VentureBeat

I remember a care-free time when salmonella and E. Coli were confined to rotten eggs, bad meat and the occasional unfortunate fast-food chain. That age of innocence has passed. Now dangerous bacteria could be everywhere, not only in your beef but in your packaged spinach, your green onions — even that innocent-looking jalapeno you’re about to eat. But YottaMark, a Redwood City, Calif. company, has just raised a $10 million second round of funding to help you take a stand.

The company has developed a low-cost way for fresh produce companies to track their goods from the farm to the grocery store and offer their consumers a way to do the same. Using a 12-digit code printed on the label or affixed to the packaging, consumers can visit a website, send a text message or a picture of the label taken with their mobile phones and get info about the history of their produce: Where it was grown, when it shipped and everywhere it’s been along the way.

Providing this degree of transparency, the thinking goes, will let produce companies reassure their customers — both retailers and consumers — that the fresh food they buy comes from reputable sources and is not going to make anyone sick. It also allows the these companies to find out if, say, a shipment of blueberries bound for Mexico actually ended up in Texas, instead. While the company won’t disclose its pricing structure, the fact that the technology relies on printable codes instead of more expensive alternatives like radio-frequency identification tags (RIFD) means it can actually be deployed on every unit sold.

While it’s hard to picture mass-market consumers actually visiting a website to type in 12 digits from their package of strawberries or taking a picture of a bar-code on some bananas and sending it in, this may not actually be the point. Perhaps the marketing value for produce companies comes from being able to claim that goods can be tracked to the source.

YottaMark is also targeting its offering at electronics companies concerned about counterfeit goods marketed under their brands. Back in April, VentureBeat’s Dean Takahashi looked at this issue and reported that approximately one-in-ten tech products sold is fake. The company has yet to announce any customers using it to combat this problem, but says it will soon. However, while RFID will remain too expensive for produce for a long time to come, it’s not clear how YottaMark will sustain its competitive advantage in more expensive electronics as the price of RFID technology declines.

The $10 million came from Granite Ventures and included ATA Ventures and Thomvest Ventures and will be used to expand YottaMark’s sales and marketing efforts. ATA and Thomvest participated in the first round, whose total has not been disclosed.

When it comes to their audiences, most blogs have a knowledge gap: while Google Analytics is wonderful for determining the sources and volume of their traffic, it tells them very little about the people that constitute it.

Expensive traffic measurement services like ComScore and Hitwise, which analyze audiences by recruiting large groups of people and following their surfing patterns, work well for sites with tens of millions of visitors, but their utility starts to wane for smaller sites. There’s simply not much Comscore or Hitwise can tell these sites about their readership demographics, and this information can be highly useful when negotiating CPMs.

As a result, they’re forced (as VentureBeat did last year) to construct their own survey, post a blog to try to get their readers to fill them out, and do the analysis themselves. Crowd Science, a company based in both Silicon Valley and Toronto, wants to take the pain out of this process. The idea is simple: add a line of code to your blog, fill in some details about the topics you write about, and Crowd Science will take care of the rest.

Theorizing that a blog with a loyal following will have a number of readers willing to participate out of the kindness of their hearts (and not out of a desire to win an iPod) Crowd Science uses text ads to solicit readers for an eight to fourteen question demographic survey. Instead of bombarding every visitor with these ads (and thus sucking up valuable space for paid ads), the solicitations only show up occasionally. Crowd Science CEO, John Martin, says that for blogs with sufficiently engaged readers, this formula will be garner the 40-50 per month participants necessary for statistically relevant results.

Assuming Martin is right, the information that comes out of these surveys is much more accurate and valuable than the relatively rough demographic data one can get from a service like Quantcast. And unlike to the somewhat comparable company, Vizu, which simply deploys rudimentary one-question polls, Crowd Science has carefully constructed surveys that avoid creating bias and get comprehensive data with as few questions as possible. Crowd Science also customizes the survey to a blog’s content, so along with the typical questions about gender, income, race, etc, a survey for a blog about, say, video games will include questions about which consoles the readers own, what games they like to buy and how often. The service makes it easy to chop up the data along any variable and, importantly, package and display it for the sake of advertisers.

