VentureBeat

The next-generation iPhone will launch soon, and development for it will only heat up, partially thanks to the $100 million iFund raised by Kleiner Perkins.

It comes as no surprise then, when a start-up that has little more than an application for jail-broken iPhones raises capital.

TuneWiki, an Israeli-based startup which launched in December 2007 by two former Israeli Defense Force fighter pilots, is raising a first round of funding from Benchmark Capital’s Israel Fund, we’ve heard, but it hasn’t gone through yet.

The company launched the iLyric Player in December(see video below), a karaoke-like application that synchronizes and scrolls lyrics, real time, in multiple languages (English, Hebrew, Japanese, and Korean). Users enjoy music on the iPhone, iPod touch, or a personal computer and in true Wiki fashion, all lyrics are user generated and edited.

Yesterday, the company posted a video (see demo here ) of the TuneWiki application, running on the Android platform emulator. The app for Android still plays music with the ability to play, edit and translate karaoke-like synchronized lyrics, subtitled on video and audio.

For Android, however, users can build a virtual media library that sits on the Android file system and can connect directly to YouTube, Yahoo Music, Imeem or a friend’s playlist.

With the increasing litigation against web companies by the RIAA and the publishers it protects, it’s surprising that such a young company like TuneWiki already has one of the big four in its pocket. This month the company signed a deal with Universal Music Publishing Group, allowing its lyrics to be legally viewed in North America. (Although the app obviously targets Israeli and Asian users, so I’m not sure what the ramification is for users outside North America).

The application is a featured application on the iPhone installer, but will most likely see legitimate release through the iPhone Apps store, as well as the stand-alone song lyric website.

We’re tracking down company founders Amnon Sarig and Rani Cohen and we’ll update with more information when we have it.

New Relic, a startup that helps you manage applications built with the Ruby on Rails framework, has raised $3.5 million in a first round of funding.

Both Ruby on Rails and computing in the Internet “cloud” have been heating up recently. In fact, this is just the latest in a series of investments in this field from Benchmark Capital, one of Silicon Valley’s leading venture firms. (Benchmark invested in Engine Yard back in January, and announced it was backing RightScale just last week.)

That’s no accident, says Benchmark general partner Peter Fenton, who’s joining New Relic’s board. Fenton describes cloud computing and Ruby on Rails as the two most important and transformative recent developments in software. The movement to the cloud is changing how software is distributed and what it can do, while Ruby on Rails is making it faster and easier for developers to build applications.

New Relic’s founder Lewis Cirne already has some experience with application performance management — in 1998, he founded Wily Technology, a company that provided a similar service for Java apps. Wily eventually grew to $100 million in annual revenue and was acquired by CA, Inc. in 2006.

Menlo Park, Calif.-based New Relic’s offering works as a Rails plugin and is supposed to provide an easy interface for developers to detect, diagnose and fix problems with their apps (see screenshot below). It’s still in private testing mode; Cirne says the company has already signed up 50 customers. (Since it’s still in testing, they’re not paying any fees yet.) The service should become available to the general public in 60 days or so.

Fenton and Cirne both say that New Relic complements Benchmark’s past investments, particularly Ruby on Rails company Engine Yard — Engine Yard helps with hosting and deployment, while New Relic finds problems in the application code itself.

There’s a personal connection behind the deal, too. Not only was Cirne an entrepreneur in residence at Benchmark, but his previous company Wily was actually Fenton’s very first investment as a brand new, 27-year-old venture capitalist.

Updated

RightScale, the latest company to emerge offering “cloud” computing services, has raised $4.5 million in a first round of funding from Silicon Valley venture capital firm Benchmark Capital.

The Santa Barbara, Calif., company helps businesses manage their Web sites by transitioning them to Amazon’s Elastic Compute Cloud (EC2), or remote servers that lets businesses pay as they go, rather than buy and upkeep their own servers. Businesses can use a RightScale online dashboard to control their server clusters, and also automate the process of scaling up to more clusters if necessary.

