People don’t normally associate blockchain technology and advertising together, but NYIAX changes that through its blockchain-powered, patented financial matching engine for the advertising industry. Developed in partnership with Nasdaq, it provides advertisers and publishers with a platform to buy, sell, and re-trade advertising contracts, similar to financial instruments. It is built on the Nasdaq platform, which is tried and tested, powering more than 70 marketplaces in 50 countries. In 2019, the US digital display ad market is expected to reach $47B, providing a lucrative opportunity for NYIAX to be the preferred exchange to facilitate transactions for advertisers and publishers.
AlleyWatch spoke with COO, CSO, and cofounder Carolina Abenante to discuss its latest round of funding, and how its strategic partnerships and cutting-edge tech are creating a new market in the ad industry.
Who were your investors and how much did you raise?
Our investors are qualified investors. We raised $5.65M. This is a Seed ++. We have not done a series A as of yet. Our investors are repeat investors from our prior rounds of Seed funding. We have been oversubscribed in each of the three rounds of Seed funding by a significant percentage!
Tell us about the service that NYIAX provides.
Developed in partnership with Nasdaq, NYIAX combines a patented financial matching engine with blockchain technology for the advertising industry. NYIAX provides advertisers and publishers with a platform to buy, sell, and re-trade premium advertising contracts in a forward/futures methodology. As the first and only trusted, transparent and curated marketplace, NYIAX enables advertisers and publishers to increase ROI and to reduce costs throughout the deal lifecycle.
What inspired you to start NYIAX?
We wanted to bring financial rigor into the advertising industry and create an end-to-end platform for contract creation and management. This means streamlining contract methodology and creating advertising contracts (inventory, audience or any combination) as reusable instruments. We wanted to put the power back to the brands (advertisers) and their proxies (agencies) and the publishers (media sellers). I came from Reed Elsevier. We have seen how digital advertising has been reduced for great content publishers. We wanted to provide an exchange which would create an even, transparent and trusted exchange where we use the blockchain as our core ledger to record all transactions.
How is NYIAX different than other advertising exchanges?
We are the first exchange for advertising contract and audience. In the advertising industry we use the word exchange flippantly, but really all companies that call them exchanges auction marketplaces. An exchange is a two-sided marketplace which allows not only listing of inventory, but either side can list their inventory or their audience. Buyers can buy any portion of any listing. Sellers can create specialized products on the fly, as well. Our exchange is not just limited to inventory and audience. We can handle, within one market trade credits or any type of instrument which could benefit the buyers and sellers within the NYIAX exchange.
We are starting with direct advertising for digital (digital, digital video, and mobile) but we are creating other asset classes; such as VOD and linear TV. Our US market is between $43-52B solely for our current market without participation in new asset classes (VOD or Linear).
What’s your business model?
We are an exchange, so we take a transactional fee for any transaction which occurs on our platform.
How was your business changed since we spoke last fall?
We have been receiving an incredible amount of transactions within the industry. The idea of a transaction, contract creation, and contract management.
What was the funding process like?
We have undergone three Regulation D seed rounds of funding. We were very lucky that our valuation has been increasing based on milestones and our investors requested to be involved in our subsequent rounds of funding.
Our funding was done with full due diligence. We drafted three different private placement memorandum, which demonstrated the differences that NYIAX underwent and milestones achieved at each interval.
What are the biggest challenges that you faced while raising capital?
We rejected VC funding for our Seed funding so the $16M which we have raised was from individual investors and those investors have been following NYIAX for the last three years.
Raising capital is always hard. Raising capital through a Regulation D is even harder. We had to fit into all Regulation D requirements. We used outside companies in order to certify our investors as qualified investors. The structure we took in creating a private placement memorandum is a similar procedure to the creation of documentation for an initial public offering (IPO). So, we have done a lot from a regulatory, financial and legal standpoint. I believe more so than any other startup prior to IPO.
I believe this methodology allowed us to have our business strategy, financials, and regulatory files done exceptionally well. All corporate documents have been streamlined and are intact and we are more prepared than anyone else who is similarly situated.
We are extremely happy to have the investors who believe in us and we are in constant contact with them and let them know all milestones we have met. We appreciate their belief in us and we could not be happier that we chose the methodology we did.
What factors about your business led your investors to write the check?
I know from the investors that they believe in the partnership we have with Nasdaq and the joint patent that we filed together which opens us up not only to advertising but also scores of other industries. Additionally, they believed in the necessity of what we were creating for the industry. We are bringing automation through an exchange, the immutability of the blockchain, and the self-effectuation of smart contracts into one place to help solve a problem in the industry which still has been reliant on archaic methods of transacting, creating contracts, executing contracts, managing contracts, reconciling contracts, and distributing funds.
What are the milestones you plan to achieve in the next six months?
There are so many. You will start seeing some very large players in our industry providing traction and I am so happy that we have achieved that goal. I will let you know names when we are allowed to disclose them. Additionally, we are venturing into digital assets, which are reliant on advertising and audience, with new partners and the first of those new partners will be announced shortly.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
My advice is to make sure you have a good board of directors with at least one to two people from the capital markets industry. If you have that from the start you can use multiple modalities to raise funds. You do not have to be solely reliant on the venture capital or private equity method. You can look to other investment vehicles, but it helps to have people who can guide you through that process. We had that with our directors Thomas O’Neill formerly of Sandler O’Neill and Robert Ainbinder. They guided us through three rounds of seed funding. We are so happy to have Bill Wise as our Executive Chairman as he brings incredible insight into every aspect of funding.
Where do you see the company going now over the near term?
Our future is extremely bright. I see us becoming a new but very significant player in the advertising and contract management space. We see ourselves as a true utility as an end to end platform in the advertising and audience data supply chain.
What’s your favorite restaurant in the city?
Marea and I love the Polipo there it is almost like having it in Capri.