BlackArrow Nabs Strategic Investment from NDS

Interactive advertising startup BlackArrow has secured a $20 million Series C Round of financing, led by new strategic investor NDS. The investment also underlines a new strategic alliance between the companies, which will attempt to extend BlackArrow’s interactive capabilities to new markets.

In addition to NDS, existing investors Cisco Systems (s CSCO), Comcast Interactive Capital (s CMCSA), Intel Capital (s INTC), Mayfield Fund and Polaris Venture Partners also participated in the round. BlackArrow most recently raised a $20 million round in October 2008. Altogether, the interactive ad starup has raised a total of $58 million since being founded in 2005.

BlackArrow is best known for being able to dynamically insert targeted ads into video-on-demand platforms, and has signed up customers like Comcast an Fox Cable Networks to do so. Without technology like BlackArrow’s, adds that appear in cable VOD systems are typically stitched into the video itself, which limits the flexibility of the ads that can appear.

BlackArrow CEO Dean Denhart said in a phone interview that the company had two main objectives in raising the most recent round of funding — which he says will be the company’s last: to enhance and expand BlackArrow’s product offerings and to expand its operations internationally. With the strategic investment by NDS, BlackArrow will look beyond cable VOD to also enable interact ads through DVR and set-top box platforms. The company’s have already worked to create an integrated product offering that will target ads at VOD, DVR, linear broadcast and cable TV and broadband video services.

In addition to the integrated technology offering, the companies plan to jointly market and sell their products to customers. In a phone interview, Todd Narwid, NDS vice president of new media, said that NDS will probably take the lead in sales internationally, where the company already has a sales force. But in North America, he said that the companies have a good mix of joint customers they can approach together, as well as accounts that one company can introduce to the other.

The companies see a large opportunity for advertising in VOD and DVR advertising, particularly as more viewers turn to on-demand viewing of video. “If you look at linear video, it’s being disintermediated by on-demand viewing. All channels of on-demand — VOD, DVR, broadband — are increasing by 20 percent or more,” Denhart said. Our customers are looking to enable dynamic advertising and being able to not look at it as a siloed approach.” Being able to combine all of those approaches in a single product offering should be a big differentiator for the companies.

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