VentureBeat

updated

The back-story on Jangl’s slow death — Yesterday, we reported on Jangl’s asset sale process. A tipster tells us that Seattle-based WhitePages had offered to buy Internet phone company Jangl for $20 million, but then kept the company in diligence for more than a month and walked away at the last minute — giving Jangl no choice to but throw in the towel when it ran out of time and options. Whitepages flew down from Seattle for regular meetings, and Jangl’s execs flew up to Seattle, but then WhitePages caught wind that Jangl was running out of money and that investors had given Jangl’s team a deadline to sell by May 15. WhitePages whittled down its offer first to half, then cut off a severance agreement to those who would be laid off, and then lowered the offer even more: “They had us over the barrel,” said one Jangl employee. [Update: There are always two sides to the story. WhitePages is denying they ever offered $20M. And that's partly what happens in these sorts of negotiations: There's verbal dancing, and there's written, signed legal offers. If there's no deal, there's no deal.]

Virgin Mobile USA considering merger with Helio — While many MVNOs have simply collapsed or been closed by their parent companies, Virgin Mobile USA and smaller rival Helio have scraped by, if not flourished. The two may solve some mutual problems by undergoing a merger, which would create a bulkier combined company and add to their respective plan and phone options. However, mocoNews suggests that they might still look for a private equity buyout afterward.

VC investment continues to move overseas — Limited partners say they’re still wrestling with the implications of more and more venture capital activity moving abroad. The comments came during the LP panel at the recent meeting of the National Venture Capital Association. VentureWire was there to note some of the most interesting facts and figures. There’s definitely a lot of activity — almost 20 percent of domestic funds were deployed outside the United States in 2007, compared with 7 percent in 1998, according to Bob French of Adams Street Partners. And David York of Paul Capital predicted that within the next decade, as much as 50 percent of global venture capital activity will take place outside the United States.

Yahoo launches regional search variant – Yahoo’s Indian team has put together a search product called “Glue Pages” that integrates traditional search with results pulled from Yahoo’s portal business, including content like recipes, medical information, images and restaurant listings. The feature is undergoing testing on Yahoo India, with no plans as yet to offer it in the United States. More at CNET News.

Warner Music may invest again in imeem — In an encouraging turnaround for the music industry last year, Warner Music dropped a lawsuit against music sharing social network imeem, then followed up with an investment in the company. It may tag along with Sequoia Capital and make another investment this year, according to the Silicon Alley Insider.

RealNetworks spins off game studio — RealNetworks, maker of the most irritating media player ever created, has spun off its games division, which includes recent acquisition Trymedia. The gaming business is one of RealNetworks’ most profitable; it will retain an 80 percent ownership stake, but will allow the new company to forge its own path.

Real Goods Solar prices IPO real low — Solar installer Real Goods Solar, which recently announced plans for an initial public offering, has priced its 5.5 million shares at the bottom of its $10-12 range. Most cleantech companies have held off from IPOs this year due to the current market troubles.

Google achieves coveted “brain drain” status — The BBC has a report on the steady stream of executives away from Google, many of whose departures we’ve also noted, including Chris Sacca, Gideon Yu and Elliot Schrage. Many are headed to Facebook, which is described in the article as “the Google of yesterday, the Microsoft of long ago,” while Google is called a “behemoth” that is “no longer the firm it once was.” Google’s current position, of course, is precisely where Facebook aspires to be.

Forbes.com launches business social network — Following in the footsteps of BusinessWeek, Forbes.com has launched its own social network, the AnswerNetwork. As might be expected from the name, users are expected to ask questions and share answers with each other, in return gaining competence rankings based on their expertise. LinkedIn, which is BusinessWeek’s partner, has a similar feature, although it seems to be only moderately popular with users.

Here’s the latest action:

Advanced Micro Devices is in a world of hurt — The Sunnyvale, Calif. chip company lost $358 million on revenues of $1.5 billion in the quarter. It cited a tough outlook for the computer market, but it is clearly hurting from Intel’s newfound competitiveness. AMD’s core business is microprocessors and graphics chips for personal computers. It has other businesses related to getting those chips into other devices, from consumer electronics to mobile phones. CEO Hector Ruiz said the company is looking at its “non-core businesses” to evaluate them as part of a new cost-cutting program. That’s in addition to its previously announced restructuring in which it will cut 10 percent of its staff. Hence, it may sell off some of its non-core businesses.

