ProRata.ai Secures $40M Funding to Revolutionize AI-Powered Search for Publishers

Exclusive: ProRata.ai raises $40M and launches new search tool

Why it matters: The funding supports a new AI business model where publishers are compensated by AI companies using their work. Follow the money: Gross says the startup wasn't in need of capital -- still having $20 million from its past funding round -- but received interest from Touring Capital, which led the round. * Existing investors Mayfield Fund, MVP Ventures, Revolution Ventures, SBI Investment, BOLD Capital, XPV-Exponential Ventures and Idealab Studio also participated. * "Generative AI is reshaping search and digital advertising, creating an opportunity for a new category of infrastructure to compensate content creators whose work powers the answers we are relying on a daily basis," Touring Capital general partner Nagraj Kashyap said in a statement. * ProRata.ai has raised more than $70 million in total. Zoom in: ProRata.ai's product, Gist Answers, lets publishers embed custom AI search on their websites. Publishers can show AI-powered summaries and recommendations exclusively based off their own content or showcase content from ProRata.ai's broader network of 750 publishers. * "It's absolutely free to all the websites, and it's actually profit-making, small profit, but profit-making," Gross tells Axios. "Our whole goal is to get this ethical search distributed as far and wide as possible." * Publishers that choose to license their content to Gist Answers benefit from a 50/50 revenue-sharing model. Adweek tried the experience earlier this year during Cannes Lions. Popular Science and The Atlantic are among the publishers planning to participate. * "As a publisher, our priority is making sure our journalism reaches audiences in trusted ways," The Atlantic CEO Nicholas Thompson, who is a ProRata.ai board member, said in a statement. The big picture: Publishers have been forced to address AI models scraping their content without compensation, leading to some lawsuits and a slew of licensing deals. * ProRata.ai pitches itself as a neutral platform that ensures attribution and revenue-sharing for publishers. * "My hope is after OpenAI feels the hurt of not having as good quality content, they might talk to us about how can we use our attribution to figure out how to fairly compensate people," Gross says. "I'm in this for the long game to make that happen." What's next: Gross says ProRata.ai plans to expand its 75-person team to about 100, hiring for its technical team, customer service and sales.

ProRata raises $40M to develop AI tools for publishers - SiliconANGLE

ProRataAI Inc., a startup that develops search and advertising tools for publishers, has raised $40 million in funding to expand the adoption of its technology. The company announced the deal today. It said that Touring Capital led the Series B round with participation from returning backers Mayfield Fund, MVP Ventures, Revolution Ventures, SBI Investment, BOLD Capital, XPV-Exponential Ventures and Idealab Studio. Those investors earlier provided ProRata with more than $30 million in funding. The company didn't disclose its valuation. According to the Financial Times, ProRata was worth $130 million last November. ProRata offers an AI search engine called Gist Answers that publishers can embed in their websites at no charge. In addition to helping readers find specific articles, the software summarizes those articles. Users can also ask Gist Answers to explain topics discussed in the article they're currently reading. The search engine answers reader questions using content from ProRata's network of more than 700 publishers. This past June, the company stated that it had "one of the largest licensed content libraries in generative AI search." Perplexity AI Inc., a competing AI search engine provider, launched a content licensing program of its own last month. The initiative focuses on the company's Comet browser. Users who subscribe to a paid version of the browser will receive access to paywalled content from publishers that partner with Perplexity. Those partners, in turn, will receive a share of subscription fees Perplexity generates from Comet. Last year, OpenAI inked content licensing deals with Condé Nast, Financial Times and other major media companies. The ChatGPT developer is also using content from Reddit Inc. to power its AI models. The licensing agreement is believed to be worth $70 million per year. ProRata monetizes Gist Answers with a built-in advertising system called Gist Ads. It displays advertisements below the search engine's prompt responses. If a user asks Gist Answers to find more information about an iPhone feature mentioned in an article, Gist Ads might display an ad from a handset accessory maker. ProRata allows brands to customize how its platform displays promotions. Marketers can upload prompts that define the target audience an ad should reach, its tone, style and other parameters. ProRata disburses half the revenue that it generates from Gist Ads to publishers. According to the software maker, media companies are compensated for content "on a per-use basis". The exact sum is calculated by an automated system that measures the "value of contributing content from contributing sources." ProRata Chief Executive Officer Bill Gross told Axios today that Gist Answers is profitable. The company, which currently has about 75 workers, will reportedly use its new funding to hire 25 engineering, sales and marketing professionals.