VentureBeat

Metaplace, a company that will allow anybody to build their own virtual world and access it through through an ordinary web browser, has taken $6.7 million in funding as it nears a public release.

There hasn’t been much hype around Metaplace yet, probably because of the failure of Second Life, There.com and other virtual world companies to take the real world by storm. However, Metaplace looks like one of the more promising companies in a new generation of online gaming ventures, because it hopes to meld the success of social networking with gaming.

The comparison to be made is with profile pages on social networks. Building profiles and connecting with friends turned out to be extremely popular. Similarly, Metaplace hopes that if it makes it dead easy for users to build a small virtual world of their own, lots of people will.

As to what, exactly, is in those worlds, the idea is to leave it to their imagination. It’s difficult to create building tools that cater both to brand new users and professional game developers, but that’s what Metaplace is doing, in hopes of having both the virtual world equivalent to profile pages and multi-featured, rich worlds that can earn their creators money.

So far, the company has been testing with only a few thousand people, but plans to start allowing those people to invite friends, which should quickly increase the number of users. Those who have been trying out the service so far seem to like it, according to founder Raph Koster, who sees the first signs of a “MySpace effect” of people making very personal online homes with the several thousand building templates that are so far available.

In time, he says, as thousands of worlds get built, the best will float to the top as public destinations, while others will be more like art installations. “You start getting these worlds that are deeply weird. They don’t all look good, they aren’t all fun, but gems start to pop up,” he says. Plug-ins and modules will allow for variations on gameplay, so players can set up anything from a glorified chatroom embedded in their blog, to a full-combat role-playing game.

Metaplace’s $6.7 million funding was provided by two existing venture investors, Charles River Ventures and Crescendo Ventures, and two new individual investors, Marc Andreessen and Ben Horowitz. The San Diego-based company, formerly called Areae, has taken $9.4 million to date.

The hardest thing about starting a chip company these days is the cost. A big team of engineers has to work for 18 months or more to create a custom chip. Then it takes $1 million for the templates, or masks, that the factory needs to stamp out the chips. It takes 16 weeks for the chips to run through the factory.

The cost can hit $65 million before all is said and done. eASIC, a start-up in Santa Clara, Calif., is working hard on attacking these problems so that chip start-ups — which are kind of a dying breed in the inappropriately named Silicon Valley these days — can flourish again. The company has figured out how to reset the cost equation so that even complex chips can be affordable to design and don’t take as long to make, said Ronnie Vasishta, chief executive of eASIC.

Since the ante for chips is so big, the number of custom chips that are being designed has declined for the past decade. But since eASIC debuted its start-up friendly design process in 2006, the company has won more than 120 customer designs. Today, it is launching a second generation of its design process, Nextreme 2, that may make its customers even more competitive with the biggest chip makers.

eASIC said it will let customers design 45-nanometer chips (the number refers to the microscopic width between circuits), with the first chips coming out sometime this fall. Previously, only the biggest of chip makers, such as Intel, had access to the 45-nanometer technology. eASIC will be using a contract chip manufacturer, Chartered Semiconductor, to make its 45-nm chips.

eASIC combines two traditional chips: the application specific integrated circuit (ASIC, a $20 billion market) and the field-programmable gate array (FPGA, a $3.7 billion market). As such, its competitors are big companies that range from Toshiba to Xilinx. Some companies such as Altera , On Semiconductor’s AMI Semiconductor division, and a partnership of IBM and Xilinx have tried to create hybrid models of ASICs and FPGAs. And companies such as Tensilica and eSilicon are also trying to cut the high cost and time it takes to design ASICs. But there are built-in trade-offs to the designs.  Vasishta says that eASIC’s recipe maximizes customization without requiring extensive chip rewiring.

ASIC chips are fast and low cost, but they are expensive to design and take years to finish. FPGAs are generic chips that can be programmed quickly at the last minute to fit a rapid product cycle. But they cost a lot and are slow.

eASIC can fuse these chips by creating generic chips that are inexpensive to make. But it allows for full customization by allowing the customers to add the final layer of metal on top of a nearly-finished generic chip. This kind of customization cuts factory turnaround times and costs because it doesn’t take much time (just six weeks) or special design work to add that last metal layer. The upfront design costs can be as low as $20,000 to $100,000, much lower than the cost of designing an ASIC.