Companies like WeoCeo and Intridea offer similar services, but chief executive Michael Crandall says RightScale stands out because of its visual interface and because the startup uses its own servers to constantly monitor the system. Search giant Google recently announced that it’s also getting into web app deployment. Crandall (and others) say the Google App Engine a much more “closed” solution — for example, Google web applications have to use the company’s BigTable database. RightScale, on the other hand, is more flexible and transparent.

RightScale is beginning by serving start-ups, and says it has 70 paying customers, as well as thousands of companies using its free service. Investor Benchmark was also an investor in Web infrastructure companies like database company MySQL (sold to Sun for $1 billion recently), and also in rails hosting company EngineYard. With these companies, Benchmark already has experience in building businesses by serving small companies first. The new cash will used by RightScale to offer more than just Amazon’s web services, also allowing for things like automatic MySQL setup on the cloud. Amazon’s web services already include database and and storage features.

RightScale previously raised less than $750,000 in angel funding.

[Anthony Ha contributed to this article.]

The Nintendo Wii may be getting a lot of attention. But the have you heard of WeeWorld and its WeeMee’s? They’re the kind of things that make you smile. Especially for teens and young adults.

A WeeMee is a virtual avatar that you can use as your identity in the WeeWorld virtual world (unrelated to Nintendo) or while you’re chatting with someone on an instant-messenger platform. More than 21 million WeeMees have been created in the past three years and about 600,000 a month are being created, says Lauren Bieglow, general manager of the London-based company’s North American division.

That has the company looking around for funding to expand its business, she said. Today, the company is announcing that RCA is doing a repeat promotional campaign with a musical artist, Alicia Keyes. Earlier, the music company tested a WeeMee-based ad campaign for singer Avril Lavigne. Keyes will release a new video which can be used as a background in the WeeWorld virtual world, where players can create their own rooms.

Beyond the WeeWorld site, users can use WeeMees as cutesy avatars on AIM, Skype, and Windows Live Messenger. They can use them on email signatures, blogs, or as their Facebook avatars as well. The company has been funded in the past by Accel in a $15.5 million round in 2006 and Benchmark Capital in a $5.5 million round in 2005.

The company started with avatars on the message systems and then created its own social network about a year ago. The service competes with other cute avatar virtual worlds such as Habbo Hotel or Gaia Online. The average age is 19 and the largest age group of users is 16. The company makes its money through advertising deals with companies such as Procter & Gamble. You can, for instance, use Cover Girl make-up on your avatars.

The company also makes money through virtual object sales. That will shortly include the purchase of Alicia Keyes pianos, T-shirts, or CDs. In the past two months, more than 400,000 items were downloaded in the Avril Lavigne promotion. The company has 55 employees. If the company raises money, Bigelow says that it will be used for a number of different avenues of expansion.

Here’s the latest action:

Mobile enthusiast gives up on “mobile web” – Russell Beattie, a Silicon Valley developer and mobile enthusiast who spent two years working at Yahoo Mobile before launching a start-up called Mowser, has given up on the mobile sector. He writes: “The general answer is that I don’t actually believe in the ‘Mobile Web’ anymore, and therefore am less inclined to spend time and effort in a market I think is limited at best, and dying at worst. I’m talking specifically about sites that are geared 100% towards mobile phones and have little to no PC web presence. Two years ago I was convinced that the mobile web would continue to evolve in the West to mimic what was happening in countries like Japan and Korea, but it hasn’t happened, and now I’m sure it isn’t going to.” Mowser focused on adapting content for mobile phones. Beattie said the expected traffic never came. His story is a cold shower for industry players hoping advances by the iPhone and the Android will inject life into the sector.

Credit crunch hits cleantech after all — Despite some crowing from the clean-technology crowd that the credit crunch hadn’t hit it, it did eat into one a that sector clean-technology companies: private equity investment. Earth2Tech has a good wrapup of the numbers and commentary.