But therein lies a number of rubs: Martin says that his primary targets are middle-tail blogs that actually make real money from advertising. But in reality, there isn’t a huge number of these. In order for the product to matter for the bottom line, a blog owner must be selling his or her own ads, and there are even fewer of those sorts of bloggers. To scale, Crowd Science will have to find a way to plug its data into ad servers and automatically improve targeting, which is far from a mean feat.

Further, Crowd Science’s process requires 40-50 new participants every month and offers no incentive, and while it’s probably true a lively blog has a number of willing readers, their numbers may be finite as well.

But if it can find a way to improve targeting automatically and keep its data fresh, Crowd Science has the potential to carve itself a profitable niche.

The company raised $2 million from Granite Ventures at the end of last year.

With the market for hybrid electric vehicles (HEVs) finally starting to heat up in earnest, several companies are making big bets on advanced rechargeable battery technologies. One of these is PowerGenix, a San Diego, Calif.-based startup that makes nickel-zinc (NiZn) batteries.

Another is ZPower, a startup that hopes to oust lithium ion as the dominant technology by developing advanced silver-zinc (AgZn) batteries. While they offer greater power density, AgZn batteries haven’t been used much because they allow for far fewer recharges than lithium ion batteries. ZPower has now succeeded in increasing the number of times its batteries can be recharged to be competitive with the latter.

NiZn batteries are smaller, lighter and more powerful than competitor technologies, such as nickel-cadmium (NiCd) and nickel-metal hydride (NiMH). Because they contain no toxic materials, they are environmentally safe and easy to recycle. PowerGenix’s CEO, Dan Squiller, said his company’s batteries are 50 percent cheaper than lithium-ion and 20 percent cheaper than NiMH. Not only that, they also offer a major power boost over the latter: 30 percent more — which, for HEVs, could translate to a 30 percent mileage increase.

Squiller believes his firm’s consumer AA batteries could grab a large share of the roughly $400 million rechargeable battery market. Unlike its rivals, whose batteries’ output typically peaks at 1.2 V, PowerGenix’s rechargeable batteries boast a 1.65 V output — even higher than standard throwaway batteries’ 1.5 V output. The company plans on inking several distribution agreements within the next 2 - 4 weeks.

Though he was coy on the details, Squiller told me PowerGenix had already secured over $40 million in supply agreements with several major power tool companies in Asia and the U.S. When I asked him what his game plan was to take on the industry’s heavy-hitters — companies like Sanyo, Panasonic and Johnson Control — he readily admitted that he didn’t foresee PowerGenix competing on the same plane anytime in the near future.

PowerGenix’s business strategy is two-fold: It plans on licensing its D-cell battery pack technology to OEM partners for the HEV market and, for all other device applications, will manufacture the batteries itself. One benefit of this strategy is that it avoids the need for PowerGenix to invest a lot of money in its own costly manufacturing processes: Because NiZn batteries are designed to use exising NiCd and NiMH processes, the firm will rely on its partners to build the batteries and incorporate them into a range of devices.

Squiller gave a blunt assessment of the battery industry’s future landscape, predicting prices for lithium ion batteries would rise and deeming most emerging technologies, including nanowires and supercapacitors, still too early for commercial-scale production. Though he commended A123 Systems‘ decision to switch to a nanophosphate lithium ion technology for safety reasons, he said the move had come at a performance cost for its batteries.

He predicted his company would reach full-scale production by the second half of 2009. PowerGenix plans on raising a fourth round of funding this summer and is seeking another $15-20 million to help it scale up its production capacity. It will start the round in early June and expects to wrap it up by the end of September. Squiller said he was looking for one lead investor with experience in the cleantech sector. PowerGenix has raised $31 million so far and has received support from Angeleno Group, Advent International, Technology Partners, Granite Ventures, OnPoint Technologies and Braemar Energy Ventures in the past.

