AdFlight Lands $8.25M First Round

In a deal that could help reshape the Internet advertising industry, AdFlight Inc. recently raised $8.25 million in its primary venture round. The company also has plans to soon begin marketing a Series B round to be completed in three to four months with a total price tag of $15 million to $20 million.

Sierra Ventures led the finished transaction with a $6.5 million commitment. It was the fund’s first investment in an Internet advertising-related firm. Additional participants included Sienna Holdings, Cooley Godward LLP and Synergy Ventures.

Proceeds will be used to help AdFlight roll out its signature product, an automated b-to-b marketplace in which companies can control all aspects of their Internet advertising campaigns. In other words, an advertiser will now be able to change banners, see hit results and instantaneously purchase more of what’s working with the click of a mouse.

Such a self-service model is a significant shift away from the traditional direct sales approach that critics have scolded for being far too inaccessible for both relatively small buyers and lower-tier Web sites.

“The inefficiency of the [direct sales] model is borne out by the large unsold inventory,” said Ajit Shah, a venture partner at Sierra Ventures. “AdFlight has developed a powerful engine for self-service which enables any size site or advertiser to participate in Internet advertising.”

Of course, AdFlight is not alone when it comes to trying to corner the burgeoning Internet advertising market. Indeed, a number of companies, including some which also operate in the traditional advertising space, are working to line up electronic billboard space for interested buyers.

“We do have some competitors such as obvious ones like DoubleClick, but they focus more on the big buyer said Albert Lopez, chief executive at AdFlight. “We’ve also done something the other companies haven’t by adding the aspect of an automated service which I like to describe as a NASDAQ real-time marketplace combined with self-service E-TRADE type of service.”

Lopez added that the company’s second round will be used to sustain growth and for sales and marketing. Shah confirmed that Sierra Ventures intends to participate in any future rounds of venture funding for AdFlight.