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VCs Talk A Bluestreak $16.5M Wide

Believing that the future effectiveness of online advertising will be determined by innovative infrastructure, Bluestreak announced this morning that it has raised $16.5 million in its second round of institutional venture financing. The deal follows up on January’s $7 million Series A deal and is designed to act as a bridge to a larger strategic offering next year.

Starvest Partners, which had attempted to get in on Bluestreak’s first deal, led the completed transaction with a $5.5 million participation. Additional investors included CIT Venture Capital and existing backers Lazard Technology Partners and Zero Stage Capital.

According to a source familiar with the deal, Bluestreak received a post-money valuation in the vicinity of $60 million.

“We’ve spent a lot of time looking for the right play in this market and decided this company really has done a good job improving its product and its market traction,” said Jeanne M. Sullivan, founder and co-chair with StarVest.

More specifically, Bluestreak is out to combat the prevailing notion that Web surfers have effectively trained their blurry eyes to avoid intimate contact with online advertising.

Rather than simply designing flashier click-through banners, however, Bluestreak is involved on the infrastructure side by creating new types of Java- and HTML-based (i.e. not GIF-based) online ads that can allow users to interact within the banner itself, rather than clicking over to a new site.

“All the technology we’ve built is based on the premise that the Internet offers opportunities for users to interact directly with a marketer’s message,” said Stefan Tornquist, co-founder and director of marketing and communications with Bluestreak. “The challenges to overcome in this market are really ones of technology and acceptance.”

Examples of Bluestreak solutions include multimedia options and ads in which a user can enter his email address without even a separate window opening up on his screen. Moreover, the company has created RADAR, a cookieless solution that acts as a virtual connection between the ad and the marketer’s database. While such a technology may concern privacy advocates who currently just shut off their automatic online cookie acceptor, Tornquist said it identified users in terms of groups rather than as individuals.

Although the company has yet to begin marketing a new deal, it is likely to hop back into the VC pond next year.

“I suspect we’ll do another round next year, but with that one the pendulum will swing toward the strategic point of view,” said Annete Tonti, president and chief executive with Bluestreak. “It could certainly be the type of round that would get us to the liquidity stage.”

Proceeds from the Series B deal will be used to advance and expand the company’s technological offerings.