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Ahead of IPO, Outbrain raises $200 million from Boston’s The Baupost Group

NYC-based, Israeli-founded firm is the maker of a web content discovery platform that produces recommendation feeds

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Outbrain in action (Photo credit: Courtesy)
Outbrain in action (Photo credit: Courtesy)

Outbrain, a web content discovery firm, has raised $200 million in funding from Boston-based investment manager The Baupost Group ahead of its planned initial public offering of shares.

The firm did not say at what valuation the funds were raised. On June 29,  Outbrain said it filed for an IPO on the Nasdaq.

“We are excited to announce this investment from The Baupost Group, who share our vision and commitment for our business, our team and our future prospects,” said David Kostman, co-CEO of Outbrain, in a statement on Tuesday.

The company said that its technology enables one-third of the world’s online consumers of content to discover new things through recommendation feeds on their preferred media outlets and connects advertisers to these audiences.

The firm, founded in 2006 by Ori Lahav and Yaron Galai, who served together in the Israeli Navy during their mandatory army service, is headquartered in New York City and has offices in 18 cities worldwide. It partners with publishers and marketers in more than 55 countries, the company said in a statement. It is used by numerous news websites, including The Times of Israel.

The Baupost Group manages $31 billion in assets, and the CEO and portfolio manager Seth Klarman has overseen Baupost’s investments from its inception in 1982. (Full disclosure: Klarman is the chairman and capital partner of The Times of Israel.)

Outbrain’s rival, Taboola Inc, another Israel-founded firm, started trading on the Nasdaq in June, after the firm merged with a special purpose acquisition company at a $2.6 billion valuation.

In the prospectus filed with the SEC, the company said that proceeds of the IPO will be used for working capital and general corporate purposes, including research and development, product development and sales and marketing, to grow its business.

Outbrain said it posted $10.7 million net profit for the first quarter of the year, compared to a loss of $9.6 million in the same quarter a year earlier. Revenue for the period surged 29% to $228 million, Reuters said.

Among the risks the company faces are its “high dependence on overall advertising demand and traffic” generated by its media partners. A “failure to grow or to manage growth effectively” may cause the quality of the company’s platform and solutions to suffer, and may adversely affect its business, results of operations, and financial situation,” the filing said.

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