Demand Media, a startup that mines online search engine data to generate thousands of videos and web stories a day, has hired Goldman Sachs to explore an initial public offering.
The company could file for an IPO as early as August and, apparently, offer the company at a value of $1.5 billion. Since 2006, Demand has raised $355 million, attracting funding from Goldman Sachs, Oak Investment Partners, Spectrum Equity Investors and Generation Partners.
Demand was founded by entrepreneur Richard Rosenblatt, former chairman of MySpace, who brokered the $580 million sale of the social network to Rupert Murdoch's News Corp.
Demand has created a system through which writers and programmers are assigned stories or projects based on a software algorithm, which determines the interest of web visitors and calculates potential revenues from the content. The company has struck deals to supply content to mainstream news organisations such as the Atlanta Journal-Constitution USA Today. Demand creates about 4,000 video clips and articles per day, and has been a leading contributor of videos to Google's YouTube, the world's most popular online video service.
The company is expected to generate about $250 million in revenue this year.