Ad software maker OpenAds girds to take on Google

By Eric Auchard

SAN FRANCISCO (Reuters) - Openads, a supplier of free software used by Web sites to manage online ad campaigns, has received $5 million in initial funding, bolstering it to prepare for increasing competition globally with Google Inc.

The financing round is being led by Index Ventures, and joined by early-stage U.S. firm First Round Capital, Europe-focused Mangrove Capital Partners, and O'Reilly AlphaTech Ventures, an arm of the U.S. technology publisher.

London-based Openads was founded as a grassroots, open-source software development project in 1999. It has signed up 25,000 Web site publishers in more than 100 countries and 20 languages.

"In a way, this has been one of the best kept secrets on the Web," said Saul Klein, a partner with Index Ventures, who was previously marketing chief at Web-telephone company Skype.

"What we liked about Openads is that they're disrupting the market and (it) has secured significant, global adoption."

Openads powers more Web site publishers than all competing products combined, it said, albeit small players. It is popular with users of other open-source content management systems, including Drupal and WordPress blogging software.

The community-based project turned 10-employee start-up company relies on an open series of discussion boards (http://forum.openads.org/) to service its customers, solicit feature requests, and trade advertising techniques.

"What publishers love about Openads is that it is intuitive, easy to use, solid and they can peek under the hood and see how it works," Klein said. "But more than anything they love the fact that it is free."