Silicon Valley’s giants are fine, but maybe not for long — The big tech companies of Silicon Valley, on the other hand, are humming along as if the current (probable) recession weren’t even taking place, says the San Jose Mercury News in its annual SV150 issue. The reason: Their international business divisions are going strong. However, the New York Times reports that housing markets worldwide are following the US market’s tailspin, so credit and spending abroad could suffer as well, challenging even multinational companies.

Feed your tank, starve a poor person — Biofuels have pushed back the fight against poverty by seven years and may continue to hurt poor people, according to a quote from World Bank president Robert Zoellick in the Guardian. The tapping of biofuels for alternative energy has faced a growing negative reaction, because it is sending food prices soaring around the world. Biofuels are made from food crops like corn and sugar, and so are taking away from the food stock. The effect, at least for the moment, will probably be limited to more cautious government subsidization policies.

Farecast rumored sold for over $75M — Online travel search site Farecast may have been sold for over $75 million, according to John Cook of the Seattle PI. He’s not sure who the buyer is, but speculates that Expedia would be a likely match since two major competitors, SideStep and Kayak, merged last year. Farecast has done well with its feature that lets you predict whether fares are going up or down in the near future, helping you decide when to buy.

Radio One buys Community Connect for $38M — Media giant Radio One has laid down $38 million for Community Connect, which operates niche sites based on ethnicity, religion and sexual orientation. The company had taken funding from Dominion Ventures, ConnectCapital, Comcast Interactive Capital and Jump Ventures, according to peHUB.

YouTube dominates video, while Google roars in search — YouTube boasted 73.18 percent of all U.S. visits among a group of 68 online video websites in March, according to Hitwise. MySpaceTV received the second highest percentage of visits, with 9.21 percent followed by Google Video with 4.06 percent. YouTube dominates video more than Google dominates search. But then search makes much more money. Google got 67.3 percent market share for search, and that’s a high, while Yahoo and Microsoft hit new lows.

Gawker media cuts Wonkette and others loose — Gawker owner Nick Denton tells Silicon Alley Insider that as the economy stumbles, he’s ditching three “underperforming” Gawker sites: Wonkette, Gridskipper and Idolator, which will all continue under new ownership. That leaves the company to focus on its 12 “core titles,” like Silicon Valley’s beloved gossip blog Valleywag.

Google App Engine and Amazon web services, together at last — When Google launched its Engine App a week ago, allowing developers to build and deploy web applications on Google infrastructure, the move was widely seen as a move against Amazon’s web services. But just because they’re competing products doesn’t mean they can’t work together, as Portland entrepreneur Chris Anderson has shown by creating AppDrop, which allows you to build apps with Google’s software development kit and deploy in Amazon’s Elastic Compute Cloud. There have been complaints that Google Engine App locks in your applications, but AppDrop shows that isn’t quite true.

LiveUniverse reportedly acquires home page service Pageflakes — LiveUniverse, the online entertainment network run by former MySpace executive Brad Greenspan, has acquired the Ajax home page service Pageflakes, according to TechCrunch’s unidentified sources. Just a few hours earlier, GigaOM reported that Pageflakes was “desperately” seeking a buyer. Last February, a number of sites said that LiveUniverse purchased video site Revver, so the network appears to be in an acquisitive mood.

Linden Lab, maker of the online virtual world Second Life, is looking for someone to fill founder and chief executive Philip Rosedale’s shoes. Rosedale (pictured on the left) has announced that he plans to step down as CEO of the San Francisco-based company, although he will stay involved as the new chairman of the board and will also have a full-time role in Linden Lab’s product development and strategy.

Rosedale, a former chief technology officer at Real Networks, has been key in making Second Life a reality. (When he saw The Matrix, Rosedale was reportedly disappointed because the film portrayed exactly what he wanted to do with Second Life, minus the the enslavement of the human race.)  But as Linden Lab continues to grow, Rosedale says it’s time for someone with more operational and management experience to take over the company’s day-to-day workings.

