ProRataAI Inc., a startup that develops search and advertising tools for publishers, has raised $40 million in funding to expand the adoption of its technology.

The company announced the deal today. It said that Touring Capital led the Series B round with participation from returning backers Mayfield Fund, MVP Ventures, Revolution Ventures, SBI Investment, BOLD Capital, XPV-Exponential Ventures and Idealab Studio. Those investors earlier provided ProRata with more than $30 million in funding.

The valuation wasn’t disclosed. According to the Financial Times, ProRata was worth $130 million last November.

ProRata offers an AI search engine called Gist Answers that publishers can embed in their websites at no charge. In addition to helping readers find specific articles, the software summarizes those articles. Users can also ask Gist Answers to explain topics discussed in the article they’re currently reading.

The search engine answers reader questions using content from ProRata’s network of more than 700 publishers. In June, the company stated that it had “one of the largest licensed content libraries in generative AI search.”

Perplexity AI Inc., a competing AI search engine provider, launched a content licensing program of its own last month. The initiative focuses on the company’s Comet browser. Users who subscribe to a paid version of the browser will receive access to paywalled content from publishers that partner with Perplexity. Those partners, in turn, will receive a share of subscription fees Perplexity generates from Comet.

Last year, OpenAI inked content licensing deals with Condé Nast, Financial Times and other major media companies. The ChatGPT developer is also using content from Reddit Inc. to power its AI models. The licensing agreement is believed to be worth $70 million per year.

The company makes money from Gist Answers with a built-in advertising system called Gist Ads. It displays advertisements below the search engine’s prompt responses. If a user asks Gist Answers to find more information about an iPhone feature mentioned in an article, Gist Ads might display an ad from a handset accessory maker.

ProRata allows brands to customize how its platform displays promotions. Marketers can upload prompts that define the target audience an ad should reach, its tone, style and other parameters.

The startup disburses half the revenue that it generates from Gist Ads to publishers. According to the software maker, media companies are compensated for content “on a per-use basis.” The exact sum is calculated by an automated system that measures the “value of contributing content from contributing sources.”

Chief Executive Officer Bill Gross told Axios today that Gist Answers is profitable. The company, which currently has about 75 workers, will reportedly use its new funding to hire 25 engineering, sales and marketing professionals. 

Image: ProRata