The chips therefore have the hybrid benefits of the full customization of ASICs and the short turnaround times and flexibility of FPGAs. The promise of eASIC is that it can make it a lot easier for start-ups to get to market faster. That is why it has been able to raise $80 million to date from Khosla Ventures; Kleiner Perkins Caulfield & Byers; Crescendo Ventures, Evergreen Venture Partners and Advanced Equities. Most recently, the company raised a $48 million round in March.

Getting to 45nm is a big accomplishment, since only 14 other chip makers have made such announcements. Vasishta said that the company started with 90nm technology and decided to skip the 65nm generation. For the past two years, it worked on delivering a 45nm technology that would leapfrog many competitors and put the company in lock step with giants such as Intel in the technology race.

Customers are making chips for a wide range of applications, including security cameras, cameras, smart phones, and a variety of consumer electronics and computing gear. While ASICs often require huge orders to offset the engineering costs, eASIC doesn’t require minimum orders. Roughly 30 percent of the company’s customers are billion-dollar chip makers, while 40 percent are start-ups.

Customers are expected to use eASIC’s tools so that they can begin fabricating the first 45nm designs later on this year. The first product will be a new graphics chip, Vasishta said. Full told, eASIC customers should be able to get into the make with $150,000.

Do chip start-ups really exist anymore?

Not seeing many, we were going to propose changing the name of Silicon Valley to Social Networking Valley. But now eASIC, a maker of rapid-turnaround custom chips, comes along to remind us that it’s still possible for start-ups to raise more money in the semiconductor field.

eASIC says today they have raised $48 million in a new round of venture funding from Khosla Ventures and Kleiner Perkins Caufield & Byers. The company says its combination of speed-to-market and customization gives it the benefits of two different kinds of chips: field programmable gate arrays (FPGA), which have a fast turnaround, and application specific integrated circuits (ASIC), or low-cost custom chips.

It takes a big bet like this to get funding for a chip company these days. Asked if he had any trouble raising money, Ronnie Vasishta, CEO of eASIC, said, “We didn’t go out to pitch widely among VCs this time. Maybe we might have got that reaction about not being a social networking company if we had. The shine has gone off the silicon a little bit. But we have a very big opportunity.”

The ASIC industry is about $20 billion, but the number of ASICs being designed has fallen. Only the highest-volume chips can be made as ASICs, given the high upfront costs. The FPGA industry, meanwhile, is about $3.7 billion.  ASICs go into just about every major consumer electronics product, from TV sets to set-top boxes and game consoles. eASIC has a chance to steal some of this share from the ASIC business and enable new devices where entrepreneurs aren’t counting on selling millions of units at the outset.

It has been eating away at the ASIC share, on and off, because FPGAs can be made in rapid product design cycles. Vasishta says that by making chip design easier and less expensive, eASIC could make life easier for chip startups and thereby enable more of them, even if they aren’t doing Facebook applications.

Normally, it takes $1 million of design resources and a 16-week production process to make an ASIC. Santa Clara, Calif.-based eAsic can create custom chips without the up-front engineering costs and deliver its chips within four weeks. The upfront design costs are typically only $20,000 to $100,000, said Vasishta.

eASIC can do this because it spent about five years, from 1999 to 2004, figuring out how to customize a generic chip with a minimum amount of headaches. It can now do so, Vasishta says, by laying down a single layer of metal on top of a nearly-finished chip at the very end of a manufacturing process. In the past, other companies have tried to do this, including Vasishta’s alma mater, LSI Logic. But too often those attempts required more elaborate customization procedures on multiple layers in the manufacturing. Hence, they weren’t as fast or low-cost, he said.

The chip architecture is fairly modular itself and that makes it more predictable to manufacture, Vasishta said. Thus, the chip has the flexibility of a FPGA — which are typically easily programmed but available at high costs — without the additional costs of one. Vasishta also says that his chips consume 10 percent to 20 percent of the power of an FPGA.

A chip design takes perhaps a couple of months. Then, once the design is finished, a customer can get a chip out of the factory in four weeks. By comparison, ASIC chips normally take about 18 months to deliver.

Also participating in the round were Crescendo Ventures and Evergreen Venture Partners. eASIC’s chief financial officer, Craig Klosterman, also invested in this round.

The company says that it has customers with a wide variety of applications such as portable video devices, cell phones, wireless base stations, routers, gateways, video surveillance, digital displays plus others.

Khosla Ventures, headed by founder Vinod Khosla, participated in earlier rounds. Earlier investors also included Advanced Equities Inc. To date, the company has raised $80 million.

