Medialets dials up $4 million in funding

SAN FRANCISCO (Private Equity Week) - New York-based Medialets, developer of ad delivery service principally for the iPhone, raised a $4 million Series A round that it will use to add staff and expand services for other mobile phone platforms.

Boulder, Colo.-based venture firm Foundry Group led the round, with participation from New York-based DFJ Gotham and individual investor Bobby Yazdani, who was an early backer of Google.

Medialets, which was launched less than one year ago by a team of venture fund employees, develops a free tool that iPhone application creators can use to track user behavior. It earns money selling services that can deliver advertising to mobile devices when users are online. The service also provides analytics when the user is offline.

"The ability to measure in offline contexts is crucial to this space," says Rana Sobhany, Medialets co-founder and vice president of marketing.

Sobhany explains that once downloaded, games and other applications are frequently used in out-of-range locations, such as on airplanes and commuter trains, or on non-phone devices, such as the iPod Touch.

Sobhany says that analytics are also in high demand. Apple, for instance, alerts developers of iPhone widgets as to how many times someone downloaded their application, and it offers limited detail on how users are interacting with the program.

With Medialets, Sobhany says that developers can learn more details of usage, such as how much time people are spending with an application and which features they're using most often. The company also sells services for serving up advertisements within those applications, an area that is attracting increased attention from advertisers, with the growth of smart phone usage.

One recent iPhone pitch Medialets served for Dockers pants featured a breakdancer wearing the pants. When viewers shake their iPhone, the dancer makes new moves.

In addition to Dockers, Medialets has signed partnership agreements with FedEx and Paramount Pictures. The service is principally for users of iPhones and phones using Google's Android operating system. Sobhany says that Medialets plans to build out its platform for other operating systems, such as Windows Mobile and BlackBerry.

Medialets is one of several companies with a mobile advertising focus that have raised funding rounds in recent months.

Others include:

*AdMob, based in San Mateo, Calif., which raised $12.5 million in January to expand its mobile advertising marketplace. To date, the 3-year-old company has raised $47 million from Sequoia Capital, Draper Fisher Jurvetson, Accel Partners and Northgate Capital Group.

*Greystripe, a San Francisco-based developer of a rich media mobile advertising network, which raised $5.5 million in March from Steamboat Ventures, Incubic Venture Capital and Monitor Venture Management. To date, the company has raised $15.6 million in venture funding.

* And Quattro Wireless, a Waltham Mass.-based developer of a publishing and analytics platform for mobile content providers and advertisers, which raised $10.1 million in March from Highland Capital Partners and Globespan Capital Partners. Since 2006, the company has raised $28 million.