ChoiceStream Raises $25.79 Million For Personalized Recommendation Service

ChoiceStream, a Cambridge, MA based online content recommendation and personalization service, has raised $25.79 million at a valuation of around $250 million from a single investor (name undisclosed) in its 3rd Round of Funding. Precious investors include General Catalyst, Sutter Hill Ventures and a family trust affiliated with ChoiceStream CEO Stephen Johnson.

ChoiceStream´s relevance and recommendation engine is based on Attributed Bayesian Choice Modelling (ABCM) that does not only takes into account what users like, but also why they liked it. This data is then used to classify content and products in terms of attributes that people care about, and in the process of doing so represents content using the same characteristics that users considered while evaluating that content. At its very basic level, ChoiceStream´s algorithm

• Automatically classifies content according to the explicit and implicit attributes deemed the
  most powerful predictors of user preferences,
• Creates a rich, accurate profile of each user’s preferences for those attributes, and
• Matches users with content based on their preferences.

This personalization and the following recommendation it provides to consumers has resulted in doubling or sometimes trippling the sales of ChoiceStream´s clients.

ChoiceStream is a competitor of Aggregate Knowledge which also announced a big funding round today. ChoiceStream has been around since 2000 and has made an impressive client base that includes Overstock, DirecTV, AOL, Yahoo Movies, Yahoo Shopping, Movielink, Akimbo, Vongo, eMusic, and SmartBargains.

Similar service include Wunderloop, Baynote, Aggregate Knowledge and industry leader Omniture.