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You can blame the popularity of YouTube for the success of Solarflare Communications. Because demand for internet video keeps on growing, the need for infrastructure to handle the growth is also on the rise.

Solarflare Communications has raised $26 million in venture capital for its high-speed networking chip business as part of an effort to create more energy-efficient data centers.

The Irvine, Calif.-based company is creating 10GBASE-T chips, which can transfer data at 10 gigabits a second over the Ethernet protocol. Such chips are used in servers and switches inside data centers to boost the transfer of data from one piece of hardware to another with the lowest power consumption.

The company is in a good spot because it is the first to capitalize on a generational shift in networking, as network speeds move from 1-gigabit-per-second to 10-gigabits, said Russell Stern, chief executive of Solarflare (pictured below).

The round includes previous investors such as Oak Investment Partners, Foundation Capital, Accel Partners and Amadeus Capital Partners. The round slightly exceeds the amount raised by rival chip company Aquantia, which raised $25 million in March.

Solarflare was started in 2001 as a chip design firm focused on 10-gigabit Ethernet networking. In 2006, it merged with Level 5 Networks in Cambridge, England. It started shipping a low-power 10GbE vNIC controller/MAC chip in February 2007.

Solarflare said it will use the new money to launch its next-generation products, including a low-power 10GBASE-T PHY. The company hopes to dominate 10-gigabit networking the way that Broadcom and Marvell have dominated 1-gigabit networking.

“The interesting thing about networking is that no player has dominated more than one generation of product,” Stern said.

The U.S. Environmental Protection Agency (EPA) reports that national energy consumption by servers and data centers could nearly double by 2011 to more than 100 billion kilowatt hours, representing a $7.4 billion annual electricity cost.

With technologies such as Solarflare’s networking chips, it becomes easier to shift data to outlying sites with greener energy sources, such as solar or wind power. The computing of data can happen at those locations in a more energy-efficient manner than inside a power-hungry data center, said Andy Hopper, a fellow at Corpus Christi College and head of the Computer Laboratory at the University of Cambridge, Cambridge, UK.

The latest investment brings the total amount raised by Solarflare (and its acquired entity, Level 5) to over $126 million in seven years. Solarflare’s partners include Accton, Citrix, Delta, Ixia, Panduit, SMC and VMware. The company has 125 employees.

Here’s the latest action:

The Associated Press to blogs: Don’t quote us — The Associated Press has demanded that The Drudge Retort (not to be confused with much more famous Drudge Report) take down several blog posts containing excerpts of AP stories. The objections sound pretty silly — the longest excerpt was 79 words long, and quoting and linking other articles is a popular blogging practice. AP Strategy Director Jim Kennedy’s response that the excerpts were “more reproduction than reference” isn’t particularly persuasive. Kennedy later told the New York Times that the AP’s response was “heavy-handed,” but, strangely, he said the organization isn’t backing down from its initial takedown request.

Google reveals escape clause from Yahoo partnership — It looks like Google’s deal with Yahoo, through which Google will serve ads to Yahoo’s search results, is even better for Google than was initially apparent. According to a filing with the federal Securities Exchange Commission, if the partnership ever makes less than $83.3 million in four months for Google, the search giant can terminate the agreement. TechCrunch spotted the filing, and pointed out that it’s a pretty low threshold: Yahoo makes $1.3 billion every three months. Still, here’s another reason to believe that it’s a better deal for Eric Schmidt than for Jerry Yang.

Yahoo exec Weiner joins venture firms as EIR — Speaking of Yahoo, the company has lost another executive. Jeff Weiner, who was most recently in charge of core products like Yahoo.com, Yahoo Mail and Yahoo Messenger, left to be an entrepreneur-in-residence at Accel Partners and Greylock Partners, according to the Los Angeles Times. Weiner follows Andrew Bracchia, another Yahoo executive who left for Accel last year. Google just lost a big name as well: chief litigator Michael Kwan left for the nonprofit Electronic Frontier Foundation.

Google creating new services to fight for net neutrality — The network analysis tools will allow normal users to see if their Internet service providers are abiding by “net neutrality.” In other words, you’ll be able to make sure your ISP is giving you the best connection possible to the entire Internet, not just to websites that pay for better service. A Google policy director mentioned the project during a panel discussion on Friday.

