Urban Airship, a Portland-based startup that provides services, like notifications and in-app purchases to third party application makers, has raised $5.4 million in a second round of funding. In the past nine months, the company has raised a total of $6.5 million in capital, marking a huge reversal of fortunes for the company that was running off credit cards only two years ago.
Scott Kveton, co-founder and CEO of Urban Airship, remembers the leaner times well. Two years ago, he could not afford to attend Apple’s annual worldwide developer conference in June, but showed up anyway to launch his company. He passed out danishes to the hungry developers waiting in line for Steve Jobs’ keynote. On the sidewalk, he met Tapulous, the company’s first customer, which later got acquired by Disney (NYSE: DIS). Based on those successes, he went back this year, splurging on both tickets, and a coffee cart for the thirsty developers in line.
Today, Urban Airship does a lot of the heavy lifting on the back-end of applications, such as giving publishers the ability to send push notifications to their customers and enabling in-app purchases or subscriptions. Its services were recently integrated by Newsweek into its iPad app, giving readers the choice to buy a single issue or subscribe for three or six months. Newsweek subscribers may then receive a notification, prompting them to download the new issue, or perhaps, are offered a discount when their subscription is about to expire. Urban Airship has roughly 4,000 customers, including Warner Brothers and Mashable, and charges a fraction of a penny per message.
The company’s second round was led by Foundry Group. Previous investors, True Ventures and Seattle-based Founders Co-op, also participated. The capital will go toward growing the employee base from 15 to 40 by the end of next year. Next on the company’s list of things to engineer are analytic tools to measure how notifications are received by customers, and whether they translate into a sale. Based on preliminary data, they think that Android users view more notifications because they typically receive more and are less intrusive than messages sent on iPhones.
Kveton says there’s an advantage to outsourcing messaging and in-app purchasing: “There’s a lot of heavy lifting when you are doing notifications and subscriptions across a lot of platforms. We give you one interface to reach Android, BlackBerry and iPhone.”