VentureBeat

Palo Alto Networks is announcing today it has raised $27 million in a third round of funding for its firewall appliance business.

Lehman Brothers Venture Partners led the round while other investors included Globespan Capital Partners, Greylock Partners, and Sequoia Capital. The Sunnyvale, Calif.-based company will use the money to expand its sales, marketing and customer services functions in North America as well as extend its business into Europe and Asia.

The size of the round is large for a security company that is competing with some big rivals. But the company solves problems that the others don’t and it has some well-known backers. In security, a business built on trust, the clout of the backers and the company’s newly appointed CEO, who has a wealth of experience in security technology, should help Palo Alto Networks garner more momentum.

The firewalls of the past have been designed to stop threats coming in from emails and web sites. But as employees adopt new web-based services — instant messaging, Skype, and Salesforce.com — they open up the networks to new threats. That’s where Palo Alto Networks’ firewall appliances come in, said Lane Bess, chief executive of Palo Alto Networks.

“We can monitor what the employees are using on the web,” he said.

Instead of offering generic firewall protection, Palo Alto Networks’ PA-4000 family of products can set corporate firewall protocols on more granular levels so that each user has a distinct set of permissions on a network. As a tool, it gives network administrators more control of their networks by letting them see all applications on a network.

The hardware devices have enough speed to filter the traffic without slowing down a network. They range in price from $12,000 to $80,000. It lets IT managers detect which users are installing unauthorized or personal applications on their work machines. Competing products often don’t give detailed information that can help IT managers make quick decisions about what users are allowed or not allowed to do.

Bess joined the company at the end of June. He has 25 years of experience in sales and marketing roles and was mostly recently executive vice president for global sales at antivirus software vendor Trend Micro. During his years there, he helped the company cross a billion dollars in sales. Palo Alto Networks was was founded in 2005 and has raised about $55 million to date.

Competitors include Juniper Networks, CheckPoint Security Technologies and Cisco. These incumbents are well established in corporate networks. But Bess said that he doesn’t ask CIOs to rip out firewalls that they’ve invested millions of dollars into. The PA-4000 family sits alongside existing firewalls and provides added protection without requiring a company to build an entirely new network.

Updated

Outsourcing technology startup oDesk has raised a $15 million third round of funding led by DAG Ventures.

Menlo Park, Calif.-based oDesk allows companies to hire technology “providers” like programmers and web designers, and it provides companies with the technology to monitor those remote employees. Chief executive Gary Swart says the need for such a site is growing, as the number of companies looking to outsource some tech work and the number of workers tempted by the flexibility of remote, outsourced employment are both on the rise.

ODesk is best-situated to take advantage of that growing interest, Swart says, because it’s the only company whose service handles the hiring, management and even the payment of outsourced employees. Sites like Rentacoder.com and Elance function more like marketplaces without the management or payment components. [Update: Actually, Elance has been adding some management features.] That works for small, fixed projects, but creates problems for more long-term hiring or when you want to integrate the outsourced employees into your team. Swart offered some pretty compelling evidence, too — comparing the highest-paying jobs on Rentacoder, Elance and oDesk (in oDesk’s case, the numbers are presented through a cool feature called oConomy), it’s pretty clear that the top end of oDesk jobs offer more money.

This round was actually unsolicited, Swart says, because oDesk still had around $3 million of its $8 million second round in the bank. (In fact, oDesk controls costs by using its own technology to manage 41 contractors.) But DAG’s offer, along with the fact that the venture firm didn’t insist on taking a seat on oDesk’s board, was too good to pass up, he says, and it will mean that the startup doesn’t have to look for funding later this year or early next year, freeing it to continue focusing on building its customer base and improving the product.

Existing investors Benchmark Capital, Globespan Capital Partners and Sigma Partners also participated in the new round.

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Blackwave, a video storage company that says it can store video seven to ten times more efficiently than other technologies, has raised $16 million more in a second round of financing. The company’s bold technology claims, however, can’t be verified just yet: It plans to roll out its video product in the first quarter of next year.

The market for video storage is large and increasing, because online video quality is increasing and there are more people streaming it, and so storage demands are exploding too, both from publishers who need to store it all somewhere, but also content delivery networks that store video too, such as Akamai Technologies and Limelight Networks. Blackwave serves both publishers and CDN.

The company has changed its name from Ancinon. Blackwave’s investors include Sigma Partners, Globespan Capital Partners and IDG Ventures Boston.

The Acton, Mass. company’s product is a mixture of hardware and software components. The hardware is off-the-shelf. On the software side, there are two parts. First, the software improves the process of how to store data. It seeks to understand the content, for example to distinguish between a user-generated video or a tv show. It does this by checking the “meta data” of information contained around a video identifying the name of the content and creator, for example. Then Blackwave’s software algorithms deliver storage resources based on the popularity of the content.

Update: For a more in-depth review, see GigaOm’s piece here.

Here’s the latest action:

Google adds search to Reader — In an obvious but very useful move, Google Reader, the company’s web-based RSS feed reader, has added the ability to search through your RSS subscriptions, or the categories and tags you use to organize them. So you can search for words in articles in RSS feeds you’ve subscribed to, without actually having the articles on your screen. Cool!

First venture capitalist to sell his blog: Rob Day — We’ve been a fan of venture capitalist Rob Day’s blog Cleantech Investing from the day it started. It’s about clean technology. Greentech Media Inc, a company that has just launched to focus on the clean-technology sector, has acquired the blog for an undisclosed amount, and now runs it on its site. By the way, Greentech Media is also pulling feeds from VentureBeat’s articles about clean-technology. It provides links to our full stories. Day told us about the purchase last week, but we were waiting for Greentech to launch and get its feeds squared away, which it did yesterday. Day now works for @Ventures.

Quattro Wieless raises cash to help companies adapt their Web sites to mobile versions – The Waltham, Mass. company serves businesses by providing them with mobile versions of their sites. This field has many competitors now. The year-old Quattro has raised $12.3 million in a second round of funding from Globespan Capital Partners and Highland Capital Partners, bringing its total funding to $18 million. It provides online software to let companies see what their mobile site would look like. If the publisher likes it, they can join Quattro’s network, which customizes it for most mobile devices. The company helps publishers serve advertising on their mobile site, and takes a cut while doing so.
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Universal sues Veoh — Universal Music Group, a record label that has been actively suing music and video-focused startups, is at it again. It is suing Veoh, a site where you can upload and share videos, for letting users upload and share videos that Universal claims a copyright to. Veoh received threatening letters from Universal earlier this summer, and actually counter-sued for court protection against Universal in August, saying that it should not be held liable for what users do on the site. Universal was not deterred. Paid Content has more.

Groxis, the company with a visual search engine, now gets third CEO in little more than a year — We profiled Groxis and its search engine Grokker here and here. It was an early challenger to Google’s search format. Instead of giving you pages of results, it provided spheres, breaking out result by categories. Search for Paris, for example, and you’d get spheres titled “History,” “Museums,” “Universities,” “Hotels” and so on. It was always a bit complicated, however, and it has struggled to find direction. It has moved away from the sphere format, and is clearly still experimenting. We’ve heard almost nothing new from this company in years. Here’s the announcement of its latest CEO, Randall Marcinkio. He replaces Brian Chadbourne, who replaced founder and CEO R.J Pittman last year. Groxis raised $16 million for its search engine Grokker from investors including Draper Fisher Jurvetson, Jackson Boulevard Capital Management and Draper ePlanet Ventures.