Sequoia wants to be Blackstone, Carlyle going through shift — Sequoia Capital, Silicon Valley’s top dog venture capital firm, is trying to broaden its franchise, looking to do asset management and advisory work, according to Dan Primack, who says it is looking to become the venture community’s Blackstone Group. Among other things, PE Wire says Sequoia is raising a $750M hedge fund and has hired Eric Upin, former chief investment officer for the Stanford University endowment, and Michael Beckwith, former principal with Maverick Capital. We’ll look into this (let us know if you know more). Meanwhile, Primack also mentions that Bob Grady, who has led venture capital activities for The Carlyle Group, an investment firm with close ties to the Bush Administration, is moving into a lesser role. It’s part of a larger transition happening at the firm. The firm has lost two partners, and it replaced them with Nick Sturiale (formerly of Sevin Rosen Funds) and Greg Rossman (formerly of Pequot Capital). According to Primack, it also has hired Jeb Miller as a principal. Miller was previously ousted from ComVentures when that firm merged with Velocity Interactive Group.

Technorati and b5media to merge? — Seems like an odd idea to merge a company like Technorati, which searches and ranks blogs all across the web, with b5media’s network of 340 topic-oriented blogs. Wouldn’t the result be b5-biased Technorati rankings? Anyway, the merger is off because of personality differences and accounting issues, apparently.

The future of social networking: Watch this space — Social networking executives, investors and pundits sounded optimistic at a panel held on Microsoft’s Silicon Valley campus yesterday afternoon. There are still issues with making networks profitable, but that will come with time, panelists said. The discussion was part of ReMix, a follow-up to Microsoft’s big Mix conference earlier this year. The award for best quote goes to Dalton Caldwell of imeem (pictured), who said about Facebook founder Mark Zuckerberg, “I think Zuckerberg is calling the shots for our industry, and when they launched a platform, our heads exploded.”

Electronic Arts and Take-Two Interactive continue to trade barbs as EA extends takeover offer — More here. Our previous coverage here.

Quality-video site Hulu coming to mobile? — It’s been talked about before, and chief executive Jason Kilar implied as much again during a recent talk. Of course, there are already mobile competitors. YouTube has its own mobile site, while startup MyWaves has a deal with media conglomerate Viacom to be the sole provider of mobile Viacom videos.

“‘Crazy guy’” thinks CNN’s web site is about to be attacked by Chinese computers — more here.

Imeem, the popular social network for music sharing, has acquired music site Snocap, which lets bands set their own licensing terms for music downloads.

The deal was expected; we covered early reports here.

Imeem had already partnered with Snocap, we reported last year, to pay a share of ad revenue to music content owners using Snocap’s technology.

According to the company’s statement today:

This acquisition provides imeem with powerful content identification technology, a comprehensive Digital Registry and an enhanced team of executive and engineering talent. Additionally, the SNOCAP acquisition expands the mix of products and services imeem offers to artists and music labels, giving them new opportunities to market, promote and make money from their music through widgets and applications.

Financial terms weren’t disclosed.

Snocap has 110,000 users of its MyStores product, among unsigned and unaffiliated artists, and independent and major record labels. They include The Rolling Stones, Coldplay, Diddy, Nickelback and The Shins.

MySpace nearing deals with music labels — Before long, MySpace may be offering streaming music and ad-supported downloads from Sony BMG and Warner Music Group, according to a report from the NY Post. A deal with the two music giants might challenge the dominance of Imeem, which has so far held the advantage in its deals with the four music majors.

Tudou.com raises another $53M, maybe — The Chinese video portal Tudou.com may have picked up $53 million, raising its lifetime total to $81 million, according to news site SinoCast. That wasn’t quite enough for peHUB, which made some calls and was “peppered” with “no comments” from previous investors. Primack suggests that the company may be nervous about an upcoming government penalty, but is likely just tardy in announcing the funding.

Mixx makes top users even more powerful — While the social news site Digg has moved to limit the power of its top users, newer, smaller competitor Mixx seems to have the opposite idea. The site, which calls its top users “Super Mixxers”, has given them the ability to tag news stories as “Breaking”, effectively forcing those stories to display on the front page. Giving the most devoted users more powers essentially makes them the editors of the site, a risky move that other sites have so far avoided.