His ultimate ambition is to replace all NiMH batteries with NiZn batteries — a decision he says makes sense from both a performance and financial perspective. Not too shabby for a technology that last saw its heyday in Thomas Edison’s time.

There has been no shortage of attention to market research in the past few years. Established business like Nielsen and J.D. Power have struggled to encompass the Internet and use its information to give their clients a better idea of how new products are seen by consumers. Where they’ve fallen short, multiple startups have bloomed to do a better job.

The innovation has led to plenty of acquisitions: Umbria, Buzzmetrics, Telephia, Audience Analytics and others have all made exits for their investors. But according to Biz360, which just took a fresh $10 million round, the market for market research is still seriously lacking in creativity.

Biz360’s current offering is a media tracking tool called Media Insights. Any time someone like me writes about, say, a digital camera, Biz360’s automated process picks it up and does some analysis on the thrust of the article: Did I like or hate the camera, and why? The data is then returned to the business customer that produces the camera. But what corporations choose to do when given that data is changing, says CEO Brad Brodigan.

“Two years ago, people were buying media analysis for defensive purposes — they wanted to know when people were saying bad things,” says Brodigan. But now companies want to know how to compete better. “What’s driving someone to buy one digital camera over another, or one car over another? There’s been a big shift from defense to offensive tools,” he says.

That sort of information is mostly revealed by customer opinions, of course, which means Biz360 — and its competitors — will have to move toward much more analysis of social media and customer opinion on websites like Amazon.com. Brodigan admits that some companies already do that, but says Biz360 will provide a superior product by merging its new findings with its existing media research.

And, in any case, the trick is in the analysis, not simply collecting the data. There’s no shortage of information on the Internet, but just like search engines, market research startups have to find ways to understand that information, and give it to their clients in a processed, easy-to-understand format. The aim is not just to see whether people like your camera, but specifically which features and characteristics they like and dislike.

Startups are hard at work to bring that level of detail to market research. One example is Networked Insights, which tags reviews and conversations to figure out, for instance, what percentage of customers really care about the camera’s 24X zoom. Another company is BuzzLogic, which recently acquired the Firefox add-on BlogRovR, to give it better data. But as far as the old guard of market research, Brodigan says he doesn’t think there are any that have a strong product. And down the line, that will likely mean another round of acquisitions by companies struggling to catch up.

The $10 million funding was led by Foundation Capital, and partner Bill Elmore joined the board. Previous investors Granite Ventures and Scale Venture Partners also participated. It’s the second full round of funding for Biz360, but it hasn’t disclosed the total amount of the first round. The company is based in San Mateo, Calif.

Fulcrum Microsystems has created an alliance for its partners to adopt its chips more quickly and has raised $29.2 million in venture capital.

The Calabasas, Calif., chip company has now raised nearly $100 million in five rounds since its founding in 2000. That’s a big chunk of change and it has been able to do so because its esoteric chip architecture has paid off, said Mike Zeile, vice president of marketing, in an interview. The result are faster, low-power chips that are useful in networking and storage equipment in data centers.

The company uses a form of computing dubbed “asynchronous,” a technology invented by its founders — Uri Cummings and Andrew Lines — while they were at Caltech. That means the chips are unlike others in that they have no crystal clock that keeps the timing consistent throughout the chip. Rather, the components on the chips can operate on their own at faster speeds and are synchronized or coordinated only as needed.

At first, it was a struggle to prove that the asynchronous technology could work. Fulcrum had to adapt its designs so they could work in the most modern chip factories. When it launched its first Pivot Point chip in 2004, customers didn’t quite know what to do with it.

“We had a hammer and we used it for everything,” Zeile said.

Then it adopted a hybrid approach that combined both asynchronous and synchronous components on the same chip, Zeile said. The chips have found homes in high-speed communications equipment in enterprise data centers as well as devices at the network’s edge.

