VentureBeat

With the major U.S. telecom carriers rolling out ways to track the location of mobile phones with more precision, startups are rushing to offer services exploiting this.

Krillion is the latest Silicon Valley company to seek possible salvation in this so-called “location based” technology.

Krillion emerged last year with a way to find specific consumer electronic and other products in local stores, and their exact availability in those stores. However, it’s service originally targeted the PC Web. Like many other companies, the Mountain View, Calif. startup found it difficult to become a destination site online because of all the noise out there. So for starters, it changed course and offered its local product search technology to third parties, including manufacturers like Panasonic. (Using Krillion, Panasonic lets visitors to its Web site find out which local stores carry that Panasonic flat-panel 32LX70 TV they’re dying to buy.)

But now Krillion is placing a big bet on a mobile application for the first time. It’s just raised $6.1 million more in venture capital backing, in part to help it go after the mobile opportunity, including writing an application for iPhone. The financial backing comes from Leapfrog Ventures, which led the round, and Hummer Winblad Venture Partners. The round is an extension of the first round of capital raised last year, when the company raised $3 million.

The new Apple iPhone being released next week is just the latest development whipping up a frenzy in this area. The iPhone is widely expected to offer Global Positioning System technology, which uses satellites to pinpoint the whereabouts of iPhone users. Whrrl, Yelp and many other companies are writing applications that draw on the iPhone’s location awareness, as VentureBeat staff writer MG Siegler pointed out yesterday. The iPhone’s great browsing interface arguably makes it more likely people will use the iPhone to interact more with their surroundings.

Aside from the hype around the iPhone’s expected GPS technology, Krillion chief executive Joel Toladano tells me the iPhone’s existing ability to tap into WiFi routers to judge the location of a user (iPhone uses a WiFi mapping company called Skyhook to do this) will already help his application. Unlike GPS, which relies on line-of-site to judge location, WiFi works well indoors. The company expects the mobile application to be released later this year.

Peanut Labs is a great example of how an inexperienced yet scrappy team can scramble toward a new strategy to save themselves. The company, formerly called Xuqa, has just raised a $3.2 million round of capital to bolster it in its new mission.

Xuqa, you’ll recall, was a fast-growing social network when it started in 2005. It got big in Turkey and Iran, but rivals like MySpace and Facebook quickly took over the US and started targeting large swaths of rest of the world.

Xuqa’s 20-something founders initially raised a small amount of funding, but then realized they were running out of money because they didn’t have a way to monetize their site.

After much experimentation, they discovered that social networks were a great place for doing market research — and making money (see our coverage here). They’d get paid by researching companies to run simple surveys for users, then collect that data and send it back to the researching companies.

This strategy worked so well that San Francisco-based Xuqa completely changed direction nearly a year ago, renaming itself Peanut Labs, and began running surveys across widgets on other social networks. I covered the company’s evolution in some detail last July.

Today, Peanut Labs says it will have “seven-figure revenues” for the 2007 fiscal year, along with 20 percent month-to-month revenue growth. It expects “eight figures” this year.

The company has some promising internal numbers. Its surveys reach some 27 million users, across 70 widgets on social networks like Facebook and MySpace. It has had more than half a million people respond to surveys in the last two months, with a response rate of 29 percent. It is gaining 100,000 new social network users to sample, per month.

The average widget publisher who uses Peanut Labs is making $20,000, the company says.

It has taken on the additional round of $3.2 million in funding from return investor BV Capital and new investor Leapfrog Ventures. It plans to use this money to expand its services for its market research clients, and improve the survey-taking user interface.

1. Amazon S3, VentureBeat go down
2. Montalvo Systems vs. Intel, with chip for handheld devices
3. Fox Interactive to introduce “music Hulu for MySpace”
4. Yahoo’s board moving against Yang
5. Google searchers are wealthier, buy more online
6. Xobni hires Jeff Bonforte away from Yahoo, to be its new CEO
7. Stormfisher raises $350 million for biofuel project
8. Cable veteran Philip Balboni moving to online news site
9. Nielsen buys Audience Analytics
10. Air commuter conference coming up this spring
11. Report: Online Community Best Practices
12. Wal-Mart chooses Blu-Ray

Amazon S3, VentureBeat go down — Online data storage service S3 went down. Affected startups include SmugMug, 37Signals, Twitter and many others. Lots of coverage on Techmeme. Earlier today, VentureBeat was down because of separate hosting problems.

Montalvo Systems taking on Intel, focusing on a chip for handheld devices — It has designed a chip for smartphones, notebook computers and other portable devices, that should run software that works on Intel or AMD chips. The company’s plans have been outlined in some detail by Michael Kanellos at CNET (our previous coverage ).