XM/Sirius merger close to a done deal – The merger between the two satellite radio companies has just been recommend for approval by the staff of the Federal Communications Commission, meaning it’s unlikely at this point that the government will stop the deal.

Streamzy lets you search for music videos — Music startup Streamzy, which launched into the crowded online music market just a couple of weeks ago, has added some new features it hopes will set it apart from the competition: It has integrated video searches through YouTube and AOL’s Truveo. One of its competitors, Seeqpod, is already integrated with YouTube, but the ability to stream music performances via Truveo is something none of the other search engines are doing yet. Streamzy also plans to offer music and ringtone purchases shortly and to add playlist-sharing capabilities.

Orgoo to offer webmail service to existing social networks – The startup, previously known for a site that integrates email, instant messaging and SMS text messaging, will try to sell networking sites like Facebook and MySpace a solution that allows users to check their various email accounts through the social network.

[David Adewumi contributed to this article.]

Yodlee, an online finance web platform that directly serves banks and other financial institutions, has raised a large round of $35 million, led by banking giant Bank of America.

Although Yodlee has been something of a dark horse while popular personal finance sites like Mint have taken the spotlight, the company’s apparent success could indicate a more difficult road than anticipated for their competitors in the personal finance market, including Buxfer, Geezeo, Wesabe and many others.

The basic idea behind Yodlee is aggregation. The average American has 12 financial accounts of various types, according to CEO Anil Arora, and there are thousands of different services on offer, from banks to stock accounts. Yodlee got its start in 1999 as an aggregator of all the information from those different account types.

Today, it offers something called the Personal Financial Management Suite, which Arora called “a better, faster, easier Quicken online.” That product, in fact, is the back-end for Mint, which adds its own custom touches to help users understand where and how their money is distributed. However, it’s also used a growing majority of the country’s largest banks.

That should be worrying for independent finance sites. Most banks were very slow to add any online functionality beyond showing account balances and a list of transactions. That’s what provided an opening for personal finance sites to start up — consumers obviously want to see all the information from their various accounts in one place, arrayed in ways that are understandable. But banks are beginning to catch on, Arora says, and add the same tools to their own sites.

Given that the motivator for most people to seek out a personal finance site is a desire for things to be as easy as possible, if banks begin to aggressively use tools like Yodlee, there will be less incentive for their customers to seek out Mint and its cohorts, even if those sites continue to have an edge in visualization and functionality. In fact, Yodlee itself has only 50,000 users on its own personal finance portal, compared to 10 million who unwittingly use it through a bank.

Interestingly, Yodlee’s other big product, a recently-released bill payment solution, also sounds like a potential PayPal competitor down the road. Aside from the obvious function of paying bills from your utility, internet provider and other companies, it can transfer money between your various accounts.

Arora said you can also pay individuals, like your maid or gardener (if you’re lucky enough to have them). When I asked whether the service could be expanded, he only agreed that “other payments” could be addressed, but added, “Obviously, a lot of financial institutions are very interested in expanding transfers.” That seems to imply that other payments, for instance to a store or online auction, could be arranged in the future.

The funding, led by BoA, also brought on previous investors Warburg Pincus, Accel Partners and Institutional Venture Partners. Yodlee recapitalized with $40 million in 2002, making Warburg the primary shareholder; combined with the current funding, it has taken $75 million. It’s based in Redwood City, Calif.

updated

Since its launch in 2006, software from a Seattle startup called Wetpaint has been used to build nearly a million wikis where a company’s customers and fans create the content. That’s pretty impressive, but Wetpaint chief executive Ben Elowitz says some companies weren’t satisfied — it would be even better if they didn’t have to create the wiki on a separate site.

Wetpaint addresses that need with its new release, dubbed Wetpaint Injected, which does exactly what the name says — it injects wiki functionality into any webpage. So rather than creating a separate page for, say, a VentureBeat fan community (hey, it could happen), we could allow our readers to update our stories by adding wiki-style entries to the main page. And that, Elowitz says, improves traffic and search engine optimization to our main site, rather than pulling users to another page. (See screenshot of Wetpaint Injected at the game site IGN, below.)