Today, at the Interop show in Las Vegas, Fulcrum announced its ControlPoint Developer Alliance with nine companies to enable communications equipment providers to create switching technologies with Fulcrum’s chips more easily. The companies include Continuous Computing, Green Hills Software, Liquid Computing, Nimbus Data Systems, Open Grid Computing, Panasas, Quadrics, SMC Networks and XORP. Zeile said this will create an ecosystem that will improve chip adoption.

“We give them off-the-shelf software so they can get up and running,” Zeile said.

The investors include Granite Ventures, Infinity Capital, New Enterprise Associates, Palomar Ventures, and Worldview Technology Partners. Also included is an unnamed strategic investor.

The company has 65 employees. It has more than 80 designs under way at 50 or 60 customers. Its primary competitor is Broadcom, which makes synchronous-only chips.

Every part of our visual life is being taken over by video.

SellPoint is just the latest company to conspire with the takeover: The start-up produces online video tours for products, and is replacing that comely sales representative who once greeted you at your neighborly electronics store. To develop the tours, SellPoint studied everything an on-site salesperson might provide, then tried to offer an online equivalent. Potential buyers can look at a product, of course, but they can also get an overview of its features and download pamphlets and other material. (Check out a sample product tour here.)

The popularity of SellPoint’s tours has increased dramatically in the past year, says chief executive Rick Martin. Manufacturers are realizing that even if online sales aren’t a big moneymaker, many shoppers are doing their initial research on the web.

Manufacturers like Canon, Epson and TiVo have hired to SellPoint to create these tours and syndicate them through a network of more than 100 online retailers.

Web Collage syndicates promotional material and Vendaria Media can create similar content, but Martin says SellPoint is the only company that both produces the content and syndicates it.

SellPoint started out in 2000 under the name Ten Toe, but it didn’t find its current business model until 2005, which is also when it raised a its first $7 million of venture funding. This second round money comes from Granite Ventures and previous investor Menlo Ventures.

Bunchball masquerades as a network of casual game widgets that you play within a social network like Facebook — not unlike competitors Zynga and the Social Gaming Network. But it’s really doing much more. It collects data about your behavior when you play, and uses that data to build games and virtual worlds for the web sites of TV shows and movies, such as this one for The Office.

These games are supposed to give media companies a way to take advantage of popular brands to grow their online presence, creating new places to sell anything from online ads to mugs — and so far, they seem to be working very well. Current investors Granite Ventures and Adobe Ventures have been impressed enough with the results to recently add $4 million on top of a $2 million previous investment.

To collect its information, Bunchball tracks things like the time you spend on the site, the buttons you click on, and the videos you watch in order to learn what you like. It uses those metrics to create what it describes as “rules” for different behaviors that a media company might want to encourage on a game.

Bunchball’s game platform, Nitro, then matches up what it learns about user behavior on social networks with data from a media company’s site — the number of times a game is played, the number of posts to a forum, etc.

Next, it assigns the value of the action relative to the behavior it wants to promote. For example, if the game relies on earning points through interactions, as many do, Bunchball will assign different numbers of points for things like posting to forums or winning contests.

Once Bunchball has established the rules, it builds games around them that encourage competition, cooperation — anything that will get users addicted.

A simple example of behavior manipulation through competition is adding a leaderboard to a game that displays rankings for winners. Other incentives and rewards might include points, levels, challenges and trophies.

Bunchball’s The Office game-focused virtual world

The plan seems to be working well enough for its start. NBC hired the company to do The Office, hoping for 10,000 to 15,000 users. Instead, it gained more than 200,000, more than 80 percent of whom are active.

Check out this website for The Office, themed as “Dunder Mifflin,” the fictional paper company featured in the show. Viewers sign up to become fictional Dunder Mifflin employees, based on “branch offices” — their actual locations. Then they do things like make videos of themselves as employees to enter into contests for which branch has the best employees. The winners get virtual currency called “Scranton bucks” 0r Sb’s that they can use to buy virtual goods, like the mug at the top of this article. The site uses a leaderboard to show who the top employees and branch offices are, which helps spur competition.