Montalvo’s chips, however, will fundamentally differ from the latest Core or Opteron processors from Intel and AMD in that the cores on its chip won’t be symmetrical, i.e. identical to each other. Instead, Montalvo’s chips will sport a mix of high-performance cores and lower-performance cores on the same piece of silicon, similar to the Cell chip devised by IBM, Toshiba, and Sony, according to sources close to the company.

It has received more than $73 million venture and private equity firms including Bay Partners, NEA-IndoUS Ventures, U.S Venture Partners, Leapfrog Ventures, CMEA and Adams Street Partners.

Fox Interactive to introduce “music Hulu for MySpace”– The project, which is still being put together, intends to sign up all the major music labels as content providers — who would get equity. The music would be distributed on widgets and contained in a portal page, similar to video-sharing site Hulu, which Fox is a part of. The music on MySpace would be DRM-free and ad-supported. PaidContent has the scoop.

Yahoo’s board moving against Yang — Founder and chief executive Jerry Yang and a small group sympathetic members are trying to avoid a sale to Microsoft at all costs. But Yahoo Chairman Roy Bostock is leading an informal group of board members and billionaire Ron Burkle who think that Yang may be ignoring his fiduciary duty to maximize shareholder returns. The New York Post has more.

Google searchers are wealthier, buy more online — Hitwise numbers here. See chart for more.

Xobni hires Jeff Bonforte away from Yahoo, to be its new chief executive — Bonforte was previously a vice president who helped lead the growth of Yahoo Messenger. Company blog post here.

Stormfisher raises $350 million for biofuel project — It turns agriculture and food-industry byproducts into methane gas, which reduces the levels of waste in landfills. The investor is private equity firm DenHam Capital, which has already sunk many millions into biofuel projects.

Cable veteran Philip Balboni moving to online news site — He’s leaving New England Cable News to join online international news company Global News Enterprises LLC, which is slated to launch in April with more than 70 international correspondents. The new company has taken on around $8 million from angels. (Photo via Columbia University.)

Nielsen buys Audience Analytics – The web measurement company says the Provo, Utah-based startup will improve its ability to handle large quantities of audience measurement data

Air commuter conference coming up this spring — Tech commentator Esther Dyson and publisher Imaginova are teaming up to organize the fourth annual Flight School from July 4-6, an event that brings entrepreneurs together to talk about innovation in aviation and space travel. The focus is still on “air taxis” — basically, smaller planes making local flights on-request — but Flight School’s scope will be broader this year, Dyson told us. Since the conference began, air taxis have become a marketplace reality through companies like DayJet, and commercial space flight is becoming more and more practical too, Dyson said. She added: “When I was a kid, I took it from granted that I would go to the moon. Now it looks like I’m going to have to work pretty hard to get there.”

Report: Online Community Best Practices — Forrester analyst Jeremiah Owyang delivers the report (buy here). Its tagline is “Communities Are A Powerful Tool, As Long As You Put Members’ Needs First.”

Wal-Mart chooses Blu-Ray — More here. Meanwhile, Toshiba may be ready to give up on HD DVD.

Like, the San Mateo company lets you search for items to buy based on visual characteristics you’re looking for, has raised $3.3m more in financing.

Like’s chief executive Munjal Shah has proven nimble. He started two years ago with photo search, with a product originally called Riya. He then changed quickly, when he realized the market was stronger in visual search for shopping. Riya is the name of the parent company.

Like is now getting three million monthly unique visitors a month, Shah says. That’s been driven by new features, including one that lets other site owners make their own images clickable, and then searchable by Like. To do this, Web site owners add a line of javacript code to their site, and this highlights items in an image, so that you click on specific item, for example a shirt someone is wearing, and Like does a search for it.

Like has also bought Adwords beside Google search results to drive traffic. Finally, Like has worked hard to increase click-through rates in other ways. We’ll be hearing more from Like soon.

Here’s our previous coverage.

Investors include previous investors Nokia Venture Partners, Bay Partners, and Leapfrog Ventures.

It’s getting harder to fund chip companies.

Venture capitalists say the investment payoffs are lower than they used to be. Few companies go public at $1 billion valuations anymore. Mercury News chip expert Dean Takahashi has a good summary of the sector’s challenges.

This sentiment follows the one expressed by venture firm Sevin Rosen Funds, which returned money to investors last week, saying the investing environment is terrible. Sevin Rosen has focused more on chip and other hard-core infrastructure companies than other venture firms — another explanation for why they may be feeling more pain than others. They’ve invested in few consumer Internet companies.

Chip start-ups account for 10 percent of the money poured into all start-ups, compared with 22 percent in 2001. The average amount of money invested per deal is down to $9.4 million, from $11.9 million.

Even then, the start-ups keep coming. For example, Dean reveals one stealthy chip company Montalvo Systems, a fabless chip company reportedly working on a low-power chip for portable electronics. it is backed by some heavyweights like Vinod Dham, “father of Intel’s Pentium” processor. The company raised $4.5 million from Leapfrog Ventures last year.