Part of the reason is that the company spent a lot of time in development with ST Microelectronics, the European chip maker. eASIC has been shipping the 90-nanometer version of its chips since 2006 and it has customers among the top-20 semiconductor companies as well as a number of consumer systems companies.

Here’s the latest:

1) Another Googler goes to Facebook, to head its developer platform
2) Facebook traffic apparently took a dip last month — [Update: Or didn't. See Om's update, and a big looping conversation about Facebook on Techmeme]
3) Madonna latest in string of musicians to ditch record labels
4) Mozilla preparing mobile web browser, may improve mobile web user experience?
5) Mixx.com launches to let publishers give users relevant content
6) CBS acquires gossip site Dotspotter for $10 million
7) What happens when a wiki gets old?
8) Will Crescendo Ventures be saved?
9) “Virtual TV” network raises $8M
10) Industrious Kid to part ways with Steamboat Ventures
11) SendMe, a San Francisco mobile entertainment services company, acquires Mbuzzy

Another Googler goes to Facebook, to head its developer platform – Benjamin Ling, a high-ranking Google employee who has most recently led its e-commerce effort, including online payment service Checkout, is leaving for Facebook, reports Netly News. Facebook has been successfully recruiting out of Google for months, notably stealing former YouTube chief financial officer Gideon Yu (our most recent coverage) earlier this summer.

Facebook traffic apparently took a dip last month — [Update: Are we the only ones tired of talking about Facebook?] Comscore will soon release a report showing that the number of unique visitors to Facebook decreased 9.3 percent to 30.6 million in September from 33.75 million in August, according to GigaOm’s early look at the data (see table); Pageviews were also down 3.8 percent.

Some wonder if it is Comscore that is having problems collecting accurate data although Facebook itself has been citing Comscore for much of its publicly available traffic statistics.

Madonna latest in string of musicians to ditch record labels – The ever-popular and controversial artist is about to leave Warner Brothers Records for a deal worth around $120 million with concert promoter Live Nation, reports the Wall Street Journal. The money is in live performances and merchandise, not the music itself, as TechDirt has been pointing out for years. Other major artists, such as Radiohead, have also announced distribution deals that cut out the labels.

Mozilla preparing mobile web browser, may improve mobile web user experience? – Mozilla, the nonprofit foundation that leads development on open source web browser Firefox, has announced detailed, long-term plans to develop an open source web browser designed for use on phones and other mobile devices. The move dovetails with many other efforts to develop open source mobile software, such as Google’s rumored Linux-based mobile software, as gadget blog Crave points out.

Mixx.com launches to let publishers give users relevant content — The service is yet another recommendation engine, offering up content, including news stories, video and photos, depending on a user’s interests and locations. Mixx has signed deals with USA Today, Reuters.com, The Weather Channel, Kaboose and uclick Comics. It is owned by Recommended Reading, of McLean, Virginia. It has raised $1.5 million round of funding, in a round led by Intersouth Partners.

CBS acquires gossip site Dotspotter for $10 million — Valleywag got the scoop here.

What happens when a wiki gets old? — The grandaddy of them all may be revealing the answer. A study by a Wikipedia user of the site’s stats, which have been unexamined for a year, shows that edits and new account creation have both fallen from their peaks, by 20 and 30 percent respectively. The unanswered question is whether the drop in traffic is a result of the wiki fad wearing off, or simply because the online encyclopedia has reached a critical mass of information, leaving fewer opportunities to add more.

Will Crescendo Ventures be saved? — The Silicon Valley firm has been on the ropes for some time, and we wrote last year that it may not be able to raise another fund if it didn’t produce any results soon. (Scroll way down to see our original story about the firm; apologies for the buggy page). Yesterday, one of its companies, Compellent, finally went public, and it saw a 77 percent increase in its trading price in the first hours of trading — the second best performance this year. The company is unprofitable, a network storage company among a lot of competitors that have also filed to go public, or already having gone public — all losing money. The company is based in Eden Prairie, Minn., and its technology serves small and mid-sized customers. We’ll see if it’s enough to allow Crescendo to raise another fund from its skeptical investors. Crescendo owns 21 percent of Compellent, now worth in the hundreds of millions of dollars. But regulations force the firm to wait six months before it can cash in on the investment. Partner David Spreng did not respond to a request for comment.