Bill Gurley of Benchmark Capital, who sits on Linden Lab’s board, tells us that this is a normal step for a company grappling with rapid growth, pointing to a number of other examples, including Google. (We’ve also wondered if it’s time for Facebook’s Mark Zuckerberg to find himself a CEO.) In fact, Rosedale approached the board about possibly stepping down as much as nine months ago, Gurley says.

“(Rosedale’s) view was that he wasn’t enjoying the job as it reached that scale and that he could be more impactful on the company doing something else,” Gurley says.

Second Life is widely seen as the leading virtual world, but month-to-month registration growth has slowed in recent months, falling from a high of 50 percent in October 2006 to 4.6 percent in January of this year. Gurley, however, says that the change in leadership doesn’t mean Linden Lab is looking for a new direction. Revenue is “through the roof”, and Linden Lab could even go public now if it wanted to, he says.

There doesn’t seem to be a definite timeline for finding Rosedale’s replacement. Gurley says the board is hoping to hire someone who’s run a company of a similar size. And because Rosedale will remain deeply involved, compatibility with him will be a key requirement for the new CEO, Gurley adds.

updated
Zuora is a Silicon Valley company that says it offers a simpler, less expensive way for companies to offer online subscription services. It launches today announcing it has gotten $6.5 million in a first round of funding led by venture firm Benchmark Capital.

Until now, software companies like Salesforce or gaming companies like World of Warcraft have faced a lot of pain in selling their products to subscribers.

The main provider of subscription services to date has been Portal Software, but it costs between $1 million and $3 million to implement. Aside from paying for Portal’s software, you have to employ consultants to help implement it, create a database and maintain it all. Meanwhile, smaller companies unable to afford Portal are forced to do their sales by hand, using an Excel spreadsheet, or relying on a credit card company which lets customers make an automatic payment every month.

With the explosion of software companies offering their software as a monthly subscription (known as Software as a Service, or SaaS), Zuora’s chief executive Tien Tzuo said he thinks there’s a significant market for its product. Zuora will begin by targeting SAAS companies, but they cater to all kinds of services, including game companies like WoW.

Zuora, based in Redwood City, Calif., was founded by executives who previously worked at Salesforce and WebEx who found that Portal wasn’t working for them. Tzuo spent nine years at Salesforce, and he led the company’s project to build its own subscriptions services product. Tzuo then decided to leave Salesforce to start his own company specifically designed to offer these services. Rather than discouraging him, Salesforce’s chief executive Marc Benioff encouraged him to do so, and agreed to invest as well. Tzuo’s co-founder, Cheng Zou, who is chief technology officer at Zuora, built the subscription billing service used by WebEx.

Zuora’s first customer is Coremetrics. Zuora says it will undercut Portal significantly, charging on the order of a few thousand dollars a month. Benchmark’s Peter Fenton joins the board.

[Update: We failed to mention another competitor, Aria, which has served SaaS companies with a billing services for more than three years, but it has focused on the gaming industry (our coverage). It raised $4 million in a first round of capital from venture firm Hummer Winblad back in October, and counts  Flagship Studios, Hellgate London, DigitalBridge, ZoomInfo and others among its customers. Aria says  it has been used in more than 236 countries.]

Gigya, the Silicon Valley company that lets companies including RockYou track how advertising performs on their widgets across the Web, has raised $9.5 million in a second round of funding from Mayfield Fund and existing investors Benchmark Capital and First Round Capital.

Gigya, based in Palo Alto, Calif., offers ad-monitoring technology among a number of other tools it supplies to widget-makers like RockYou. Gigya helps companies make widgets, but its real focus is on helping those companies — clients include Toyota, Sprint and MTV — spread the widgets across the web and track their performance.

Among other things, it provides drop-down menus that lets users select which social networks they want the widget on (see image at the bottom of the page). This lets widget owners make, say, Orkut the first choice, if the owner wants to market the widget among Brazilian users, or Facebook the first choice if the owner want to market to Canada 20-somethings.

