WhenU.com said Tuesday that it has raised $20 million in Series A funding from private-equity firm ABS Capital Partners.

The maker of desktop advertising software said it plans to use the funds to expand its sales and marketing teams and to acquire more distribution channels.

ABS Capital typically invests $10 million to $40 million in growth companies. And this company makes a good fit. Online advertising has been instrumental in the meteoric growth of companies like Google and Yahoo, and has inspired many a startup. Internet advertising as a market is expected to hit $10.7 billion by the end of 2005.

WhenU, a five-year-old privately held New York City company, offers contextual advertising applications. It distributes them through partnerships with other software companies, interactive advertising agencies, and also allows users to download them directly from its site. WhenU’s brand had an audience of 4.37 million Internet users in March, according to Nielsen Net Ratings.

Ralph Terkowitz, general partner with ABS Capital, joined WhenU’s board in October 2004 as part of his due diligence on the company.

Software-based advertising is often bracketed with spyware, and is often looked at suspiciously by companies and end users. But WhenU insists it doesn’t track any individual users or personal information.

"Given the complexity of the industry and some of the negative perceptions surrounding adware, we were interested in backing only a company that had the highest standards and was a thought leader on emerging best practices," said Mr. Terkowitz. "We took the unusual approach of joining the board before we decided to invest in WhenU."