VentureBeat

FlowPlay, a Seattle company developing a virtual world for teenagers and young adults around casual gaming, has raised $3.7 million in a first round of funding led by Intel Capital and Ambient Sound Investments.

John Cook, of Seattle PI has the news.

The company, run by former general manager of mobile games at RealNetworks, Derrick Morton, is still in testing mode, and apparently plans to launch in spring.

Morton said gaming integration with a social network took resources, and so the fundraising took a while because investors were concerned about the money it would take to launch, according to Cook. Flowplay plans to charge $5.99 per month, aiming for 80,000 users to break even.

That’s the same model ($5 per month) as Club Penguin, which sold to Walt Disney last year for as much as $700 million.

We covered Flowplay during the Techcrunch40 conference, and concluded that while the site looks clean, there wasn’t a whole lot new here (there are lots of games where you can play with Avatars). That doesn’t mean it won’t get users, however, as the sector in general has seen strong growth.

The funding included other investors Ben Feingold, former president of Worldwide Home Entertainment at Sony Pictures and Michael Schutzler, former SVP of Games at RealNetworks.

Users play games, and lead a virtual life by earning currency, clothing, pets, furniture and more.

TODAY’S HEADLINES:

• 5AM Ventures puts $3.3M into stealthy ImmunoNewco (VBLS exclusive)
• NewLink Genetics raises $17M for cancer vaccine, immune drugs (VBLS exclusive)
• Biochip, stem-cell biotech Minerva Bio ousts CEO Jim Czirr and sues (release)
• Sonexa Therapeutics takes $30M for Alzheimer’s treatment (release)
• Tissue regenerator Healionics pulls in $1.7M (release)
• EGeen, clinical research organization, receives $245K (VentureWire)
• Barnvet Labs, HeMemics Bio get $75K apiece from Maryland gov’t (release)

5AM Ventures puts $3.3M into new immune-related startup – I’ve moved this item to a standalone post here.

NewLink Genetics raises $17M for cancer vaccine, immune drugs – I’ve moved the item to a standalone post here.

Biochip, stem-cell biotech Minerva Bio ousts CEO Jim Czirr and sues – This item is now a standalone post here.

Sonexa Therapeutics takes $30M for Alzheimer’s treatment – San Diego’s Sonexa Therapeutics (no Web site), a specialty pharma, raised $30 million in a first funding round. The proceeds will go toward licensing a so-far undisclosed compound from a Japanese pharmaceutical company that Solexa says is “being tested as a therapeutic to treat Alzheimer’s disease.”

Solexa will have worldwide rights to the experimental drug, excepting Japan and certain Asian countries. Investors in the round included Domain Associates, Scale Venture Partners, Alta Partners, AgeChem Venture Fund and MC Life Science Ventures.

Tissue regenerator Healionics pulls in $1.7M – Redmond, Wash.-based Healionics, a device company focused on tissue regeneration and biomaterials, raised $1.7 million in a first funding round. Individual investors, including Carl Lombardi, the former CEO of SpaceLabs Medical, and Sam Naficy, the medical director of the Naficy Plastic Surgery & Rejuvenation Center, provided the funding.

Healionics is focused on a new class of biomaterials it calls STAR, for sphere-templated angiogenic regeneration. These STAR materials are designed for insertable or implantable medical devices that need to integrate smoothly with and promote healing of the body’s tissues. In particular, Healionics claims that the materials are specifically engineered with “tightly controlled pore geometry” that maximizes the growth of blood vessels and tissue entry while minimizing the body’s tendency to “wall off” implants with scar tissue.

The company, founded last March, says it has established “multiple partnerships” for advancing the development of its materials. Possible applications include diabetes, wound care and infusion therapy.

EGeen, clinical research organization, receives $245K –EGeen, a contract research organization in Mountain View, Calif., raised $245,433 to expand its global operations, VentureWire reports. Ambient Sound Investments provided the funding.

EGeen conducts clinical trials for pharma and biotech companies in Estonia and other Eastern European nations. It has recently established a presence in the Ukraine and Romania. The company has previously raised $4.8 million in two funding rounds.

United Dogs & Cats, a company that manages the social networking websites for pet owners, Uniteddogs.com and Unitedcats.com, has raised an undisclosed round of funding from Ambient Sound Investments.