“Virtual TV” network raises $8M — The secretive Israeli company RayV has raised $8 million in a second round of financing from Accel Partners, according to Globes. One founder, Oleg Levy, was previously an executive at Kagoor, which was acquired by Juniper Networks. It says it wants to offer a new way for “consumers to find, review, and talk about local businesses. A cross between a web-based social community and an online business directory, RAYV is where people go to express their opinions on any type of local business and get recommendations from a trusted source – their peers.” Accel Partners declined comment.

Industrious Kid to part ways with Steamboat Ventures — Industrious Kid, the Oakland, Calif. company that raised $6.5 million last year to build its site, imbee.com, as a social network for kids, is going to try to buy out one of its investors, Disney-affiliated Steamboat Ventures. Apparently, the two sides have differences in strategic direction, and so Steamboat wants to get its $2.5 million back. The companies didn’t comment on the specific reasons.

SendMe, a San Francisco mobile entertainment services company, acquires Mbuzzy — The terms were undisclosed. Mbuzzy is a four-year-old mobile start-up based in San Mateo, Calif., that lets friends share content with each other over the phone, and claims 500,000 users. SendMe previously acquired Vector Mobile, publisher of solow.com.

When Raph Koster spoke to us in December about his startup Areae, he implied that independent games had a greater earning potential than traditional studio-produced games.

Now he’s putting his money where his mouth is, launching the website Metaplace and launching today at the TechCrunch40 conference.

Metaplace, launched by San Diego-based Areae, is a site on which amateur designers can create their own games. The concept may sound familar; similar ideas are in operation at Kongregate and the Casual Collective.

The difference is that both of those sites rely on flash coders who, although they are called amateurs, have a level of specialized knowledge an ordinary person does not. Metaplace aims to enable anyone to create their own game.

The other difference is the amount of detail. When Koster showed me one of the virtual worlds his site can create, I immediately thought of the Sims; the appearance was quite similar. Games on Kongregate, by contrast, rely on extremely simplistic graphics.

Metaplace has a two-pronged strategy: Coders and designers develop gaming platforms, and users build atop the platforms to invent their own environments. They can pull in games, images and videos from other places.
Metaplace’s approach, helping star developers show off and sell their wares independently, is similar to another private venture that was just bought by IAC, Garagegames.

Although quite a few individual games have allowed users to build atop their worlds, Koster hopes that his startup will be able to grow into something exponentially larger. However, big questions remain for this company. Do people really want to mashup their worlds? Other, bigger virtual worlds like Second Life have APIs that give developers and users more options.

As of its launch today, Metaplace only has about four different templates for game creation, created by the Metaplace team. The number could someday grow to thousands. With that many designs available, users would have a nearly infinite array of tools at their disposal to create their own games.

Metaplace will open today, following the end of the TechCrunch40 conference.

Areae is backed by Charles River Ventures (previous coverage) and Crescendo Ventures.

Pure Digital, the San Francisco maker of low-cost camcorders, releases tomorrow (Tuesday) a new line of devices that let you upload video directly to YouTube.

Called Flip Video camcorders, they are the first that easily let you upload directly to YouTube. We reviewed Pure Digital in October, when it released a device that let you upload video to Grouper and Google in an easy way. YouTube, at the time, was too distracted with its explosive growth to consider partnering with Pure Digital.

Pure Digital boasts momentum, with its pocket-sized camcorders now rated among the best-selling camcorders in the U.S. They have double-digit percentage market share, the company says. The private company won’t release any more specifics. But the growth is enough, says chief executive Jonathan Kaplan, to justify raising $40 million more in venture backing, which the company also announces tomorrow. He said demand for the company’s initial Grouper/Google-sharing camcorders exceeded expectations, with more than half of buyers reporting using the camcorders to upload and share video. Kaplan said an IPO isn’t in the works yet. The goal is first to boost the company’s branding, he said.

The new camcorders will be available tomorrow (Tuesday) at major retailers nationwide. They retail at $119.99 for the 30-minute model and $149.99 for the 60-minute model.

The funding was co-led by AllianceBernstein L.P. and Morgan Stanley Principal Investments (MSPI). Heights Capital Management and existing Pure Digital investors Sequoia Capital, Benchmark Capital, Focus Ventures, Crescendo Ventures, Steamboat Ventures, VantagePoint Venture Partners, and Samsung participated in the round.

updated

Dash, the start-up offering the first car navigation device designed to be permanently linked to the Internet, has raised $25 million in a second round of funding.

The Mountain View Dash will launch its device in the Bay Area in late April, and nationally this fall, goes up against a host of other market incumbents, none aspiring to be as continuously connected to the Internet.

