VentureBeat

Agito Networks has figured out a way for enterprises to embrace WiFi based mobile phones even though wireless carriers haven’t made it easy to integrate WiFi with the cellular phone system. Thanks to its clever solution, the company is announcing today that it has raised $13 million in a second round of venture capital.

The Sunnyvale, Calif.-based company hopes to make it easier for big businesses to adopt smart phones with WiFi access for employees who have to deal with poor reception inside buildings and high cellular network costs.

Castile Ventures led the round. ITX International Holdings and original investor Battery Ventures also participated. The company also said it has named David Leonard, a former Cisco executive, as its executive chairman.

Leonard has taken over running the company since its previous CEO, Ron Markovich, left recently. Leonard said the company is searching for a new CEO who can scale the business and that he hopes to make that hire within the next three months.

Agito puts its Roam Anywhere Mobility Router into a company’s data center. The router figures out how to instantaneously switch a call from a WiFi network to a cell phone network, depending on which network has better reception and which is more cost effective. The technology is known as “fixed mobile convergence.”

The router lets someone with a WiFi cell phone access the company’s address book or internal phone extensions easily. The aim is to let callers receive phone calls inside buildings where it’s cheaper to use a WiFi network and likely that WiFi reception will be better than cellular network reception. The company said it takes a matter of 100 milliseconds or less to hand off a call from the cell networks to WiFi. Normally, the handoff is rocky with similar devices.

The technology should appeal to workplaces such as hospitals that have mobile workforces and often have trouble getting reception inside buildings or in basements.

ITX’s specialty is international markets, and that’s one reason it participated in the round. Agito plans to use part of the money to expand overseas and it will tap ITX’s contacts. Agito was founded in April, 2006. Pejman Roshan, Agito’s co-founder and vice president of marketing, said that the timing is good for this kind of product because 60 percent to 70 percent of enterprises have now deployed WiFi networks. Also, Nokia, Research in Motion, Apple and others have now deployed handsets that can access WiFi networks for data networking.

But the carriers have been reluctant to let users bypass the cellular networks by using the WiFi networks for calls. By making it easy to switch calls between networks, Agito bridges the gap and saves money for corporations, Roshan said. Rivals include Stoke, which also received a round of $41.8 million in a fourth round of funding recently. We wrote about Stoke earlier this year.

While WiFi is subject to hacking, Roshan said that Agito makes it easy to handle calls securely because the enterprise phones are often centrally managed via enterprise servers. Over time, the company hopes to add new features related to mobile video, instant messages, and push-to-talk (walkie-talkie service).

To date, the company has raised about $20 million. Battery Ventures funded the first round in December, 2006. Agito has about 45 employees. Roshan said the fundraising process wasn’t too difficult and the company received multiple offers.

[Agito is a nominee for best mobile comany at MobileBeat, our mobile conference on July 24. Just a few days left to vote for your favorite mobile application or service company.]

World Golf Tour, a company that uses Flash technology to make a realistic game for golfers, has raised a second round of financing in the double-digit millions of dollars.

The San Francisco company, which I raved about a year ago when I first tried it out, announced the funding at the VentureBeat party last night. The company isn’t disclosing the exact size of the round.

It’s now moving in that inevitable direction — to become a social network. You’ll soon be able to invite others to play with you, and chat live while on the course.

There are still questions about whether the free game can pull in the users and revenues to become a blockbuster hit, but one thing’s clear: The company is keeping quality high. It uses helicopters to take high-definition footage of real golf courses. Its software uses physics to calculate the mix of your actions, factoring in the club you pick, wind direction, the timing of your swing and even the surface of the grass. Its debut course is the Bali Hai in Las Vegas.

It doesn’t have much of competition at this level of game — and by this, I mean the attention to the physics and details of golf, and its online Flash-based graphics delivery. That may be why its taking its time. It has been in closed testing since last year, but it opens to the public in July with a new test version.

Then, you’ll be able to play a full round at the Bali Hai course, and also at Kiawah Island Golf Resort (in real life located in Charleston, S.C.).

The company will add the ability to chip and putt — not just drive. The company says more than 500,000 people in 150 countries have already played the basic demo on the site, and that the average visit is 20 minutes.

Venture capital firm Panorama Capital led the round, which included participation from Battery Ventures.

CEO YuChiang Cheng said the company will make money from sponsors, including PGA.com, TaylorMade and adidas Golf — by letting them showcase products within the experience. The site will give real-world info about resorts in the game, and provide access to tee time reservation systems and resort booking.

1995 might as well be the dawn of civilization in terms of the Internet as we know it today. Yet that is how long Angie’s List, a source for local service ratings, has been around. Today, the company announces a new round of funding to keep its site going strong well into the future.