When we wrote about Wetpaint more than a year ago, we were most impressed with its convenience — it was just really easy to set up a new wiki. The company has carried that approach over to its new product; Elowitz says the new functions can be added by just pasting a short snippet of code to a webpage. At the same time, the user-generated content’s look and format is customizable and should blend in with the rest of the page.

This is a smart move, and should further help Wetpaint stand out from competitors like PBWiki. As more and more sites add features — wikis, comments, polls — that allow them to interact with their readers, it makes sense to integrate those features as directly into the main browsing experience as possible. And the ability to add wiki capabilities to any page with just a few lines of code is totally unique, Elowitz says.

Companies should also be attracted by the fact that the feature is free for up to 100,000 impressions per month, and then charges based on a revenue-sharing model.

Elowitz says Wetpaint’s approach has already started paying off, with 925,000 websites built on the company’s platform and 20 percent growth in recent months. But he also says it’s time for the company to start growing more aggressively, which is why he’s raised a $25 million third round of funding, bringing Wetpaint’s total financing to $40 million. That’s a hefty sum, particularly when you recall that we were already startled by the size of Wetpaint’s $9.5 million second round. But Elowitz says the funding matches the company’s ambitious plans to “wikify” every page on the web.

The round was led by DAG Ventures and an undisclosed investor, with participation from existing backers Accel Partners, Trinity Ventures and Frazier Technology Ventures.

Update: Kara Swisher reports on yet another investor, Fidelity Investments (perhaps that “undisclosed” lead investor that Wetpaint mentioned?). Fidelity is the same major institutional backer that invested big bucks into Slide. And in the comments below, PBWiki’s Chris Yeh notes that his startup offers a similar feature, but hasn’t emphasized it.

Where is technology headed?

The Churchill Club of Silicon Valley just wrapped up one of its most anticipated events: the Annual Top Ten Tech Trends Debate. Five well-known and opinionated venture capitalists weighed in on what trends will take flight and what trends will fizzle out in the months ahead.

(The VCs are pictured, from left to right: Steve Jurvetson, Vinod Khosla, Josh Kopelman, Roger McNamee, Joe Schoendorf.)

The audience of around 300 people was asked whether it agreed or disagreed with the VCs’ predictions. I’ve ranked them below, according to how well they were accepted by the audience.

Last year’s predicted trends included a shakeout of Web 2.0 companies and the rising economic power of Brazil, Russia, India and China.

Trend 1: Customer data stored by different service providers will be combined to create more intelligent services. Josh Kopelman, managing partner at First Round Capital, a seed-stage venture fund, who founded online retailer Half.com (sold to eBay after a year for $300 million) said such customer data includes your financial records, dinner reservations, preferences in the iTunes store, random searches on Google and much more. In this way the Internet goes from satisfying explicit user needs (like searching for a friend to add on Facebook) to satisfying implicit needs (like telling who you should add and why adding them would be helpful to you).
Audience: 95 percent voted “Yes”.

Trend 2: Oil will have increasing difficulty competing with biofuels made from cheap non-food crops for transportation. Vinod Khosla (pictured left below, beside Kopelman), founder of Khosla Ventures, which focuses on alternative fuels and green technologies, said coal will become less competitive compared to reliable solar thermal and other alternative energy sources.
Audience: 90 percent voted “Yes”.

Trend 3: Water technology will replace abating global warming as a global priority. Joe Schoendorf, partner at Accel Partners, previously vice president of marketing for Apple, said the world is running out of usable water and this will kill millions more people in our lifetime than global warming.
Audience: 80 percent voted “Yes”.

Trend 4: The mobile device industry’s migration to smart phones will produce great disruption for big industry players. Roger McNamee, co-founder of Elevation Partners together with U2 lead singer Bono, and early private equity investor in technology, said the disruption will exceed what the PC industry experienced as it moved from character mode to graphical interfaces. Shifts in the competitive balance will hurt Motorola, Microsoft and probably LG Electronics, Samsung and Sony Ericsson. Apple, Nokia, Palm and RIM will do better. [McNamee's firm is an investor in Palm]
Audience: 75 percent voted “Yes”.