The Office, the show, is centered around interactions between co-workers at their desks. So NBC used Bunchball’s “virtual room” module of its selection of game features to create virtual desks that users can put their virtual goods on — a sort of way for users to mimmick their favorite characters.

For a more detailed walk-through, see the company’s explanation here.

Bunchball’s business model(s)

Bunchball makes money by getting paid for its game services and for advertising shows within social networks.

Clients — including NBC, CBS, Lifetime and other large media companies — pay for a license to use Nitro, including a pricing tier for the number of application programming interface calls they make. There are also for-pay features like the “virtual rooms module,” the feature that NBC uses for its virtual desks.

These large media companies can in turn advertise their games within shows, for example by making a character in a TV episode of The Office mention a contest. The games can then become new venues to sell advertising in. One company, Mastercard has run ads in the The Office site for its corporate account plan to reach office-oriented fans of the show. They also use the site to advertise swag for the show, like actual mugs (pictured).

Bunchball, the company

Bunchball itself is a typically scrappy widget company, having evolved from building Flash widgets within social networks to being this game-creator for other companies.

“We realized the big opportunity wasn’t game content, but was meta-game experience,” Bunchball’s vice president of business development, Gene Mauro, told me when I ran into him at the MySpace developer’s platform event, where he was scouting out MySpace’s potential for its games.

The company has also gotten a lot of attention for building games that run across social networks, called Bunchball Games & Avatars. These games include a virtual currency and a single gamer identity that works across sites (see here for our coverage of this and other cross-network applications). Notably, Bunchball has also created another venue for advertising: Featuring its large clients within its social network games.

Bunchball is making this happen because it treats social networks like a giant petri dish, using them to both learn about and promote their creations. In fact, it uses what it learns through Nitro to make its own social networking games better, which Mauro says has contributed significantly to their growth on social networks.

For more background on how the Redwood City, Calif. company got started, read this column that Bunchball chief executive Rajat Paharia wrote for us last year.

Cisco, the large networking company, said it has agreed to acquire Navini Networks, a company that offers a WiMAX “upgrade” for mobile customers, for $330 million in cash and stock.

This shows that Cisco is getting serious about WiMax, a technology long in development but which is now being deployed in earnest. It differs from WiFi in that it has much longer ranges — as much as 10 miles vs. WiFi’s reach of a few hundred feet.

Navini enables mobile PC users to more easily access WiMax networks. The Richardson, Texas company provides a CPE and PCMCIA cards that allow WiMax access without an install, and powers them with “smart beamforming,” giving carriers more flexibility and lowering their costs.

Cisco said the acquisition would help extend Cisco’s WiFi offerings to include the more powerful broadband WiMax technology, over any device over any networks.

Navini’s offerings include base stations, adaptive antenna arrays, management systems, and subscriber modems, and has been sold to more than 75 customers in several countries.

A warning signal for Navini came in May, when one of its venture backers, Sequoia Capital, did not participate in the company’s sixth round of financing. Seequoia looks for big wins, and its lack of support may have signaled that the company didn’t have what it would take to be a stand alone company — though we don’t know for sure. Navini, founded seven years ago, had raised $195 million from Arcapita Ventures, Austin Ventures, Alcatel Ventures, Cross Atlantic Capital Partners, Granite Ventures, Intel Capital, Sequoia Capital and Sternhill Partners.

Read the rest of this entry »

Telltale, the San Rafael, Calif. company that makes interactive games, including Sam & Max, has raised $6 million in a second round of financing.

The three year old company is already profitable, having pursued a strategy of making games much more rapidly and cheaply than the large game producers such as Electronic Arts. Rather than trying to produce blockbusters games costing in the millions of dollars, Telltale seeks to make games in episodes (the popular Sam & Max just concluded its first season of six monthly episodes, for example), which keeps the games fresh, creating buzz on chat boards. It also forces a snappy release schedule.

Granite Ventures led the round, with IDG Ventures in San Francisco participating. Telltale raised some $800,000 in an angel round in February last year.