Xerox begins offering carbon calculator for business — What kind of environmental footprint does the paper use of your office cause? What about using the printer? Xerox has unveiled a new “Sustainability Calculator” to let you know. Of course, nothing is free in life, and becoming sustainable might involve buying some of Xerox’s newest products or availing yourself of their “document outsourcing” service. In the long run, though, getting rid of that old ice-cream cart-sized printer might both help the environment and save money. Get an earful on why from some Xerox spokespeople, here.

Founder’s Co-op starts seeding Seattle-area companies — The co-founders of ill-fated local site Judy’s Book have learned from their lesson, and decided not to start a new company. Instead, the two have opened the Founder’s Co-op, a $2 million fund for seed-stage companies in the Seattle area. Investments will range from $10,000 to $250,000, no doubt served with a side of hard-earned wisdom. Read more at the Seattle PI.

Celebrities are the sign of the beast bubble — Taking a trip down memory lane, GigaOm recalls massive fundings of sites started by actors, musicians and sports stars in the dotcom era — then compares them with recent investments into IBeatYou (coverage here), which has received investment from sports stars, and Skispace, owned by a ski champion. “There might be more such celebrity social-something-video-whatever efforts lurking … when you read about them, well, you know the end is near,” says Om. Then again, we survived the launch three weeks ago of MC Hammer’s DanceJam, so maybe the internet is more resilient this time around.

Viewdle takes first investment from Dubai fund — Viewdle, a company that’s working on a video search technology based on facial recognition, has raised an undisclosed first funding from Dubai-based investment group KIT Capital, according to VentureWire (subscription required). We covered Viewdle during its TechCrunch40 launch.

Imeem, a popular social network for music sharing, is acquiring music site Snocap, which lets bands set their own licensing terms for music downloads, according to TechCrunch.

No source was named, and the amount isn’t being disclosed.

Imeem had already partnered with Snocap, we reported last year, to pay a share of ad revenue to music content owners using Snocap’s technology.

Snocap had fallen on tough times recently, and it’s possible that one of its investors, Morgenthaler Ventures, decided Snocap made a good fit with Imeem, another of the firm’s investments.

Imeem also recently acquired Anywhere.fm, a Y Combinator company billing itself as “iTunes for the Web” (our coverage).

San Francisco-based Snocap, which wanted to let bands set their own licensing terms for music downloaded on the Web, is best known as the company started by Napster co-founder Shawn Fanning, although Fanning has since left to found gaming company Rupture. Struggling to find a business model, Snocap cut its staff by 60 percent in October, and was rumored to be up for sale (our coverage).

As TechCrunch and others are noting, Imeem probably prefers this outcome to Snocap going under.

Yesterday, we wrote about Kobalt Music Group, which is pursuing something similar to Snocap’s failed business model. But as we noted, there’s a key difference — Kobalt doesn’t just license music, it publishes music too.

A number of companies decided to compete with DEMO for media coverage today by announcing some rather large acquisitions:

Paypal ponied up $170 million for Fraud Sciences, which prevents online fraud;

Nokia paid $153 million for Trolltech, which helps developers build cross-platform applications;

GSI Commerce gave $157 million for E-Dialog, an e-commerce company;

Finally, Imeem bought Anywhere.fm, an internet radio service.

Here are a few notes on each:

Paypal’s acquisition of Fraud Sciences was an all-cash deal for $170 million. The company had taken less than $20 million in funding to date, from investors Redpoint Ventures and BRM Capital. Fraud Sciences tracks online buyers to pin-point suspicious behavior, and is supposed to be particularly good at detecting fraudulent overseas transactions, a particular pain point for Paypal. (Press release)

Nokia also paid cash for Trolltech, which was a publicly-listed company on the Oslo Stock Exchange, but also had investors including Index Ventures. Simply put, Trolltech’s application development framework, called Qt, makes it much easier for developers to build applications that work across both PCs and mobile phones, as well as on the web. That sets Nokia up nicely to compete with Google’s Android, which we’ve covered here. (Press release)

Neither GSI Commerce nor E-Dialog is well known locally, but the acquisition price should turn some heads for its investors, which include Flagship Ventures and Commonwealth Capital Ventures. The company had taken about $20 million in funding, according to Xconomy. (Reuters)

Imeem likely didn’t pay that much for Anywhere.fm, at least in comparison to the price of the above three acquisitions. Then again, for a three-man startup that came out of Y Combinator less than a year ago, with no venture funding, even a few million is significant. Anywhere.fm, which only ever took angel funding, has about 60,000 users and will continue to operate as its own service. It will likely benefit greatly from the business deals Imeem has made with the major music labels, covered in more depth here. (Press release)

Imeem, a Web site that offers playlists of music, has become immensely popular because it’s free — and legal. The music is ad-supported, and imeem keeps adding more music to it’s offering.

