VentureBeat

[Update 7/25: Tagged's Greg Tseng has gotten back to us and said there has been no funding and that the TechCrunch article "was entirely false."]

Tagged is rumored to have followed Hi5 in raising a large amounts of cash to try to conquer the social network global market.

Tagged, of San Francisco, has raised $15 million, on a reported $102 million pre-money valuation, according to Techcrunch, meaning investors value it at $117 million. Investors weren’t disclosed.

The race is on. Moreover, the timing of the latest investments is likely no coincidence.

Google saw 47 percent of its ad revenue from international markets during the first quarter. Investors are betting social networks are going to see strong growth abroad. Hi5, in particular, is already quite active internationally. Moreover, some investors looked at both companies, we’re hearing. When one group decided to back Hi5, the other may have signed with Tagged, though that’s just speculation on our part.

Hi5 and Tagged are the third and fifth largest social networking companies respectively. They have both lost U.S. market share dramatically over the past year, according to Hitwise (see table at left, and method description below; the data is open to lots of questions).

Here are the top seven networks, according to Comscore data on unique users globally for May. We’re trying to get June figures, and will update.

1. MySpace
2. Facebook
3. Hi5
4. Friendster
5. Tagged
6. Bebo
7. Piczo

Update: We’ve just gotten June figures from Comscore. We’ve inserted the chart below, which includes a range of sites not associated with full-fledged social networks, but categorized as such by Comscore’s broad definition. You’ll note that Tagged, for some reason, has fallen off the list.

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Hi5 and Tagged had raised the least amount of money among the top seven networks, especially Hi5, which had raised to less than $1 million previously. This makes their accomplishments all the more impressive. Both companies are profitable, based on advertising. Last night, we reported that Hi5 had raised $20 million more. Tagged had previously raised $8.5 million from Mayfield and angel investors.

Myspace is now part of a public company. Facebook and Friendster (see our recent coverage of that company’s fast growth lately) have each raised much more money in the past. Piczo raised $11 million earlier this year. Last year, Bebo raised $15 million from Benchmark Capital

We just talked with David Feinleib, of Mohr Davidow Ventures, who led the venture firm’s investment into San Francisco’s Hi5. He wouldn’t comment on the coincidence of the timing, but did say his firm had looked at Tagged too. He said there are very few companies that have been able to round up tens of million of users, and that his interest in Hi5 came from its international exposure and scrappy ability to grow despite very little backing. Feinleib says the company has a chance to get to 100 million users worldwide. It has a team of almost 40 employees.

Some have remarked that both companies, in particular Tagged, have used aggressive marketing tactics to sign up customers, making it very difficult not to spam friends with invites during the registration process, for example. It convinces new users to reveal their contact lists, and then sends invites to each of the contacts. VentureBeat has been trying to talk with Tagged about this policy for sometime. Tagged’s chief executive, Greg Tseng, told us in early June he was “in the middle of a huge deal.” and would talk when he came up for air.

We’ve put in a request for comment and will keep you posted when we know more.

Note on Hitwise data - This is what Hitwise tells us about the data. It “is based on a custom category of 21 of the leading social networking websites ranked by US market share of visits, which is the percentage of online traffic to the domain or category, from the Hitwise sample of 10 million US Internet users. Hitwise ranks more than 1 million unique websites on a daily basis, including sub-domains of larger websites. Hitwise categorizes websites into industries on the basis of subject matter and content, as well as market orientation and competitive context.”

Here’s the latest action:

Feed Crier gets bought — Feed Crier, the service that lets you subscribe to blogs or other content within your instant messenger (IM), has just been bought by IMified. That company, meanwhile, says it plans to do more on mobile front. It’s just the latest in a crazy-full day of IM stuff.

VCs have produced less profit than they invested, since 1997 — In other words, the industry is negative for the past decade. The vast majority of profits come from a few dozen firms. Other firms are bleeding red ink. See NYT story: For instance, in the first nine months of 2006, venture firms invested $20 billion but paid out $10 billion; in 2005, they invested $23 billion but distributed $20 billion… Diana H. Frazier, a managing partner of Flag Capital Management, a limited partnership, who mediated the limited partner presentation at the venture capital association meeting, estimated that from 1986 to 2002, only 32 firms accounted for 56 percent of money distributed. Ms. Frazier and other limited partners said the success for investors depended on being among the top-tier firms. “This is an access class, not an asset class,” she said.

