Cheq raises another $16M to fight ad fraud

Cheq, a startup focused on preventing ad fraud and ensuring that ads run in brand-safe environments, has raised $16 million in Series B funding.

When the company raised its $5 million Series A last year, CEO Guy Tytunovich contrasted Cheq’s approach with what he called “first generation solutions for ad verification” — rather than identifying fraud and other issues after an ad has already run, he said Cheq is more proactive and can block ads from being served in real time.

I caught up with Tytunovich yesterday, and he told me that this approach remains one of Cheq’s strengths.

At the same time, he also acknowledged that “refunds, rebates and make goods” are allowing advertisers to achieve a kind of retroactive prevention. So he’s increasingly focused on Cheq’s accuracy.

Tytunovich suggested that rather than simply relying on keywords (an approach that might suggest that a relatively innocuous article like “LeBron James killed it last night” isn’t an appropriate place to serve an ad), Cheq is examining 1,200 different factors, “looking for anomalies or looking where the fraudster did some sloppy work.”

He added, “We investigate every single impression in JavaScript. We are extremely deterministic, to not cause this damage of false positives and false negatives.”

And Tytunovich said that despite the number of companies tackling the issue, fraud is still growing — he pointed to a recent report from Cheq estimating that fraud will cost advertisers $23 billion this year.

“You need to be smarter every day,” he said. “We’re definitely seeing in ad fraud, not just different types of sophisticated fraud — as the time goes by we see more and more of that organized crime type of ad fraud. Which is fascinating on the one hand, but also it’s kind of frightening if you really think about it.”

The new funding was led by Battery Ventures (which also led the Series A) and MizMaa Ventures. The latter is an Israeli firm that Tytunovich said already “helped tremendously” with things like introductions, even before making an investment.

Cheq is also moving into new areas like connected TV and console gaming.

Ultimately, Tytunovich said he wants the company to become the “immune system of the internet” — which doesn’t just mean detecting ad fraud, but also becoming “a solution to everything that sucks about digital advertising specifically, things like fake news and how advertising relates to that.”