Indeed, less than five months after announcing a new distribution deal with Warner Music Group, one of the four big record labels in the United States, imeem has signed deals with all the others: Sony BMG in September, EMI in October, and now Universal Music Group.

While the labels have stubbornly clung to a direct sales model, aggressively rejecting the business plans of most websites, the consensus imeem has struck between them world proves that there is also potential for ad-supported services.

What is imeem’s secret? It appears to be offering the labels high enough payment for their streamed music, where other services, including other social networks, are still grappling with the issue of how to pay the labels. The string of deals is an amazing turnaround for imeem, which was being sued by Warner only seven months ago.

Under the deals, imeem gives each label a chunk of its advertising revenue in return for the right to freely stream any music or videos owned by the labels. (Update: It also pays out a fraction of a cent each time a song is played, according to Dow Jones.) Users upload most of the content from their own computers.

The service imeem offers is unlike radio (represented on the internet by Last.fm and Pandora) in that it allows users to make and share their own playlists, giving listeners another level of control. Imeem also supports video and pictures, most of which is also copyrighted material owned by the labels.

Other competitors like Napster have deals allowing them to use the same content, but are subscription supported. Imeem is the only service of its kind that has managed to wrangle agreement out of the large labels. (Most of the small and independent labels, which imeem also has agreements from, have signed deals with many other websites.)

Although it may appear that the labels are ready to loosen their grip on how their content is spread over the internet, that may not be the case. Only days ago, Universal enacted a 90-second rule for playback of its content on websites like MySpace, apparently worried that listeners were going online in lieu of buying a copy of a recording.

We don’t have the details on exactly how much imeem is paying the labels, but it must be a significant amount. The site’s monthly 19 million unique visitors don’t hurt in getting attention for them, either.

Founder and CEO Dalton Caldwell said the company will now seek to raise ad revenue with targeting, which will be based both on the content (the specific artist a listener is tuned into, for example) and anonymous user data like geographic location.

As in the video industry, the music industry will likely see handful of sites shaping up to be the leaders. Pandora has done well with radio, while iLike is locking in the social networking crowd. Any other sites that you think are likely to succeed? Let us know.

1) Niche job board site conglomerate OnTargetJobs buys niche job board site Jobloft
2) Vint Cerf done at ICANN, staying on at Google, etc.
3) More streaming TV startups get funding
4) Imeem signs third major label

Niche job board site conglomerate OnTargetJobs buys niche job board site Jobloft – Toronto, Canada-based Jobloft is perhaps best known for going on a Canadian game show for entrepreneurs, winning $200,000 in funding then refusing the money. By not giving up 15 percent of the company, its founders apparently kept more of the sell-out for themselves. The company (pictured) has blogged about their saga here.

OnTarget is a sort of holding company for job sites in various industry verticals, such as healthcare, hospitality and others. It works in partnership with Warburg Pincus, a private equity firm.

Vint Cerf done at ICANN, staying on at Google, etc. — Vint Cerf, considered one of the fathers of the internet for inventing the TCP/IP protocol used to handle data transmissions between computers, is stepping down from his long-time position as chairman of the board of directors at the Internet Corporation for Assigned Names and Numbers. He will continue on as the Chief Internet Evangelist at Google. He will continue his work at NASA, advising researchers on how to bring the internet to outer space and the world around us. He will continue helping to connect gadgets to the internet, through his work on the IPv6 Forum, a consortium of companies creating a numbering system to organize

Cerf tells the AP he will also go on to complete five books, including a book on poetry he has written.

More streaming TV startups get funding – United Kingdom-based Skinkers has raised $16 million from Acacia Capital Partners as well as existing investor SPARK Ventures and Skinkers’ own management team. Israel-based Imagine Communications has raised $15 million from Court Square Ventures.

Imeem, one of fastest growing Web companies, signs third major label – Imeem, a company that record labels tried to sue earlier this year because it let people share music playlists online, has just cut a deal with EMI. It already has deals with Sony and Warner, as well as a number of independent labels.