The Estonian company is the latest European clone of a U.S. Internet company. It competes against Dogster, the San Francisco company that launched in 2004 and runs popular sites Dogster, Catster and other sites.

Dogster has been growing steadily, having last year raised $1 million from angel investor Jeff Clavier and others. That company has essentially been profitable, but has poured resources into growth, and so is really only breaking even, according to Dogster chief executive Ted Rheingold.

Other similar sites include Fuzzster, Backwash Pets, PawSpot and PetsinCommon.

Of course, a multitude of venture-backed pet sites was the hallmark of the last bubble. Those sites, including Pets.com, were the first to crash when advertising dried up. However, it has become a cliche to cry out “bubble!” anytime we something similar to last time. Fact is, things are much saner this time around. Both Dogster and UnitedDogs appear to be raising prudent amounts of money.

Ambient has invested small amounts of cash into 13 early-stage companies, most in Eastern Europe, but some in Asia and the U.S. Its investments include Blip.TV.

Ambient, an Estonian firm run by four early engineers of Skype, will own a 15 percent stake of the company after the investment.

Like at Dogster, United Dogs & Cats lets you create a homepage for your pet, upload and comment on photos and videos, keep pet blogs and share stories with other pet owners.

UDC launched in March in Estonia, and then released an English version in May. In addition, UDC also has released new versions in German, French, Dutch and Latvian. UDC said it will add new languages to its portfolio. Co-founder Ragnar Sass said he is adding a new language to the company’s websites practically every week. This is one area where rival Dogster has been slow to move.

On name alone, however, Dogster wins this battle. It is so much more memorable than UnitedDogs.

Here’s the latest action:

Ooyala, secretive ex-Google company, about to launch — The Mountain View, Calif. company, founded by ex-Google engineers and product managers, is secretive but says it delivers a high-quality, interactive, video experience, and is a couple of months away from launch. Sean Knapp, a co-founder, formerly led Google’s user interface team for web and image search. Bismarck Lepe, also from Google, and another of the three co-founders, told VentureBeat the company wants to stay quiet on details, but that it is a “new interaction and monetization platform for online and offline video,” and that it raised a large round of funding from the “typical folks in the valley and the not-so-typical guys in Hollywood” earlier this month. It has launched a closed testing version. It will open office in New York and Los Angeles.

Google buys online application security company, GreenBorder Technologies — The Mountain View, Calif. company, founded in 2001, boasts it’s the industry’s first desktop “DMZ” software for Windows, saying that it keeps internet invaders out and enterprise data in, allowing users to “safely connect anywhere, go to any website, open any Internet email or attachment, and use any downloaded files without worry.” (Via Googlified)

AMP’d CEO is still in charge, but company is indeed in turmoil — The mobile network provider is rumored to be desperate for more cash. But see latest from PE Week, which has talked with CEO, who contends he is still at the helm despite rumors that he is out. However, if it is true that the board has 20 people, no wonder the company is having trouble with direction. Here is our latest coverage of its whopper financing round.

Yahoo opening up — Until now, the portals have all tried to promote their own traffic on their home page. However, they’re experimenting with testing links to outside sites.

Ambient Sound Investments invests in Chinese virtual world, Frenzoo — Ambient, you’ll recall, is the firm run by former Skype co-founders. It has made an undisclosed investment in the Hong Kong 3D social networking company which has been likened to Second Life. There are other virtual world competitors in China, such as HiPihi, and Shanda’s coming version.

Odd story — VeriSign’s board announced the surprise resignation of Chief Executive Stratton Sclavos, saying the company “has reached a point in its evolution where it can benefit from new leadership.” (WSJ) No explanation?

Google losing the employee hiring game — There are increasing reports that start-ups are being able to hire employees that Google also sought to hire. This is because they offer the upside reward of a potential IPO. Google’s advantage is that it did most of its initial spurt of hiring during the downturn. The hires these days are specifically mentioning potential riches as one reason why they’re joining start-ups which, while understandable, may also point to motivation challenges for these start-ups down the line. See the NYT story, including a quote from Powerset employee, Nitay Joffe (pictured here), who was wooed by Google, but joined Powerset because it had the one thing Google didn’t offer: “When you get a stock option at 5 cents and it goes to $50 …,” Mr. Joffe said, before his voice trailed off.