Gigya’s technology is used to install hundreds of thousands of widgets per day, the company says. It tracks more than three billion widget impressions per month. It says it is the largest widget distribution network (for proof, check out the logo-cloud above, which shows the companies it serves).

However, large widget companies like Slide use their own internal technology for distribution and tracking advertising impressions. Clearspring is another competing company, but Clearspring hosts widgets on its own servers, and so maintains more control over the widget making and distribution process. Gigya, by contrast, simply provides a code that is inserted into widgets, and customers like Toyota can choose to run the widgets from their own servers.

Gigya hasn’t focused too much on making money too date, instead it seeking to become the distribution standard on the Web. But it does plan to make money from revenue shares, for example from a company like Toyota, which might pay Gigya a fee for help in distributing its widget to third-party sites.

Co-founder Rooly Eliezerov told me he hopes the company will reach break-even within the next year and a half.

Mayfield’s Navin Chaddha joins Benchmark’s Michael Eisenberg on Gigya’s board.

Following yesterday’s announcement that free personal finance site Mint has raised $12.1 million — and rumors that a number of venture firms were trying to get in on the deal — I talked to Mint investor Bob Kagle about what makes the company stand out.

After all, it’s a crowded and growing field, as we noted in our coverage. Kagle confirms that there were “a fair amount” of VCs that were “very interested” in investing in Mint. The company’s going to win the online personal finance crown because it’s so easy to use, he says.

Kagle is a general partner at Benchmark Capital, which led this second round of financing, and he’s also joining Mint’s board of directors. He says Mint is the first personal finance aggregator that he’s used, because setting up an account anywhere else was just too complicated. You only need to enter your account numbers and passwords to get started on Mint. Kagle says he now manages 16 accounts on the site, and recently spotted and emptied an account that wasn’t earning any interest at all.

(When we first covered Mint, we agreed that it was fastest to set-up of all the personal finance sites, including competitor Wesabe. But usability isn’t everything, says Wesabe chief executive Marc Hedlund. In the past, Wesabe has touted its social network tools. Hedlund adds that by automating everything through online banking provider Yodlee, Mint is sacrificing the flexibility and security that Wesabe’s homegrown solution can offer.)

Mint has acquired more than 160,000 users since launching last September, and it now organizes $10 billion worth of transactions, according to Mint’s numbers.

Although the site is free, the company makes money from a section where users can compare different deals, such as credit card financing offers. Knowing as much as possible about your audience, and therefore getting the most bang for your buck, is something of a Holy Grail among online advertisers. And as a “nexus” of financial data, Mint is going have access to some of the most important and relevant information about its users, Kagle says.

At 27, Mint chief executive Aaron Patzer may seem a little on the young side, Kagle acknowledges. But he points out that Patzer is surrounded by experienced executive team, including Chief Marketing Officer Donna Wells (formerly of Expedia and Intuit) and Product Vice President Aaron Forth (formerly of eBay).

FriendFeed is like Facebook’s news feed. But it’s more of a dynamic conversation among close friends about what they’re up to all over the web — and not so much a social network.

I’ve been using FriendFeed religiously this year, after reviewing it in detail last month, and I’ve been consistently impressed. So I’m pleased to report that the company is launching in public beta today, and has raised a $5 million Series A round from some of its own founders (early Googlers Paul Buchheit and Sanjeev Singh) and Benchmark Capital.

On FriendFeed, you can see your friends’ published blog posts and Twitter messages, their favorite YouTube videos, their uploaded Flickr photos — and their activities from more than other 20 other sites. You and your friends each pick the sites you use, that you want FriendFeed to track for you. Then every activity is presented in a running stream, with every item from all your friends appearing in chronological order on your FriendFeed homepage.

The dynamic action happens because of two one-click features: You can comment on your friends FriendFeed activity items or “like” an item — basically a vote, that shows your name and a smiley face next to the item.

The combination of nearly instant activities of your friends pumping through FriendFeed, along with the conversations that form around them, leads to a burgeoning, ongoing discussion.