With Sam & Max, Telltale has already made money, chief executive Dan Connors tells VentureBeat, by selling the game through multiple channels. One is through Turner’s Gametap (see here), which is a subscription broadband service for games, costing $9.95 a month. A second is by direct downloads from Telltale’s site. Other ways, still in the works, are syndication with other Web portals (still be announced), possibly along with advertising, and as retail game in stores, aimed at consoles.

Some other companies are pushing episode strategies. Kuma War Hothead games for examples.

The VC snoman video reminds us of a post we’d intended to write, but which we dropped when ValleyWag got there first.

It is about the proper etiquette for a venture capitalist, while hearing a pitch from an entrepreneur.

VCs are the ones with the money, so they can treat the poor entrepreneur as they please, right? That means fiddle with their blackberry, take calls during the meeting, arrive late, and so on.

Well, Mark Suster, chief executive of Silicon Valley content collaboration start-up Koral, recently lost it while visiting a venture firm called Granite Ventures in San Francisco. His rant is long, but here’s the gist:

So I’m stuck with the paper shuffler and the Blackberry man. I am not kidding you when I say that I was on the verge of literally saying, “let’s just call this meeting a day. It’s clear you have no respect for me and no interest in my company.” I bit my tongue (which my wife will tell you is rare). I finished the next 15 painful minutes and said goodbye. My only regret … the $25 I had to pay to park in their building. They were seriously the most pompous, self-centered, unprofessional group of people that I have come across in a long time. I went to back to their website and unsurprisingly there were no great companies I had ever heard of. I later learned that they were a spin out from an investment bank. It all made sense. They were not “real” VCs.

Valley gossip site Valleywag unearthed the fact that the firm he ragged on was Granite, and at least provided some perspective on the firm. It isn’t that second rate.

The amusing thing is that VentureBeat had the same experience with the Granite guys, but came away with a slightly different feeling — perhaps because we weren’t pitching, merely doing a routine meet-and-greet. They came and went as they pleased during the meeting, and several of them had their phones out, and were fiddling. So much that I even switched the conversation to compare the various phones we had around the room. That livened them up a bit. I wasn’t dismayed by their etiquette. Five partners were there, and that wasn’t like most VC firms, where I typically am able to meet with only one or two, or at most three partners. I appreciated the informality. And I’ve long gotten over the cellphone fiddling. At dinner recently, a friend started checking her Treo email during dessert, so I took the opportunity to check mine too. And valley entrepreneurs like Pankaj Shah sleep with their Blackberry and don’t stop checking it when we’re around them (see story, and click on image for video clip, and then hit play). So we checked in with Mark Suster to ask him why he took it so hard. We also contacted Granite a few weeks ago for comment, but they never responded (also common VC etiquette).

Suster (pictured left) said he wrote his piece more as a caricature, and never intended to out the firm, or make anyone feel bad. The firm had indeed stood out from among the 14 firms he’d visited. However, Granite’s lead partner had called him as he had seen the piece, and apologized. Another partner let him know his wife had a baby, and while not an excuse, he’d been particularly distracted. Suster clearly didn’t want to inflame the situation any more than he already had. Good news is, Suster has raised seed funding — clearly, not from Granite.

Our social norms are changing. Question to entrepreneurs: In 2007, will it be ok for VCs to fiddle with a Blackberry while you’re pitching? Or not?

Bunchball, a Redwood City start-up that lets people create Flash-based interactive games for multiple players, and then insert them in blogs and other Web sites, has raised around $2 million in in a first round of funding.

Backers included Adobe Systems, which makes the Flash technology for these games and Granite Ventures, an SF venture firm that has been affiliated with Adobe in the past.

Bunchball was founded by Rajat Paharia and Sunil Singh. There’s more at the company’s blog, including a list of the games developed so far. They range from the classics like Asteroids to spicy but mindless “How hot?” (click on image at left).

The company had said it has raised money. But PE Week first reported the amount, citing a regulatory filing.