ReachLocal is trying to corner the online local ad market. This is a classic VC play: there’s a small window for one or two super-fast growing companies to grab a big chunk of a soon-to-be-massive market. It’s the same reason Yelp could attract a $550 million offer, and refuse it.
ReachLocal has grown its salesforce from 28 in 2006 to 525 this year. The on-the-ground=growth seems smart. Most local businesses don’t yet see the advantage to online ads, as opposed to buying exposure in local print and display. But as the geo-web enables location-based targeting, whoever reaches the Mom and Pop shops first could have a serious advantage. London-based ReachLocal is betting that good old-fashioned door-to-door salesmen are the way to go. And a recession is the best time to find willing handwringers all across the globe.
VantagePoint owns 53.22% of the pre-IPO stake, Rho Ventures has 12.94% and Galleon Group, which has been caught up in an insider trading scandal, owns 6.76%.
Solyndra, another venture-backed company, filed for an IPO last week. The re-opening of the IPO market will help with M&A valuations as companies exit options widen.
Reach Local was ranked No. 1 on the Deloitte 2009 Technology Fast 500 list of the fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America.