Can a Q&A Site Be a Real Business? $14M Will Help ChaCha Find Out

Photograph by Erik Dreyer

Among crowdsourced Q&A sites, the winner may be whoever can answer the business question first.

ChaCha, a website where you can ask about anything and get answers from volunteers or the site’s database of 2 billion queries, doesn’t have a response yet to one big question: Is crowdsourced Q&A a standalone business?

Enter that into the search box on ChaCha‘s site, and the automated system doesn’t have an answer. But a new round of financing will buy the Carmel, Indiana-based company more time to figure it out.

ChaCha Search announced today it has raised $14 million in a funding round led by VantagePoint Capital Partners, Rho Ventures and Qualcomm. That brings the total amount raised to $82 million, said Scott Jones, the chief executive who has invested  $30 million of his own money in the seven-year-old startup. Jones previously co-founded Gracenote, a media-data provider that was sold to Sony in 2008 for at least $260 million.

Whereas Google proved many years ago that Web search is a serious business, crowdsourced Q&A has yet to find its cash cow. As ChaCha remakes its site and apps to look more like a social network, Jones said advertisements targeted at the context of a question should be very effective. Imagine asking about a restaurant and getting the option to book a reservation or call for a cab to take you there, he said.

The biggest Q&A site out there is Yahoo! Answers. It had 69 million visitors in December, an increase of 11 million compared to the previous year, according to research firm ComScore. All the while, Yahoo has made minimal improvements to the site, as it’s been overtaken by silly questions and often useless answers.

In 2010, Google acquired Aardvark, a crowdsourced Q&A startup. The next year, Google shut down the service.

Quora, which was co-founded by a former Facebook executive, is popular within Silicon Valley and raised $50 million in financing last year. But it received just 1.9 million visitors in December, though that is nearly double what it had a year ago, ComScore said. The Mountain View, California-based company, which has 45 employees, expanded beyond Q&A last week when it gave users their own blogs, Quora executive Marc Bodnick said in an interview last week.

ChaCha, with 52 employees, had 16 million visitors in December, ComScore said. Many people also use the service through mobile applications or via text message. The company, which runs banner ads alongside its content, generated $12.2 million in revenue last year, up from $7.7 million in 2011, Jones said. It hasn’t had a profitable year, although some months have been, he said.

As for when the company might go public or seek a buyer?

They’re still working on answering those questions, too.

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