Trend 5: Booming market for healthy aging technologies Steve Jurvetson, managing director of Draper Fisher Jurvetson and well-known for his founding investment in Hotmail, said a booming market in such technologies will allow people in their 60s and beyond to continue working and living a good life. Every 11 seconds, a baby boomer from the 1940s turns 60. These people have time and money and are Internet-savvy, so they represent an enormous market for services like mental exercise programs and online education in various topics. It fits into a larger vision that could also include an eBay for information services that exceeds the market for physical goods.
Audience: 70 percent voted “Yes”.

Trend 6: Four-fifths of the world population will carry mobile Internet devices within five to 10 years. Schoendorf said mobile Internet devices are rapidly becoming the leading device category.
Audience: 50 percent voted “Yes”.

Trend 7: Algorithms will be constructed to develop new industrial chemicals, new biofuels and eventually artificial intelligence. This was Jurveston’s prediction.
Audience: 50 percent voted “Yes”.

Trend 8: The mobile phone is your most important device. This prediction by Khosla is similar to Trend 6, but he predicted an even more intimate connection with the phone: Mobile phone applications will extend beyond e-mailing to include a virtual credit card, your ID, access to location systems and personal information filing systems. If you lose your phone, your data on it will all be backed up on a network so that you can load it all on to a new phone. Ten years ago people thought it would be ridiculous to have a camera in your cell phone, in two years you will have two cameras per phone – one for taking photos of yourself, and one for taking photos of others.
Audience: 40 percent voted “Yes”.

Trend 9: There is going to be a venture capital shakeout. Lower costs and barriers to entry for startups will have a dramatic impact on the venture capital industry and lower returns. This was Kopelman’s prediction.
Audience: 40 percent voted “Yes”.

Trend 10: Within five years everything that matters to you will be available on a device that fits on your belt or in your purse. This was McNamee’s prediction, and it’s similar to Trend 8. This will cause a massive shift in Internet traffic from PCs to smaller devices.
Audience: 30 percent voted “Yes”.

[Photos by Cecilia Aronsson]

After years dominated by lumbering giants like Peregrine Systems and BMC Remedy, the customer service market is ripe for innovation, say executives at a startup called Parature. The company bootstrapped itself for several years, but chief executive Duke Chung sees a coming “land grab” as more companies enter the field and start targeting the smaller customers who have traditionally been ignored.

In order to keep up with the competition, Parature has been raising substantial amounts of cash — a $13.5 million first round back in 2006, and now $16 million led by Accel Partners.

The Vienna, Va. company says that through its software-as-a-service model and multi-tenant server architecture (in which a single server is used by several companies at once), it’s able to provide customer support software at a much lower price than the competition, putting it within reach of smaller startups that would normally just use email and in-house solutions. That setup also allows Parature to deploy and update its product much more quickly than traditional companies.

The startup has been refining its core product for several years, which emphasizes the customer service “portal” it creates for each client. By creating an easy-to-navigate site where users can find the information they need, and where members of the community can help each other through forums, Parature “deflects” numerous requests, freeing customer service representatives to focus on longer-term issues like improving the portals.

(There are other startups trying innovative approaches to customer service too, such as Satisfaction, a San Francisco startup that allows consumers to drive the service process.)

Accel Partner Rich Wong describes Parature as a company with the potential to become “the Salesforce.com of customer service” — namely, the pioneer and leader in providing customer service through a SaaS model. He was also impressed that, unbeknownst to him, several Accel companies like Trulia and Coremetrics were already using Parature.

Parature’s background is in many ways a classic startup story. Its founders, who initially saw Parature as a way to deliver tutoring software, started the company in a Cornell dorm room. Although its early offering was little more than instant messaging software and service, Parature started building momentum early on; a division of Hewlett Packard was its 14th customer, and started paying before the team had left that dorm room.

That momentum has continued building — the Vienna, Va.-based company now boasts more than 650 customers and has helped served around 10 million customer service requests to date. Much of that demand comes from Linden Lab, the company behind the enormously popular virtual world Second Life.

