Emmis leads $48M investment into Israel-based ad-tech startup

Indianapolis-based Emmis Corp. has added a new company to its investment portfolio—an Israel-based advertising technology company called Anzu Virtual Reality Ltd.

Emmis was the lead investor in a $48 million Series B funding round for Anzu, which has developed a way to insert targeted advertising into video games.

“We’re very excited to be working with them,” said Emmis CEO Jeff Smulyan. “The technology just blew us away, and the people blew us away.”

Simon Equity Partners, an investment firm founded by Steve Simon, the son of Indiana Pacers owner Herb Simon, also invested in the round, as did PayPal Ventures, Evolution and Bandai Namco Entertainment 021 Fund, the venture arm of Japanese entertainment company Bandai Namco Entertainment.

Anzu’s co-founder and CEO, Itamar Benedy, has a background in advertising. Benedy said the company exists to fill what he saw as a big gap in the market: Gaming is an immensely popular activity, yet advertisers spend 50 times more on television advertising than on gaming advertising.

“If you think about it, gaming is the perfect environment for brands,” Benedy said. “There’s amazing game graphics, pretty worlds, big screens and brands can blend very naturally in the game.”

He said Anzu is the first company to have come up with a way to bring personalized advertising into video games. Currently, Benedy said, gaming advertising typically takes one of two forms: pop-up ads that disrupt the game or “hard-coded” ads that are a permanent part of the game’s visual world.

What Anzu does is create the ability for advertisers to insert dynamic advertising into a game—advertising that can be tailored to individual players based on demographics or interests. As players move through the world of the video game, for instance, they might see an ad on another character’s T-shirt or on the side of a passing vehicle. Because the ads are dynamic, advertisers can target different players with different messages. The technology also collects analytics so advertisers can see the impact of their messages.

Anzu, which currently has 100 employees, has already attracted some big-name supporters.

Including its Series B round, Anzu has raised a total of $65 million in outside investment. In addition to those that joined as new investors in Series B, Anzu’s existing investors include the venture investment arms of Sony Corp. and Samsung Electronics, NBCUniversal, and Marquee Ventures, the venture fund associated with the Chicago Cubs, among others.

Numerous well-known brands have also signed on with Anzu, including Levi’s, convenience-store chain 7-Eleven, toy car brand Hot Wheels and snack-food maker Lay’s.

Fueled with its Series B funding, Benedy said Anzu’s next goal is to scale up its growth. He moved to New York City last year as part of the company’s push to establish a foothold in the U.S.

Benedy said he’s excited to tap into the expertise that Smulyan and Emmis can offer.

Incorporated in 1980, Emmis previously owned as many as 16 television stations and 20 radio stations around the U.S., along with Indianapolis Monthly magazine and other regional magazines. The company has gone through a transformation in recent years, and by the end of last year, it had sold off all of its magazines and all but two of its radio stations, both of those based in New York City.

Emmis’ current strategy is to invest in high-growth-potential companies that have between $5 million and $100 million in revenue. Its target areas of interest include media and entertainment, marketing and sales, sports, consumer and business products and services, technology, construction and infrastructure.

Benedy met Smulyan through a mutual contact in banking. During a trip to Indianapolis, Benedy then met Herb and Steve Simon when Smulyan took him to a Pacers game.

Benedy said he was attracted to Smulyan’s background in building a company and taking it public, his experience in advertising and his familiarity with U.S. business culture—all things that can help Anzu achieve its goals. Benedy said he also liked Smulyan’s willingness to be “transparent and open on mistakes and learnings” he’s experienced during his career.

“And so I felt this is really someone I can learn from, and try to make this a better business,” Benedy said of Smulyan.

Simon Equity Partners was a good fit, Benedy said, because of the intersections that exist between gaming, advertising and sports.

In addition to Anzu, Emmis’ other portfolio companies are Lencore, which offers sound masking, paging and audio solutions for offices, health care settings and other professional environments; podcast studio Sound That Brands; Digonex, a dynamic pricing technology company; and Emmis Radio.