Phorm taking even more money for ad targeting dream, now in China

The pot at the end of Phorm‘s rainbow keeps appearing in a new country every year.

After fleeing to Brazil following UK controversy and Korean failure, the outfit, whose technology targets ads at users using their entire ISP browsing history, is now relocating to Singapore.

Repeating an earlier tactic of expanding available shares to raise more money, the controversial outfit has created a new division with new equity, 20 percent of which it is selling to Chinese City Investments Limited (CCIL) for £20 million, giving the new division an immediate valuation of £100 million (announcement).

That is giddy and delirious. I calculate Phorm has now raised around £124.56 million since 2005 through 10 separate raisings of various kinds. The company never booked any revenue until it recorded small incomings from Brazilian ISPs early in 2011. But it has continued promising large eventual returns from trials and early ISP contracts.

Phorm’s technology uses ISPs’ data of their subscribers browsing habits to better target ads served through partner publishers. The idea promised to increase advertising rates for publishers and click-throughs for advertisers.

Despite Phorm softening the service in response to privacy concerns, three UK ISPs who trialled it decided not to go deploy it. Phorm moved operations to South Korea but the same happened. So it moved to Brazil, where it has signed with ISP Oi.

China’s younger and still-growing internet market could represent a genuine opportunity. Phorm cites unattributed research pegging China’s online ad market at $5.97 billion in 2011.

Phorm executives are asking shareholders to approve its plan to relocate its holding company from Delaware to Singapore (announcement), in line with trying to find business in Hong Kong and China.

But the £20 million injection from CCIL depends on Phorm actually finding an ISP client to license its technology exclusively in the countries.

Had Phorm expanded the available shares of its holding company to raise new money, it would have diluted previous backers’ stakes by now. So its tactic is to establish new country-specific operations ring-fenced from the core.

Nevertheless, Phorm does intend to use some of the money for general working capital for its efforts outside China, too, according to filings.

CEO Kent Ertugrul (pictured), via announcement:

“For a long time we have discussed the potential of specific country level subsidiary financings. This represents the first instance of this and highlights the significant progress we are making at an operating level ahead of commercial launches.

“We are very confident that this investment will bring with it material support in accelerating our roll out in China.”