The company was already pretty successful in 2006, when it had around 300 customers, Chung adds. But he and his cofounders realized that they were losing potential clients to the larger salesforce of competitor RightNow, and if they wanted to continue growing, they needed to bulk up Parature’s sales team too.

“We were losing deals because we weren’t at the table,” Chung says.

He says his long-term goal is to one day make a similar boast to McDonald’s — “I’d like to eventually be able to say we served 1 billion customers.” That’s a distance off, but it sounds like Parature could one day make that dream a reality.

Existing investors Sierra Ventures, Valhalla Partners and angel investor Ching-Ho Fung also participated in the new round.

updated three times

Xiaonei, the company that likes to call itself the “Facebook of China” has raised a whopping $430 million from financial backers, VentureBeat has learned from the company’s investors.

The backing gives it a larger financial warchest than Facebook itself, and sets the scene for a showdown with the American company. Facebook has just started to get serious about entering the huge, fast-growing Chinese market.

The backing of Xiaonei could be a statement that the company intends to fend off China from Facebook’s advances. Xiaonei’s site sports the soothing blue border colors almost identical to Facebook’s; its thus not entirely surprising that Xiaonei would also copy Facebook’s ambitious fundraising strategy.

Recently, Facebook took $100 million (in two tranches) from Hong Kong business mogul Li Ka-Shing, in what is widely considered a strategic move to get help to enter that market. Facebook hasn’t entered China yet. But Ka-Shing’s company, Hutchison Whampoa Ltd, runs everything from major port facilities to mobile, location-based 3G services in China and other countries — all of which could be attractive to Facebook in China’s vibrant mobile market.

Xiaonei is owned by Oak Pacific Interactive (OPI), a holding company with a number of online communities.

The lead investor in this latest round is SOFTBANK Corp.

The huge investment in OPI translates into about 35 percent of the company, according to its investors, meaning the overall company is now worth more than $1 billion on paper. But that’s still far less than Facebook’s value — which is $15 billion, at least based on the value Microsoft gave it when the giant backed Facebook last year.

Facebook has raised $378 million in total over several rounds, including from venture firm Accel Partners, which has also invested in OPI.

While the investment was made into OPI, the money will mainly be used to helping expand Xiaonei.com, the company said. Xiaonei is China’s largest social-networking site. Two other groups, SBI and JOHO Capital, participated in the funding.

Xiaonei.com’s features include include multiplayer gaming and wireless services for mobile users. In the college market, Xiaonei.com claims a dominant market share, but hasn’t released any specific user data [update: Xiaonei had "22 million registered users and 12.7 million daily users by March," reports Communication Information, cited via Pacific Epoch. Xiaonei had 280 million page views in March, according to the report. Thanks to Christian, from comments.]

It’s true, though, that in China, there are few Facebook-like sites. Most social sites are like MySpace, where people are freer to use false identities. OPI also owns and operates Mop.com, the largest entertainment portal, and Donews.com, one of the leading IT blogging services in China.

Oak Pacific also announced that Masayoshi Son, chief executive of SOFTBANK Corp. will join the board.

Existing investors of OPI include General Atlantic, DCM, Technology Crossover Ventures, and Legend Capital. OPI had already raised $48 million from those investors two years ago.

Update: I just talked with David Chao, a partner at venture firm DCM and early investor in OPI, and one of its six board members. When I asked him about the Facebook clone-like blue color, Chao said he thinks the blue “looks like IBM to me.” He added that most sites these days are either blue, green or orange.

Chao was on the board two years ago when it decided to acquire Xiaonei, at the time a small startup. OPI invested heavily into the company, to make it a Facebook-like site. When combined with the traffic of OPI’s other property, Mop (which is more like a MySpace), they make up China’s fourth most visited site in China.

Notably, Chao said the company is cash flow-positive, meaning it didn’t really need to raise money. But Chao said that, after some debate, the company decided to “put the pedal to the metal, and really dominate the market,” he said.