Facebook has launched classifieds — It’s called Marketplace, and it launched this weekend. We’ll be writing about it more. For now, here’s the NYT story. It will allow users to create classified listings in four categories: housing, jobs, things for sale, and other. Facebook told us over the weekend that Oodle and Jobster do not have exclusive classifieds relationships with Facebook, despite previously announced partnerships. Jobster does offer job related products that go beyond Marketplace’s listings. Facebook users who create classifieds can show them to only chosen friends or to anyone in one of their “networks” — their high school, college, company or geographic region. They can choose to make the listings appear on their profile pages, and send them out on “news feeds,” the automatic updates that appear when users log in to the site. Buyers will be able to see how they’re connected to sellers. Get ready for some serious Facebook road-kill: The handful of stand-alone college classifieds start-ups (we hinted this might happen, here).

MySpace announces “Take Down Stay Down” — MySpace said it is using the technology of Audible Magic, a Los Gatos, Calif. company to prevent users from re-posting video content at MySpace after that content has been removed at the request of the copyright owner. MySpace is the first company to launch this feature. Google reportedly also has a deal with Audible Magic, and says it offer similar filtering technology at its YouTube property, but hasn’t commented on specifics. It’s hard to believe YouTube’s traffic won’t get hit when it implements the technology.

Sergey Brin, Google co-founder, gets married — …quietly, to his girlfriend, Anne Wojcicki, in the Bahamas last weekend. Story here. As mentioned before, Wojcicki is a biotech analyst who just started her own company. She’s a Yale graduate in her early 30s. Her sister Susan rented her Menlo Park, Calif., garage to Brin and Larry Page — which became Google’s first office.

Last.fm announced video service — Here is the company’s announcement. Last.fm has gotten buzz for its music recommendation technology, and social networking that lets you connect with users with similar tastes. It will let users create personal videos channels, just as they can create music channels. Recommendations will come from its partnership with indie labels such as Ninja Tune, Nettwerk Music Group, and Domino. Now people are calling Last.fm the “MTV of Web 2.0.”

Tagged fastest growing social network? — Michael Arrington has an update about the Silicon Valley social network, Tagged, which is now profitable, and perhaps the fastest growing. However, it’ll be worth checking back to see if it is sustainable, because the traffic spurt happens mainly over a single month.

Shopping widget mania — Seattle’s Mpire is rolling out about 80 new e-commerce “widgets,” which allow bloggers and publishers to post shopping related content on their sites and make money by passing leads onto Amazon.com and eBay. More details here, by John Cook. The company is similar to Tumri (see our coverage).

Child porn ring on Second Life — Bizarre, but serious.

Wallstrip, a financial video site, sold for $5M? — So say the rumors, but venture capitalist Fred Wilson is emphatic he did not invest $500,000 into the company.

Amazon’s stealth company, Lab126 — The company appears to be focused on digital media for consumer electronic devices. And its president is Gregg Zehr who was VP of Hardware Engineering at PalmOne, VP Engineering at VA Linux and VP PowerBook Engineering at Apple.

Car engine redesign may reduce pollution — See story here, about Purdue researchers who say they’ve created the first computational model to track engine performance from one combustion cycle to the next for a new type of engine that could dramatically reduce oil consumption.

Clean-tech sector summarized — Here is a good summary of details from the Lux Report.

China is out of control — Pundits have been shouting “China bubble” for years, only to see China keep growing with no major setback. This time, though, the mania has hit and China appears headed into the equivalent of Silicon Valley’s euphoric bubble and burst. The stock market has tripled in value since early 2006, and is up 51 percent this year. There’s talk of shares in China’s Bank of Communications jumping 50 percent on first-day IPO trading Tuesday.

Blackstone’s bridge too far? — Orbitz, Blackstone’s latest IPO candidate, does look shaky. See Gigaom story here.

Google’s strategy in three words: “Our next strategy evolution is to really think about three components,” Mr. Schmidt said, in comments picked up widely. “Search, ads and apps.”

Who’s afraid of Google? — That’s the headline screaming from the San Francisco Chronicle, featuring a graphic of a scary Google creature. The real answer, of course, is that Chron itself just as scared of Google as the start-ups it writes about — reeling from a decline in advertising and more layoffs.

iPhones coming earlier — They’re already being sold on eBay for more than $1,000, and apparently coming June 14 or earlier

Blackberry fans, check out the Curve — Slimmer than the 8800, but fatter than the Pearl. Details here. No launch date or pricing yet, but it will launch with AT&T.