ChaCha Raises Cash, Lays Off Staff

ChaCha Search Inc., a Carmel, Ind.-based search startup, has raised $12 million in Series C funding. peHUB had previously reported that it had secured $11 million of a $30 million-targeted round, based on a regulatory filing. No new shareholders were disclosed. The company had previously raised around $14 million from Morton Meyerson, Bezos Expeditions, Rod Canion (founding CEO of Compaq) and Jack Gill (partner at Maven Ventures). It also had secured a $2 million grant from 21st Century Technology Fund.

In related news, ChaCha said that it would “streamline and restructure itself to preserve cash.” VentureWire reports that this means 25 of the company’s 81 employees were let go.


ChaCha, the fastest growing SMS mobile search service, with 70 percent of Google’s SMS search volume, today announced that it has closed an equity financing round of $12 million. These investments will provide ChaCha with the additional capital it needs to expand its local and national advertising sales activities, including a newly opened New York office.

“This funding is a tribute to the strength of our service and the continuing rapid growth of the mobile search and advertising market,” said Scott A. Jones, CEO of ChaCha. “Our solid position in this space will help us focus on attracting more advertisers that want to reach today’s mobile generation, a group that is beginning to make buying decisions based on what they see on their mobile devices.”

Resulting from increased operating efficiencies, ChaCha also announced it is streamlining and restructuring itself to preserve its cash. The company is reducing headcount, overhead, and expenditures through a series of cost-saving actions to ensure the company is positioned for long-term success.

Jones continued, “We’re sizing our business expenses conservatively for slower, more realistic revenue growth to match the conditions of the economy. We will continue to make smart decisions about our costs to ensure we are poised for long-term profitability and success.”

ChaCha reports that they now deliver 30 million impressions per month and have had approximately 3.6 Million users since the SMS answers service launched in January 2008. This explosive growth demonstrates ChaCha’s uniquely disruptive mobile search experience, which is leading quickly to dominance in the mobile search market. Because of its unique relationship with its users, ChaCha has a coveted capability to impact mobile customers’ buying decisions. To date, marquee brands including Palm, H&R Block, Coca-Cola, McDonald’s and the Obama Campaign have partnered with ChaCha to run interactive and engaging SMS ad campaigns and have achieved industry-leading response rates.

In January 2008, ChaCha introduced its free mobile answers service, which leverages human guides to provide answers, for free, to any question, anytime, anywhere. Users don’t need a Web-enabled phone, special browsers or codes to search the Internet, and ChaCha answers go far beyond directory assistance. For free, mobile customers simply text 242242 or call 1-800-2-ChaCha (1-800-224-2242) on their mobile phones, ask their questions and receive concise, relevant answers via text messaging.

About ChaCha

ChaCha, a completely FREE mobile answers service, allows users to call 1-800-2-ChaCha™ or text questions to ChaCha (242242™) on mobile phones and receive answers within minutes. Its unique advertising solutions provide pay-for-engagement opportunities for advertisers to precisely target and embed their messages within millions of text conversations. Unlike traditional media, ChaCha’s advertising platform is simple, results-driven and measurable.

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