ChaCha secures $14M investment to expand services

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Carmel-based ChaCha Search has closed a $14 million round of financing to further fund an expansion of its mobile and online services, the company said Monday.

The funding extends prior investments in ChaCha made by California firms VantagePoint Venture Partners and Qualcomm Ventures, as well as New York-based Rho Ventures.

VantagePoint and Rho invested $20 million in October 2010, and the two were joined by Qualcomm on a $3 million infusion in January 2011.

Since its inception in December 2005, ChaCha has raised about $82 million.

The information/answer service allows wireless phone users to call in or text their questions to the company’s human guides. ChaCha makes money by embedding advertisements in the answers.

The latest round of funding will enable ChaCha to make “significant” investments in new products to expand both mobile and online services, CEO Scott Jones said. Internally, the project is dubbed “Go Big,” in which the improvements will be launched in the first half of the year, he said.

“It’s a significantly more engaging ChaCha experience,” Jones said. “We’re shifting more to a Q&A platform where you know who is answering your question. You get connected to a social network in real time.”

ChaCha has 52 employees in addition to thousands of independent contractors who work as guides, earning 2 cents to 20 cents per task.

But now that ChaCha has answered 2 billion questions, however, the company has accumulated millions of question-answer pairs that can be accessed automatically to provide answers. Many of its users now text their questions to ChaCha from their mobile phones, and receive an answer back with the embedded advertisement.

Within the past year, monthly visits to its website have more than doubled, to 68 million, Jones said, while the number of unique visitors to the site grew 80 percent, to 45 million.

“Within the last year we’ve had tremendous growth,” he said, “so we really feel like the new experience will be awesome.”

To expand its product base, ChaCha earlier this month launched Social Reactor, match advertisers with participating celebrities and other “social influencers,” who will use social media tools such as Twitter to drive fans to advertisers.

If the concept works as planned, advertisers will get more celebrity-driven eyeballs on their ads or websites and see more sales.

Social Reactor already represents about 20 percent of ChaCha’s $12.2 million in revenue, Jones said.

San Diego-based Qualcomm Ventures, a subsidiary of Qualcomm Inc., was launched in November 2000 to invest in privately owned startups in the wireless Internet markets.

VantagePoint, which has offices in Silicon Valley, Beijing and Hong Kong, funds “transformative companies,” in the information technology, clean technology and health care sectors.

Rho Ventures has offices in Palo Alto, Calif., New York and Montreal. It has experience in information technology, communications, new media, health care and energy technology.



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