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Third-party social media site developer Vitrue Inc. raised $10 million in a Series B investment round led by Dace Ventures of Boston that included previous strategic investors Comcast Interactive Capital and Turner Broadcasting, as well as longtime backer General Catalyst Partners of Cambridge, Mass. The deal comes as the 18-month-old Atlanta company prepares to expand marketing and support of hosted user-generated content services it develops and operates for large corporate customers, and is positioned as the company's final private capital call. Vitrue founder and CEO Reggie Bradford said the round came about the time the company expected its next funding but was not widely marketed and was negotiated directly with Dace without soliciting other term sheets. "We didn't work with any bankers, and there was no real process in raising the money," Bradford said. "We had lots of interest but didn't formally seek other offers, and everybody was pleased with the valuation we got." Vitrue began in April 2006 with $2.2 million in seed money from General Catalyst and raised an additional $3.3 million in a strategic round with Philadelphia-based Comcast and Atlanta's Turner Broadcasting in October 2006. The company originally teamed with General Catalyst based on Bradford's relationship with the firm and his record with previous media startups. Bradford was chief marketing officer at WebMD Health Corp. of New York from 1998 to 2000 and founded video-on-demand developer N2 Broadband Inc. before selling it to Norway's Tandberg Television for $120 million in 2005. "I was on the board at N2 Broadband on behalf of Comcast, and the big driver of our investment was a long-term relationship with Reggie over eight years," General Catalyst partner Neil Sequeira said. "He had the vision that social media would be part of every site, and while the low-hanging fruit is in getting consumers to make content for you, the real value is in really having consumers interact with the brand, and they have done an exceptional job of doing that." Vitrue provides a platform to help publishers, advertising agencies, media companies and consumer brands to develop user-generated content by building audiences and managing content for security, safety and appropriate use. The company has aimed at the largest consumer brands and companies but offers services for companies of any size to use social media to build brand value and customer engagement. Dave Andonian, founder and managing partner of Dace Ventures, said the firm had been looking at potential investments in broadband media and saw Vitrue's strategy of aiming directly at large advertising and marketing buyers as an attractive path to large markets. "We had been focused on the next wave on the Internet and had looked at other companies more broadly in the social media space with music and video, but we have followed them and were very interested in the way they are approaching bigger brands and chief marketing officers," Andonian said. "We have seen many other companies approaching user generated content from the consumer side, but they have identified how they can help brands connect with passionate users and have already assumed a leadership position in video-centric social media." Vitrue targets customers in markets including travel, media, entertainment, CPG, restaurants, retail and sports, and boasts customers including Procter & Gamble Co., Turner Broadcasting, VH1 and Cincinnati Bell. Bradford said the company will use the new capital to expand hiring in marketing as well as product development and support, and to build up infrastructure. Vitrue now has about 40 employees in Atlanta and New York, and the company has contract technology developers in the Ukraine. Vitrue had legal work in closing the round from Edward Hirsch of Morris Manning & Martin LLP in Atlanta. Thomas Rosedale of BRL Law Group LLP in Boston represented the investors.  Deal Video
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