The $35 million investment comes from Battery Ventures, which will also take a minority stake in the company with the deal.

Angie’s List has over 600,000 members across 124 cities in the United States. This new investment will be used to expand into new markets in the U.S. as well as into new rating/review categories — such as the recently launched medical reviews.

Another priority will be expanding into select international markets. There is competition overseas, but by utilizing its 10-plus years of experience in the business, Angie’s List is confident it will work very effectively in other countries as well, Battery Ventures’ general partner Roger Lee tells us.

$35 million is a lot of money but the company believes its model is built to scale larger both in this country and aboard. Access to providers, quality and reliability are all important factors which Angie’s List currently has working in its favor.

One competitor in this country is Bestcontractors.com, which also allows users to find trust-worthy professionals by way of customer reviews, but that services currently operates in far fewer markets. Yelp, also offers customer reviews, but is broadly focused making it more difficult to find pertinent service recommendations (our coverage).

A newer entry in the arena is GenieTown, which has a special focus on the Bay Area (our coverage).

Updated

Even though a recession is looming (and venture investment has slowed) not everyone is doing badly. In fact, the tough times may benefit some companies, such as electronic procurement startup Coupa Software, which just raised $6 million in a second round of funding.

Foster City, Calif.-based Coupa may be one of the few companies that actually does better in the tough economic times ahead — as businesses tighten their belts, Coupa’s services will become even more useful. The startup’s software-as-a-service creates a “one stop shop” where employees can search for and purchase supplies. By centralizing and managing the procurement process, Coupa helps companies root out waste.

Battery Ventures led the round, and senior associate Brian O’Malley told VentureWire that his firm likes Coupa because its services would still be in demand during a possible recession. BlueRun Ventures also participated.

Coupa previously raised $1.5 million, which we covered here. (The amount was undisclosed at the time.)

Update: I just finished an interview with O’Malley, who elaborated on why he thinks Coupa is a good investment. And yes, the fact that it’s “almost counter-cyclical” — i.e., that it might do even better during a downturn — is a big factor. That’s something Battery’s investors have to think about when considering any new funding, or when they’re evaluating companies in the firm’s portfolio, O’Malley says. (With that same logic, Battery has been taking a close look at startups in the mortgage market, particularly those that can help homeowners refinance. The firm has yet to make any investments in this area, however.)

And Coupa really does save companies money, he says. For example, it serves biotech firms that have to make several expensive overnight shipments each day. With Coupa those companies can better manage the ordering process, and therefore consolidate each of those shipments into a single daily order.

There are some big players in this field, but that’s exactly what creates an opening for Coupa. Companies like Ariba only serve large customers, because installing their systems is expensive and difficult. Coupa, on the other hand, is much cheaper and easier to set-up — in part because it’s built on Ruby on Rails and Amazon web services — so it can serve companies with between 100 and 5,000 employees.

“There’s been so much built on the consumer shopping side, but there’s a big void on the business side,” O’Malley says.

updated with info on who is behind Triad

The Federal Communications Commission has gotten bids for more than the minimum of $10 billion it had set for its 700-megahertz spectrum auction, and there’s word that AT&T has been an active bidder.

Google and Verizon are also assumed to be bidding on a chunk of the spectrum. The auction is significant, and closely watched in technology circles, because it could open up innovation in the wireless industry — providing the chance to a provider like Google to bypass the powerful carriers.

One of the relatively unknown accepted bidders in the auction, Triad 700, of Silicon Valley (Burlingame, Calif.), however, has quietly raised $90 million from investors, VentureBeat has learned, but neither the company nor its investors are returning our calls. The $90 million is a piddling for the billions of dollars that are needed to bid successfully in this auction, but perhaps the company is leveraging it with debt. Triad’s backers are traditional venture capital firms, including Battery Ventures, Highland Capital, Ignition Venture Partners and M/C Venture Partners. Anybody know anything more about this company?

Update: The rumors are rolling in. One source says Triad is run by Sanjiv Ahuja, former chief executive of Orange; we haven’t confirmed.

Update II: Dan Primack follows up, and finds that the Triad principals are Barry Lewis, Craig Viehweg and John Mason, who once were part of the executive team at rural operator Triad Cellular, a Silicon Valley company bought last year by Western Wireless. They’ve participated in nine spectrum auctions, according to Primack.

Unmanned aerial vehicles (UAVs) look to be part of the automation wave of the future, with military, police and research organizations shifting billions of dollars to purchase unmanned drones for surveillance and combat.

From tiny, lightweight robots that are discarded after a single use, to aircraft with the size and complexity of a traditional jet, UAVs are evolving into a huge market. And with small companies such as Insitu developing low- and mid-range aircraft, we’re seeing money pouring into startups.