As for Facebook, Chao said he doesn’t see the companies competing closely short-term, because Facebook isn’t even present in China. He noted most strong Chinese companies are home grown, from Alibaba, to 51Job, Baidu, Ctrip and Sina. “There might be an exception, but history tells us there’s not going to be too much to worry about an outside, non-Chinese born company taking a big chunk of the Chinese market.”

Update II: Reuters and WSJ are reporting the investment was only $96 million, but they seem to have gotten it wrong. There was also a reference to warrants, which is also wrong. Here’s what I think happened: They must have taken an Nikkei article about the investment (which referred to yen) and converted to dollars mistakenly. The Nikkei article refers the company’s draw of $100 million, as the first tranche of the total round. But the $100 million was assumed a 100 yen rate - so it ended up as 100 oku yen in the Nikkei article then it got recalculated at 105 yen to a dollar and ended up with 96 million. In the same article it clearly states total round will be 400 mil (oku) - so it got converted twice wrongly.

ソフトバンク、中国ネット大手を傘下に――最大市場に攻勢

ソフトバンクは中国のインターネット大手、オーク・パシフィック・インタラクティブ（ＯＰＩ、北京市）を傘下に収めることで同社と合意した。約400億円で株式の40％を取得、経営権を握る。急成長する中国ネット市場で携帯電話経由の情報提供など新サービスの拠点とする。中国のネット人口は今年、2億2000万人超と米国を抜き世界最大に浮上する。国内大手のミクシィや米グーグルなど米国勢も事業展開を加速しており、巨大市場を巡る攻防が激化する。

ソフトバンクはＯＰＩ株式の約14％を約100億円で取得。20数％分の新株予約権も得た。最終的に総額400億円を投じて出資比率を約40％に高める。同社創業者のジョー・チェン最高経営責任者（ＣＥＯ）を上回る筆頭株主となり、孫正義ソフトバンク社長は取締役に就任する見通し。

[4月30日/日本経済新聞　朝刊]

Update III. Furthermore, there were no warrants, as discussed by some sources. Next, the amount discussed in Nikkei article was $400 million, but that’s just the Softbank portion. It didn’t count the $30 million contributed by Joho and SBI.

Finally, there are no milestones - the pulling down of the first $100 million (instead of the full amount of $430M) is just cash timing that is best for both sides - nothing to read between the lines.

Coremetrics, one of many analytics companies trying to help website owners understand and market to their visitors, has raised $60 million in a fifth round of financing.

Back in 2006, we said there was some real demand in this area, but probably not enough to support all the companies that were springing up. Coremetrics, however, seems to be getting some real traction, which chief executive Joe Davis attributes to building sophisticated marketing tools — such as search engine bid marketing, email marketing and cross sell applications — on top of the basic analytics features.

Most analytics services, such as Omniture, are really designed to aggregate data about the overall patterns of site behavior. Coremetrics, on the other hand, functions as a “data warehouse” of information about each visitor, and helps you market to those visitors, Davis says. Using Coremetrics’ default package, companies can find out everything they want to know about an individual. If companies want that kind of data from the competition they have to constantly formulate and reformulate their queries — and with Coremetrics’ competition, the data collection starts anew each time, Davis adds. There is also some data that competitors just can’t get, such as a visitor’s behavior across multiple sessions.

For example, Davis says, most analytics companies will tell you that say, 20 percent of your customers put an item in their shopping cart and then abandoned it. Coremetrics can tell you who those 20 percent of people are, by gathering that information from email addresses, for example. Companies can use that information to market similar products to those customers later.

The analytics field has been winnowed down since we last took a close look, Davis says: Omniture is doing well with its paid service, and Google Analytics is popular on the free end, but most other companies — such as Webtrends — are struggling or have disappeared. Davis says Google Analytics actually functions as marketing for Coremetrics, because Google users understand the importance of analytics, but also see its limitations and are often ready to pay for additional tools.

Coremetrics’ customer base grew by 46 percent in 2007, and the company achieved profitability at the end of the year, Davis says. The San Mateo, Calif.-based startup was gearing up for an IPO when the market (and the economy as a whole) started struggling. Now the company is focused on growth instead, and may make some acquisitions in behavioral marketing and multivariate testing to expand its offerings. With the planned expansion, Coremetrics will go back into the red and likely stay there for the rest of the year, Davis says.

