ChaCha Raises $14M to Make Q&A a Respectable Business


by MATT GALLAGHER, Red Herring

Though plenty of Q&A service sites sleep contentedly in the graveyard, ChaCha is thriving alive and strong. The company recently raised a new round of $14 million. The company will use the new funding to expand its mobile and online experience as well as enhance its advertising potential.

The round was led by VantagePoint Capital Partners and Rho Ventures, and brings the company’s total venture funding to $82 million.

The company certainly isn’t the only entity in the Q&A business; it just seems to be the one that is pulling it off effectively. It does so with a crowd sourced human approach, as all answers are provided in real time directly from ChaCha contractors who look up the information on the Internet.

Most questions posed on ChaCha’s web page or mobile app receive instant answers, pulled from a database of over 100 million questions and answers previously asked. If a query stumps the database, it is put to ChaCha community of experts, which return about three to six answers, where one of the company’s 60,000 paid guides check the answers for accuracy, and then provide the most relevant answer to the user. Most questions posed to the community are answered in a matter of minutes.

“This funding enables us to build what we call the ‘Go Big’ experience for Q&A, which is an immersive, real-time Q&A experience that allows users to get relevant, accurate, speedy answers to all of their daily wonderings,” said Scott Jones, CEO of ChaCha. “We think that this idea of providing fast, accurate, helpful answers is a ‘bigger than Google’ concept and somebody will solve it. While that could be Google, it could just as easily be somebody else such as ChaCha. Whoever does will be valued at more than Google today.”

Speed and dependability are ChaCha’s calling cards. MsearchGroove’s report rates ChaCha’s answers with an 80 to 90 percent accuracy rate, the highest in the industry. If judged according to accurate answers provided within minutes of asking, services like Ask, Google, and Siri reach accuracies that are less than 50 percent.

The free service has answered over 2 billion questions for over 45 million people.

Comparatively, Google acquired crowdsourced Q&A startup Aardvark in 2010, and shut the service down after only one year. Quora, whose co-founders include a former Facebook executive, recently managed a mere 1.9 million visitors, though that is double the traffic it got a year ago, Bloomberg points out.

ChaCha relies on advertising for monetization. Receiving over 8 million page views per day, the company delivers three ads per view on its website, adding up to 24 million viewed ads every day. The company’s next plans are to get brands more involved in the conversation. It will deliver social advertising that better relates to the content of each question, so asking for the best restaurants in the Bay might deliver special coupons, suggest a cab service, or suggest a great place for cocktails afterward, for example.

“We have gotten feedback from brand advertisers that they would love to be offering sponsored questions and/or sponsored answers in the normal flow of our user experience, instead of being relegated to banner or text ads,” Jones said. “Brand advertisers are all about true engagement, especially through social experiences, such as the very social and highly contextual Q&A experience that we’re creating.”

Jones expects if ChaCha can become that “’smart friend’ that can make life just that much easier” the company could potentially become “a multi-billion dollar project.”

Founded in 2005, ChaCha is headquartered in Carmel, Ind., but has offices in San Francisco, Los Angeles, and New York City. It has 52 employees.