These other players are Garmin, TomTom and Magellan. Last week, Garmin released its own bluetooth gadget that turns your cellphone or PC into a naviation device.

Here’s our earlier coverage of Dash.

The round was led by Crescendo Ventures with new investors Artis Capital, ZenShin Capital Partners and Gold Hill Capital. Existing investors Kleiner Perkins Caufield & Byers, Sequoia Capital and Skymoon Ventures also participated. Artis is the hedge fund with family connections with Sequoia Capital, and continues to benefit from that relationship. It is one of the few hedge funds that invests alongside venture firms in Silicon Valley start-ups. It won a coveted position as the only other investor beside Sequoia in hot video-sharing company, YouTube.

Back to Dash. The company won awards at the Consumer Electronics Show (CES)
last month. It is uses Yahoo for local search, so drivers can find things like bars, restaurants and movie times, along with maps. It uses Tele Atlas for maps, and Inrix for traffic pattern data, which can used to help drivers steer clear of traffic jams.

The GPS navigation market has been on fire this year, with the market tripling in 2006 compared to 2005, said chief executive Paul Lego. He expects the device to price within the $500 to $800 range, along with the existing leading devices.

D2C Games (also known as Bigdog Games) and Areae are two of the latest game start-ups boasting “next generation” technology, and they’ve just raised millions of dollars in venture capital.

D2C, of San Mateo, has raised $1.5 million in a first round of funding (Dan Primack broke the news), but there’s no sign it is moving in the direction of the more recent start-ups, Red 5 (see our story here) and the just-announced Areae. Both of these aim to merge multi-player games with the Internet and its full Web 2.0 glory. For now, D2C doesn’t specify what exactly about it is “next generation.”

D2C is is run by Madden Football architect and Glu Mobile founder Scott Orr, and is backed by new Silicon Valley firm Rubicon Ventures, which earlier invested a seed round of $1 million into D2C. All we know is that it is focused on “casual games for a variety of platforms.” It also is a licensed Sony publisher, and plans to offer at least two games next year. (More background on backer Rubicon, its partners Mark Wilson, Paul Sherer, potential partner Ravi Chiruvolu and their apparently tortured efforts to raise $30 million for an inaugural fund, can be found here.)

Areae, of San Diego, is also being cagy, but it is overtly trying to merge Web 2.0 with games, just like Red 5. Chief executive Raph Koster told VentureBeat last weekend he has raised a fraction of the $18.5 raised by Red 5. From the sounds of it, Areae got in the low digit millions, though Koster hasn’t confirmed. Investors are Crescendo Venture and Charles River. Koster says he’s working in the virtual world area, but cautions that its different from Second Life. He distances himself from Red 5, saying Red 5 appears to be like a traditional game development studio, allocating most of its capital to developing a single (or perhaps a couple) of titles. While Red 5 says it will take years to develop its games, Koster says we’ll be hearing from Areae in 2007.

Koster is a pioneer in the multiplayer online gaming space. He was lead designer of Ultima Online and the chief creative officer of Sony Online Entertainment, and wants to merge the Web 2.0 and multiplayer game worlds from the outset — but apparently wants to invest a lot of cash into developing a few titles. Koster shares some of his views here.

Here are a few questions we asked Raph and his responses:

VentureBeat: If you’re not developing games like Red 5, what *are* you going to do? Where are you on the spectrum between Red 5 (on the game-making side, with Web 2.0 baked in) and Shawn Fanning’s Rupture (on the full Web 2.0 side, with games backed in)?

Koster: Oh, we are firm believers in entertainment and in games. But as I have said many times before, games fit inside virtual worlds — not the other way around. I think that’s a difference from Red 5, probably. The straight-up games business carries with it so many assumptions about production styles, scope, approach, and so on, all of which are in fact already disproven by the indie games movement. The largest game world today, Runescape, is an indie, not World of Warcraft.

I would describe it as marrying the Web 2.0 elements to the game elements, rather than saying that these things are on a spectrum. Rupture seems like it’s a business layered on top of existing games, and we’re definitely interested in the games themselves as well.

VentureBeat: Where do you plan to monetize?

Koster: We’re staying quiet about that right now.

VentureBeat: If you’re opening up to Web, you’re even more vulnerable to a CopyBot, no? Where is the value?

Koster: I think I hinted at this even in the original article I did for you, in the concluding paragraph. Anything that streams is vulnerable to CopyBot. But there’s a host of things that aren’t: server-side content and value, service-level value, and so on.