Sony BMG has become the latest music label to offer its entire music and video catalog for free streaming on imeem, a Web site focused on letting users share music playlists.

Warner Music Group did the same in July (our coverage). The deal is significant because it represents one more fissure in the once united stance among music labels to stick with a paid model and digital rights management. Increasingly, music is being streamed for free, supported by ads.

Of the four market leaders in the music space, imeem now has sharing arrangements with two. EMI and Universal Music Group have yet to cut deals with imeem. “We’ll have to demonstrate that we can provide a serious revenue stream,” CEO Dalton Caldwell told us.

Unlike Napster, which has a subscription model, imeem is supported entirely by advertising. Other advertising-based models like last.fm and Pandora are more similar to radio than imeem, playing random songs based on user’s preferences; imeem allows you to build your own playlist.

Sony will get a piece of imeem’s ad revenue, just as Warner does, and the deal will further be supported by collaborations on social networking and marketing projects.

This is a remarkable turnaround for San Francisco’s imeem, who just a few months ago was getting sued by the labels for streaming their music.

Warner Music Group is offering its entire music and video catalog for free streaming on imeem, a Web site focused on letting users share music playlists.

The music is currently live on the San Francisco startup’s Web site, the company told VentureBeat Wednesday evening.

Now imeem users can make playlists with Warner music. Warner, in return, will get a piece of imeem’s ad revenue.

So music from Depeche Mode, a Warner artist, can be played freely, for example. Press the play button on the widget below, for example, which we’ve just pulled from imeem.

This partnership is significant because it is the first time a major label has offered free ad-supported access to it entire catalog of music and video to such an online sharing site. It is also remarkable because Warner (along with other labels) had sued imeem less than two months ago for copyright infringement (our coverage; scroll down). See suit here.

Imeem has grown rapidly over the past year, bosting 16 million active users. Earlier this year, it arranged to pay a share of ad revenue to music content owners, as we reported here. It recently offered free ad-supported streaming of music from other labels, but not from the majors. Competitors such as SeeqPod (our coverage) haven’t cut such deals.

Latest action:

Evite vs. Socializr continued — The bad blood between Jonathan Abrams, founder of Friendster and now founder of online event service Socializr, and the lawyers at Evite, is worse than we realized. The bitterness started during the Friendster days, and worsened when Evite threatened to sue Socializr, saying the start-up had copied Evite’s templates and styles. Abrams now responds with a diatribe, saying Evite is a hypocrite and a bully. We’ve requested comment from Evite.

Voki makes a better avatar — Voki is the latest animated avatar service offered by Oddcast, and is designed for bloggers. It is free, and has made improvements over its former avatar product, called Sitepal, which was for businesses. You can leave audio clips by talking right into your laptop, and your avatar will speak your words from your blog. Fred Wilson, an investor the company, is pushing the company to let avatars speak the words you might leave it with a Twitter message. If you haven’t seen the President Bush avatar, check it out (you’ll have to wait a few seconds for the intro to stop, but then you can change his nose, skin, mouth, shoulders, color of eyes, skin, etc). Similarly, Voki gives you a dashboard that makes it easy to edit your own avatar. It is similar to Meez (our coverage).

Founders of best companies are in the mid-20s or earlier — That’s the observation made by Valleywag. This topic has been controversial for some time. Sequoia’s Michael Moritz has made a big deal about backing young founders. Can you argue with him? He made big money from YouTube, Google and Yahoo — all started by young founders.

Yahoo has a new CFO — Some say the banker-as-CFO heralds more deal-making, more acquisitions for Yahoo. Yahoo did look at Facebook last year, but it’s probably too late now to try again. There’s an independence and pride over at Facebook these days that suggests it may decide to go for an IPO or nothing.

More details on the backing of Jason Calacanis’ company — Calacanis, who is starting a new company called Kokua (scroll down), has gotten funding from Sequoia, as earlier reported, and also apparently from News Corp’s Jeremy Phillips and CBS, if you believe this report. We’re trying to confirm.

Google’s wants to watch you — At least, that’s what this patent filing suggests (see details). The patent would monitor your behavior in PC video games, and seek to serve you targeted advertising based on that behavior.

Amazon.com plans to launch DRM-free digital music store — The iTunes-like service is scheduled for later this year, and will sell songs from EMI without the anti-piracy technology currently demanded by most music labels. However, it doesn’t appear any different from iTunes, which has already announced it is doing the same. Amazon says it will have “millions of songs” without protection.