A new comment or “like” triggers FriendFeed to send the item itself (and the entire conversation about it), back up to the top of the FriendFeed stream. This gives everyone a chance to continue the conversation.

Of course, you may wonder if Facebook couldn’t easily let its users do the same thing? Couldn’t Facebook just let people include their activity from among their friends, within their news feed? In fact, Facebook is working on this, according to one recent report.

The problem with this analysis is that FriendFeed has been emerging as a different sort of tool from Facebook. The Facebook news feed is already chock-full of your friends activities on Facebook, like when they add a new friend, break up with their girl/boyfriend, or decide to attend an event. This is information about your friends’ lives. FriendFeed, in contrast is purely about the online media you and your friends think is most interesting.

FriendFeed, as well, doesn’t promote the narcissism of a social network. Facebook is basically a huge game where people compete to have the most friends (or at least the most friends who are cool) the funniest profile descriptions, etc. Subscribing to somebody on FriendFeed only means that you’ll be able to see what they share on FriendFeed, and their comments.

As Mountain View, Calif.-based FriendFeed’s founders told me last week, it’s not about articulating relationships about everyone you know, it’s not about poking and who broke up with who, it’s not necessary to friend everyone in your address book — and, importantly, unsubscribing on FriendFeed is not a social stigma.

Since the company launched last October, the average beta user (typically a tech geek and/or blogger, from what I’ve seen) shares their activity on 3.5 other sites. Personally, I use it to share my stories on VentureBeat, my Twitter updates, and maybe my shared items from Google Reader.

FriendFeed allows you to see in the ‘stats‘ area what users you find interesting (by either ‘liking’ or commenting on their items), and which find you the most interesting. The site also allows you the option to see content that someone posted who isn’t necessarily a friend of yours - but rather a friend of a friend, if your friend commented on or liked that person’s item. Both of these features lead to finding users and content that is more valuable to you quite often then simply importing a contact list (which you can also do).

Some of the most popular services include Twitter and Flickr, two services that are notably open in letting a third party like FriendFeed freely make use of their data — in contrast to sites like Facebook, that don’t let third parties like FriendFeed access and display Facebook photos.

FriendFeed itself has made openness a focus. It lets you view your entire FriendFeed in its Facebook application, or in a widget that you can put on your iGoogle homepage or your personal web site. The company is also working on improving its mobile version and its application programming interfaces so third parties can gather information from FriendFeed for their own sites.

[MG Siegler contributed reporting to this article.]

Numobiq, a company that develops a software to turns low-end mobile phones into smartphones, has raised $4.5 million from Benchmark Capital.

The Pleasanton, Calif. company launched two years ago, when former Sun engineer Mark Young became frustrated with his cellphone. He lived in San Jose, Calif., and commuted to Pleasanton, some 35 miles away, but even though his commute was predictable every day, he couldn’t easily get traffic congestion alerts sent to his phone.

Instead, he was forced to load an application, and then search for traffic conditions manually. Why, he asked, wasn’t there a way to push it all to his phone? In 2005, he left Sun to find a way to make phones smarter.

Two years later, he’s emerged with a software, currently in trials with carriers, that sits on top of a mobile phone’s operating system alongside the application platforms J2ME and Brew. Young calls the technology a “smart pipe,” because it allows telecom carriers to remotely deliver any applications or updates, as well as install new protocols.

Partner Mitch Lasky at Benchmark Capital had worked with a Numobiq employee earlier at Jamdat — and thus the connection leading to the investment.

Young, now Numobiq’s chief executive officer, served as a technical lead for more than five years on Sun’s Java 2 Platform, Micro Edition (J2ME), giving him vital experience both with mobile devices application development and the ins and outs of the mobile industry.

Young told us there’s no reason to shell out $400 to Apple to get a decent smart phone. He said all phones are capable of delivering a richer experience. Numobiq’s software is built around Javascript, so it can use web services on its platform, and it functions 24/7, so that applications can run on background throughout the day — something that isn’t possible on most Java phones today, he said.