Walmart's Mysterious Adtech Acquisition Has Tongues Wagging Over The Price

@WalmartLabs has acquired Adchemy, the slightly mysterious Foster City, Calif., adtech company that specializes in "semantic search," or trying to develop meaningful, implied search results that go beyond the mere keywords punched into Google. Semantic search could be a huge business, but only if it turns out that software is better at predicting what humans want the keywords they type in.

Business Insider profiled Adchemy's unusual history here - CEO Murthy Nukala took the company through six different business models before today's deal. Adchemy was named on BI's hottest adtech startups in 2013.

The company is mysterious for four reasons:

• First, it took $120 million in investor funding over 10 years, a massive sum for an adtech company that was never able to describe its revenues publicly or file for an IPO, the preferred adtech track. Most adtech companies have taken less funding than that over the years, even the ones that filed publicly.
• Second, the company is virtually unheard of in New York, the capital of adtech. Successful adtech companies tend to have a presence in the city because that's where all the big ad clients' media agencies are.
• Third, the true size of Adchemy's business is unknown outside the company. Nukala told Business Insider previously that the company was never profitable, and that it had about 30 clients spending a minimum of $200,000 a year. That would imply a revenue base of just $6 million annually.
• Fourth, a spokesperson for Walmart declined to say how much the company paid for Adchemy. We have yet to hear back from a spokesperson for Adchemy. With $120 million in funding, investors in the company would have been looking for a very large sum in order to get their money back plus a nice profit.

The lack of revenue detail and a question mark over the deal value have set tongues wagging in Silicon Valley, especially among former Adchemy employees. Techcrunch said it was mainly a talent acquisition. The Wall Street Journal added that Nukala would not be joining the Walmart team.

One source told Business Insider that he had heard an investor saying the preferred stock holders only got 50 cents on the dollar at maximum (meaning that the company sold for less than what its investors plowed in).

Antonio Garcia Martinez, a former Adchemy employee who left to go work at Facebook where he helped create the social network's ad exchange, posted a long rant on his Facebook page. Much of it is personal criticism of Nukala (who sued him when he left the company). But he gave his opinion of the deal, too:

The acquisition price is likely embarrassingly low, otherwise it would have been leaked.