Warner Music Group sues Imeem — Imeem, a Palo Alto, Calif. music start-up, came out of nowhere earlier this year, boasting in March it was the fastest-growing company on the Web, with 16 million unique users a month. (Hitwise ranks Imeem fourth among multi-media entertainment sites, behind Google Videos, YouTube and MySpace Videos). Users create and share music playlists. The copyright-infringement suit from Warner Music could be bad news for the young start-up, which had labored for two years in relative obscurity until changing its model last year. The company did not respond to a request for comment. Morgenthaler Ventures, a backer, declined comment, as did another backer, Sequoia Capital (Sequoia, of course, backed YouTube, which is a target of a major suit from Viacom.) During the upload process, Imeem does issue a warning to users not to upload media they don’t own, but that wasn’t good enough for Warner.

Sony is in talks to buy online childrens’ game, Club Penguin for $450 million — Club Penguin is a company we’ve covered before — noting its excellent execution of an enjoyable game for kids centered around happily chatting penguins. PaidContent is reporting it has annual revenues of $60 million, and margins of 50 percent. The impressive part is, the company didn’t take any venture backing to do this.

VCs still trying to distance themselves from those job-cutting private equity guys — “We’re in two different industries,” says Ted Schlein, venture capitalist at the Silicon Valley firm Kleiner Perkins to Fortune. “We recruit. We help companies sell product. We do business development. [Private equity] is not an industry that can talk about creating ten million jobs.” The point, of course, is that any new tax, if there is one, as Washington is discussing, should be levied on the private equity guys.

In other news….
–MySpace announces more video channels featuring content from an array of big-name publishers, in an apparent move to go after YouTube.
–Google, without advertising — Really.
–Coupons, a Mountain View, Calif. provider of printable coupon marketing products, said it has acquired Consumer Networks LLC and its Boodle.com coupon service, from Gannett Co.
–Mozilla is experimenting with “Joey,” a service that lets you select portions of Web sites, including images, text, and videos, and later access them from a cell phone.

Updated

San Francisco start-up Imeem, a Web site focused on letting users share music and other media playlists, has come out of nowhere.

It now boasts 16 million unique users a month, and grabbing enough attention that it needs to start protecting content owners. It will announce tomorrow a partnership with Snocap, another San Francisco company, to identify the music streamed at Imeem, so that Imeem can pay a share of ad revenue to music content owners.

Snocap’s technology gives each music track a unique signature, and can identify the music when it is uploaded by Imeem users. It then gives content owners a platform to dictate the terms of their music’s use — including the right to negotiate the ad revenue share they get when a track is streamed over Imeem.

The companies said the ad-sharing model is a first of its kind. It is significant because competing sites like Google’s YouTube are struggling to come to terms with content owners.

Snocap says its registry has three million tracks.

This is a significant turnaround for Imeem, which two years ago was working on a peer-to-peer product that didn’t go anywhere.

Much of the music on Imeem comes from independent artists. But it says it has partnered with Virgin Records, Nettwerk Records, SubPop Records, Beggars Group, Domino Records and Warner Independent Pictures.

Imeem’s founder Dalton Caldwell says the site is the fastest growing on the Web, citing Hitwise statistics.

Snocap’s already powers MySpace’s music store, however Snocap chief executive Rusty Rueff says the Imeem partnership takes things a step further. The Imeem deal lets any content owner stream their content online (MySpace allows downloads). The other difference is the ad-revenue share, letting users listen to the music for free.

The two companies have a common investor in Morgenthaler Ventures.

PixSense, latest start-up to offer video compression, is hiring! — This Santa Clara start-up claims no one has been able to compress a video by 85 percent to share it via mobile phone.

It is offering such a feature to consumers and carriers. Some 90 percent of cell-phone users don’t have a set data plan, meaning they pay for bandwidth they use while sending pictures. PixSense will lower costs. It will also sell its technology to carriers, a spokesman told us. It has angel funding of $1 million and is a raising a venture round. The start-up has 30 people, and here’s the kicker: It plans to employ 150 by next year.

Veeker buys Thumbdrive, to pursue mobile video messaging — Veeker, a San Francisco company building a mobile video-message sharing service targeting young users, told GigaOM that it has acquired San Francisco-based mobile software development company ThumbJive, which also has employees in China.