Less than a month ago, Aurora Flight Sciences, an Insitu competitor, agreed to take $15 million from an unnamed private equity firm in its second round of funding. It’s developing drones for scientists and soldiers (including the RQ-4A Global Hawk, shown below). Manassas, Virginia-based Aurora is already profitable, with about $50 million in annual revenue.

Insitu was founded after Aurora but is doing even better. We’ve heard the Bingen, Wash. company has about $80 million in revenue, although we haven’t been able to confirm that number. However, when it comes to a battle over market share, there may be room for both companies, and many more.

Drones seem to be, almost without exception, cheaper to develop and build than traditional aircraft, but money is pouring into their purchase. The United States government alone is expected to budget over $50 billion for unmanned vehicle systems over the next decade or so, according to Roger Lee, one of Insitu’s investors from Battery Ventures.

That has provided room for plenty of new competitors. Steve Sliwa, the CEO of Insitu, compares the current market to the dawn of aviation. “Back in the ’30s and ’40s, there were hundreds of companies making airplanes, but over the years that narrowed down to three or four,” he told us. “Now with unmanned, it’s been opened back up. It’s hard to imagine a Boeing or Northtrop Grumman developing something that costs a few hundred thousand dollars. It’s just not what they’re good at.”

As a result, smaller, more agile companies, that have far less funding to work with than aviation and defense giants like Lockheed Martin or Northrop Grumman, have the opening they need to develop multiple products each. Insitu, for example, has Integrator, Insight, GeoRanger and ScanEagle (the latter two co-developed with Fugro Airborne and Boeing, respectively).

Dozens of other models are competing for attention from the armed forces–everything from a tiny model propelled from a slingshot to General Atomics’ large, deadly Predator B (also known as the MQ-9 Reaper). For a gallery of different UAVs, check out this Wired article.

The $21.33 million Insitu received is part of a $25 million fourth round provided by return backers Battery Ventures and Second Avenue Partners.

Summary:
*AjaxWindows offers operating system in the browser
*IBM researcher says “racetrack memory” could unseat flash
*Noise reducing headset Jawbone wins backing from Sequoia
*Lemonade, latest company to offer online kiosks
*Adobe previews Photoshop Express
*MobiBucks, the latest start-up targeting mobile payments
*Scouta, offers personalized video and podcast recommendations

AjaxWindows offers operating system in the browser — Michael Robertson, creator of the SIPphone and the Gizmo Project, has unveiled something called ajaxWindows, which lets you do all your computing straight from your browser. It’s essentially a virtual PC, used from any browser on any Web-connected computer. He blogs about it here. His site has been pummeled with traffic, however, so we couldn’t sign up. He points to an online demo and video, which were also hard to reach this morning.

Basically, browsers are finally getting sophisticated, because of the inclusion of things like AJAX technology, which store more information. So AjaxWindows makes the browser work as both the operating system and engine for all your needed applications, Robertson says. AjaxWindows directs you to other online services for many of your needs, for example Gmail for storing email, documents and other file types. For example music files, it connects you with a MP3tunes locker. AjaxWindows automatically creates an MP3tunes account and guides you through the Gmail set up if you don’t have an account already. Similarly, it lets you handle bookmarks, contacts, wallpaper and other stuff. Now, much of this was already possible, of course, before AjaxWindows came along. You can use browsers to access most of these services anyway. We haven’t tried AjaxWindows yet, so we’re not certain how revolutionary this is. But if he can make it easier for the average user to get by without needing desktop files, the project may do well.

IBM researcher says “racetrack memory” could unseat flash — IBM researcher Stuart Parkin’s is working on a new form of memory, called “racetrack,” that may allow electronic devices to potentially hold 10 to 100 times more data in the same amount of space. People are looking for alternatives, because flash memory is slow at story data (NYT has story ).

Jawbone, the headset which shuts out background noise, gets backing from Sequoia — We last wrote about the expensive high-tech headset, when it raised $5 million from Khosla Ventures. Techcrunch says it has raised money from Sequoia capital. Here’s a good video showing how Jawbone works.

Lemonade, lets users a way to make money from online kiosks — The South Norwalk, Conn. company lets people display ads for goods in widgets on their profile pages on Facebook or MySpace, and then lets them make money when people click on the goods and buy them. Lemonade, featured in the New York Times, lets users choose the goods from a catalog of 250 online retailers, including Zappos.com, iTunes and Walmart.com. However, the idea is not new. Companies like Buy.com’s Garage Sale, and Zlio (see our coverage), already do something similar. With Lemonade, the retailers pay commissions of 5 percent to 15 percent of the sale price. Lemonade will keep 20 percent of the commissions on behalf of people who create online kiosks, and pay users the rest of the money.

