British mobile advertising firm StrikeAd has secured $500,000 (£320,000) of Series A funding from three US investors, prompting a decision to move its headquarters to a new office in New York City.
The funding has come from three West Coast investors: venture capital firms SoftTech VC and Siemer Ventures, as well as angel investor Gil Elbaz, co-founder of Applied Semantics.
The round is an addition to the $3 million (£1.9m) Series A funding led by DFJ Esprit, the European arm of American venture capitalist Draper Fisher Jurvetson, which the start-up announced in January.
The additional capital will be used to fund StrikeAd’s expansion in the US and enhance the company's technology, which allows media agencies to manage multiple global mobile advertising campaigns from multiple advertisers on a single platform.
Speaking to Techworld about the company's decision to relocate its headquarters, Tim Finn, StrikeAd's head of EMEA, said that a move to the US had always been on the cards because it is the dominant market for smartphone advertising and where many of the big players are.
However, Finn also said that there is not the same level of early stage funding available the the UK for technology companies, and the same is true across Europe.
“Ultimately most if not all of those companies will find themselves in the US because that's really where the big market opportunity is, both in terms of the size of the advertising and the consumer market, but also because it's much easier to raise follow-on rounds when you're in the US,” he said.
StrikeAd's new headquarters will be in Silicon Alley – the tech hub that has grown up around the New York's Flatiron district.
“To me London's Silicon Roundabout is looking to copy more the Silicon Alley experience, rather than the Silicon Valley experience – so media orientated, service orientated companies rather than heavy Intel-style companies,” said Finn.
The news comes as a report by think tank Centre for London highlights the “apparent lack of understanding of the digital sector among financiers” in the UK as one of the main concerns among local entrepreneurs.
Rob Whitehead, Deputy Director of Centre for London, said that the government needs to do a lot more to build up a community of specialist technology investors in London's Tech City cluster, to support the existing community and help promising companies to grow.
“It’s harder for entrepreneurs to access the right kind of finance here compared to the US”, he said. “More can be done to encourage private investors. UK banks, VCs and Business Angels are missing out on the opportunities domestic firms offer, many of who are going to the US for funding.”
A report released today by Juniper Research finds that in-app advertising spend across all mobile devices will reach $7.1 billion (£4.5bn) by 2015, up from $2.4 billion in 2012. The increasing spend on in-app ads will be driven by greater use of rich media in ads allied to greater app usage.
This growth, from one of the key mobile advertising segments, will help to triple spend on mobile advertising by 2017, according to the report.
“There's a lot of venture capital money going into this part of the industry right now, hence us wanting to get into the US to become a bigger part of that market, because it is being very much driven out of the US right now,” said Finn.