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Dec 15, 2008

CLIP: NetShelter raises $11.1 million for online media network

NetShelter Technology Media is announcing today that it’s raised $11.1 million in a first round of funding as the nine-year-old ad network for tech properties seeks to expand the reach of its 150 technology content web sites.

Backers include Montreal-based Rho Canada, GrowthWorks Canadian Fund and JLA Ventures. The Toronto, Canada-based company runs web sites such as TopTechGifts.com and LastGadgetStanding.com. The company’s vertical network strategy resembles that of Glam Media, which owns a bunch of fashion-oriented sites that can be collectively pitched to fashion advertisers.

The aggregation of the sites — in what the company calls the NetShelter Branded Network — lets tech-oriented marketers advertise directly to an affluent and passionate tech audience. That audience of 17.7 million unique visitors a month in the U.S. and 50 million worldwide is now bigger than that of CBS’ CNET online tech news site, as well as tech sites owned by media companies IDG, Ziff Davis and CMP.

Similar to companies such as Federated Media, the company is one of the necessary ingredients in how smaller web sites can attract big advertisers who advertise across an entire group of web sites that share similar audiences.

While Federated Media (which provides ads to VentureBeat) has a lot of news sites, NetShelter focuses on sites that have a lot of technical discussion about products in reader forums. Those sites include Geek.com, PhoneScoop.com, TecheBlog.com, Bytes.com, SlashGear.com, PhotographyBlog.com, CrackBerry.com, TGDaily.com, and HowardForums.com. The contrast with CNET is that no single site accounts for more than 5 percent of the traffic on NetShelter’s network.

The company was founded in 1999 by two brothers — Peyman and Pirouz Nilforoush — in the basement of a Toronto office with a few thousand dollars of savings. The original business provided web hosting service for a variety of publisher sites focused on four vertical topics — gaming, entertainment, music and technology — in exchange for ad space and revenue sharing. The company exited the hosting business and focused entirely on ad representation. Since technology was the only vertical generating ads early on, the company dropped the other three topics.

The site has been profitable from the start and it added large numbers of sites which reaped the benefits of its ad network. In 2004, the company started seeing strong growth and advertising from companies such as Microsoft. In May 2006, the company started a branded network that let tech advertisers target ads to users of sites such as Geek.com, PhoneScoop.com, TheInquirer.net. Since that time, traffic has grown 900 percent and it has doubled its revenues in both 2007 and 2008.

In February, the company changed its name from NetShelter to NetShelter Technology Media. In May, 30-year media veteran Patrick Houston became chief publisher. In December, the company said it overtook CNET for the first time in U.S. online audience, according to comScore Media Metrix.

Before today’s investment, it had previously raised just $1.5 million in seed funding. Jeff Grammer of Rho Canada, Roger Chabra of GrowthWorks, and Rick Segal of JLA Ventures have joined NetShelter’s board. The company has 35 employees and has just opened offices in New York and San Francisco.

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