The round was led by the 3i Group, a new investor, and existing investors Accel Partners, FTVentures and Highland Capital Partners.

Xoopit wants to help you more easily distribute your photos, videos and files — and taps into your social network through your email account to do so.

The San Francisco-based company is in private beta, and it has a few components. It’s a plugin for Firefox that works in Gmail, it’s also a free-standing site and an iGoogle widget. Here’s the gist of how it works in Gmail (VentureBeat readers can get invites at the bottom of the article).

First, you install the plugin, then sign in to your Gmail account: Xoopit’s application appears within Gmail, above your messages. It searches through all of your emails to find attachments and links to photos, videos and other files, putting everything into a simple interface.

It collects lists of friends in your email, based on their relationship to the media file, so you can do things like comment on a photo and it will be emailed to the person who sent you the photo. You can also search Xoopit’s collection based on the person or topic. You can also post an item from Xoopit, from within Gmail, to Facebook or a blog.

In my testing today, the tool only pulled up a fraction of the media files that I have in Gmail — but the company’s site is no doubt getting hammered by its first big wave of users. The core of the company’s work has been in developing search and data-organization technology to enable it to access and sort so much data, and the team is comprised of experienced engineers from a variety of well-known search and data-analysis companies, so I expect these bugs to get fixed in short order.

The company is branding itself as a sort of social network for email because, as Bijan Marashi says, email is the largest, oldest data set on the web, and data in it is a mess.

The longer-term vision is to allow users to seamlessly import and export data across email services, social networks and other sites. Xoopit, like many startups, hopes to one day have complete access to data on sites like Facebook — so maybe Gmail users, could for example easily either dump all of their photos collected by Xoopit into Facebook, or vise versa. Marashi imagines someone being able to tag him in a Facebook photo, which he could comment on from within Xoopit in Gmail, and then have that comment appear on the photo in Facebook.

The company received seed funding from Foundation Capital 18 months ago, and Accel Partners joined the firm in funding the company in a Series A round, with total funding coming in at $6.5 million.

Get your invites here.

We’ve been hearing whispers for weeks that Hollywood talent agency William Morris was planning to partner with a Silicon Valley venture firm to invest in digital media companies — maybe Accel Partners, maybe Venrock. Turns out, it’s both firms, plus mobile operator AT&T, as the New York Times reports.

The fund is being touted as a more successful sequel to dot-com era efforts by Hollywood and Silicon Valley investors to bring their industries together. This time, the investments will be small and targeted. The fund aims to invest as little as $250,000, focusing on Southern California companies, and ranging in scope from mobile software to social networks. The fund will be in the tens of millions of dollars — peHUB says it has heard the amount may be as high as $50 million.

As Accel’s Jim Breyer told the Times: “There is always a fear, I know, that the bubble is about to burst when a parade of actors and actresses comes through my door. This time the discussions are much more rational.”

The fund will be led by Richard Wolpert, former president of Disney Online and former chief strategy officer at RealNetworks. As VentureBeat readers may recall, Wolpert himself has already been actively investing in online game companies since 2006, including gaming site Kongregate and multiplayer online game GameLayers. He is also an advisor to Accel.

The fund will have an executive committee comprised of representatives from the venture firms and AT&T, along with a separate and larger committee that will decide which startups get funding.

The move is intended to help the fund’s partners themselves get a better understanding of each others’ industries. AT&T’s representative, Susan Johnson, went as far as to tell the Times that “we’re not in it for the return on investment,” but rather to learn about the digital content business.

This news follows earlier reports that valley firm Draper Fisher Jurvetson has been trying to raise a $150 million fund together with Hollywood agency Creative Artists Agency (our coverage).

There have also been rumors that one of the other “big four” Hollywood agencies, International Creative Management, has also been looking at creating a new media fund. We’re watching to see which valley venture firms may partner with it, or with the fourth agency, United Talent Agency.

Also, I’m going to be in Southern California this coming week. If you’re a startup or investor located in SoCal, let me know if you want to grab coffee. Email me at eric (at) venturebeat (dot) com.