Warner Bros opens a Studio 2.0 — Details here.

Private equity firms are worse than mafia, when it comes to lack of transparency, says union boss in UK — Story here.

Adobe previews Photoshop Express — This is still secretive, but Adobe is apparently about to offer an online version of Adobe’s image editing software Photoshop. This is analogous to the move earlier this year, when Adobe offered Premiere Express, a free, Flash-based online video editor for creating mash-ups and remixes. More about the latest here. And here’s a screenshot of the app in action, which apparently shows how to adjust an image just by rolling over the different versions shown at the top, previewing the results & then clicking the desired degree of modification.

MobiBucks, the latest start-up targeting mobile payments — Mobibucks, which launched in April, says it has signed up 115 retailers and 2,000 users in a program that lets people make payments by keying in their cell phone number and a PIN at a store register. The company is now looking for a VC round. Its selling point: MobiBucks charges 15 cents per transaction, about half the usual fee for a debit transaction. The Mountain View, Calf. company was founded last year by Jorge Fernandes, who earlier founded ViVoTech, a Santa Clara, Calif. company that makes devices to conduct credit and debit transactions. With PayPal, Google, Visa and Mastercard all moving into mobile e-commerce, along with other start-ups already active, this company is a long-shot — but then most start-ups are (Mercury News story here).

Scouta, offers personalized video and podcast recommendations — Scouta is an Australian company offering a recommendation service based on what you bookmark in a “My Scouta” account, or what you listen to on iTunes, using the Scouta Agent.

There’s a notable piece at Boston.com today about how Battery Ventures partner Scott Tobin (pictured left) decided not to invest in Facebook when Mark Zuckerberg pitched him three years ago in Boston.

Tension between the firm’s East and West Coast offices contributed to the firm’s rejection of the Facebook founder (Battery, by the way, has since been quite open about the division, and says it has cleared things up). However, Facebook has become a billion dollar company, on paper (of VC termsheets) at least. So when Boston-based Tobin says his pass “may turn out to have been a mistake,” it’s a huge understatement.

We’d agree with Accel’s Jim Breyer, who also comments in the piece.

Breyer, who ended up backing Zuckerberg, argues Facebook became as big as it did only by coming out to the valley. Breyer cites the execs from area companies like Yahoo, eBay and Google who have helped Facebook. Also, early employee Sean Parker, also out here, helped Zuckerberg navigate the VC world, and cut some good deals.

Tobin responds to Breyer’s comments, saying: “Folks in the Valley are incredibly geo-centric to a point of snobbery.” That’s not quite fair. Breyer has been on the record often over the years (see our coverage), saying the Valleyites were too self-centric during the last boom, “smoking their own exhaust fumes.” However, that’s since changed: Silicon Valley’s Accel has moved to China and Europe, as have other valley firms. In fact, Battery, led by its East Coast office, has been relatively slow to move abroad. It’s hard to argue the West is more self-centric or snobby than the East Coast.

The story also notes that early Facebook investor Peter Thiel invested $500,000 of his own money, in return for 10 percent of the company (valuing the company at $5M). That’s a steal, but it doesn’t match up with the rest of the story, which says Zuckerberg was demanding better terms (valuing the company at $15M when he was back in Boston).

Ruckus, which provides college students free unlimited PC and laptop download access to more than two million songs, has raised $10 million in a second round of financing.

The service is apparently making headway on competitor Napster, which offers a similar service. Earlier this month, Penn State dropped a partnership with Napster, in favor of Ruckus — because Ruckus did not charge it for the contract.

However, there’s no sign the company is making headway on revenue. Students are unlikely to upgrade to its paid premium service, because students are frugal — and because it competes with Apples’ iTunes. The company isn’t saying anything about revenue.

Indeed, the new money will be used to find ways to push advertising to support the basic free access, it said. It has signed contracts with 40 new schools over the past school year, for a total of 120 schools in its network nationwide. The site is also pushing social network features. Any student owning a .edu address can access the service — even those from schools without a contract. The music includes songs from all the major labels and various independent labels. It has added access to full-length films to its offerings, too.

The company charges $19.95 a semester to students wanting to download music to portable devices, and $14.95 a semester to download movies, but concedes that revenue from this is “nominal.”

Investors are Anschutz Investment Company and Columbia Capital. Existing investors include Battery Ventures, Eastward Capital, Pinnacle Ventures and Shelter Capital, although Pinnacle did not invest in this round. The Herndon, Va. company has now raised more than $33 million.

Ruckus’ parent company is Ruckus Network.