Mercora, that Santa Clara radio song-sharing service, launches service for smart-phones — Mercora says its wireless music service “beat Steve Jobs to the iPhone…And we’ve beat Microsoft to the Zune.” Dubbed “M,” the service allows smart-phone users to listen to music that sits on their PCs. Further, M subscribers can share music with each other — by accessing each other’s PCs.
We wrote about Mercora here.

Piczo, another sleeper social site? — The San Francisco social networking site, which focuses on teens and photo-sharing, is boasting 17 million registered users. It has raised a total of $7 million, according to GigaOM’s Liz Gannes, who brings us an update on the relatively closed, privacy-conscious site. (We’d reported earlier only $4 million raised). Sierra Ventures and Catamount Venture are the backers.

PayPal prepares a way for users to store files — Techcrunch has the skinny on the yet-to-be released service, called DropBox, which creates a secure storage area within a user’s account. We called PayPay, and there is no intent to create a digital distribution platform of any kind. It is merely offering what most mainstream payment providers do, including a way to batch-process payments instead of settling one payment at a time, said spokeswoman Sara Bettencourt. She declined to provide more details.

Cynical blog Dead20, which has covered the valley’s Web 2.0 companies with scorn, is down — It has an error message saying “Bandwidth limit exceeded,” after the author, who has been writing in anonymity, is all but outed.

Facebook founder puts Microsoft on hold — The WSJ, in its recent story about Facebook, reported how Facebook executives told their Microsoft peers “they couldn’t do an 8 a.m. conference call because the company’s 22-year-old founder and chief executive, Harvard dropout Mark Zuckerberg, wouldn’t be awake, says a person familiar with the talks. Microsoft executives were incredulous.”

No surprise here. We, too, remember showing up for an interview at Facebook last year at 10am, and having Zuckerberg show up late. Only Facebook co-worker Matt Cohler was in the office, who told us some engineers had only just left after working through the night.

Remember Imeem, the company that lets you share your desktop contents directly with others? — It is raising money. It has also changed its business strategy. We’ll report more soon.

AdMob, a company that sells advertising on mobile devices, said it raised $3.6 million in its first round of venture funding — We reported earlier on the funding, but the SF Business Journal has the exact amount.

This story about ITU is a tragic one, and a lesson for us taxpayers in California to be vigilant about how the state deals with venture capital firms.

A few weeks back, we reported on the failure by the Southern California-based venture firm ITU to raise a new fund. The failure, we reported, was sparked in part by Harvard’s decision to pull its money from the firm.

Now a story in the LA Times tells us why Harvard took that step. ITU had suggested its portfolio companies, including three in California (the start-ups aren’t mentioned by name), give donations to political candidates the firm was friendly with, including California Controller Steve Westly. This is tragic, because by all appearances, it was an effort to manipulate Westly to be friendly to ITU, which was dependent on large pension funds where Westly was influential as a board member, and even more influential had he won the election (i.e., as governor, you have a role in picking board members for the funds). More importantly, it is state money that would be supporting ITU.

The guys at ITU, defending themselves, say they merely made suggestions that the portfolio companies make donations, and no pressure was intended. This is silly, because there was enough pressure on the companies for them to start griping about it. They even approached us about it.

The LA Times should be commended for reporting this story. The tipster who gave us the original story about ITU’s problems stayed on the phone long enough to suggest we look into “political donations” made by its portfolio companies. We sniffed around a bit, but without any further leads, we couldn’t get very far and let it drop.

But the LA Times did not make explicit, except for a brief mention at the bottom of the story, the real reason this story looks like a scandal. ITU was dependent on investors such as the huge California state pension funds (CalPERS, CalSTRs) for its money. This is significant because we, the Mercury News and others fought hard, and successfully, in 2003 for appropriate disclosure rules — including a demand that the financial performance of companies like ITU be disclosed. This helps ensure that only good-performing firms receive state money, and not mediocre ones dependent on political contacts for their money.

Disclosure of performance results may not be enough. The LA Times references to political relationships at the bottom of the story are concerning, and makes you wonder:

TU’s principals and associates have given $19,500 to Westly and $20,000 to state Treasurer Phil Angelides, who defeated Westly in the June gubernatorial primary. These donations are not in dispute.

Westly spokesman Russ Lopez said the controller has met with Brownstein privately — including meetings in New York, where Brownstein introduced the controller to other potential donors…