VentureBeat

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Software giant Microsoft reportedly spent $500 million to acquire Danger, the company that developed software to power the youngster-popular Sidekick.

The figure, while not officially announced, was dug up in reporting by GigaOm’s Om Malik. We haven’t confirmed that exact figure, but we do have enough info that suggests investors made a very good return.

The acquisition comes after Danger swallowed some $225 million from investors, Om says, though I think that some of that may have been debt because we’ve been told the equity investment was less than that (see update below for exact numbers, which suggests the investment was indeed lower). The company’s chief executive Hank Nothhaft was insisting yesterday that the outcome was a “very, very strong exit” for its backers, and it probably was. The company’s valuation crept up steadily from 2000 from about $27 million to $190 million last year, according to our source. So investors pumping in money at these levels all appear to have done well, even the earliest ones who had their money locked up for eight years (we mentioned the investors in our story yesterday; Mobius, though, was the earliest backer).

More interestingly, however, is Om’s thought on why Microsoft is making the move — it wants to “pull an Xbox” on its mobile phone business. Not only does it want to extend beyond the business world and entice consumers, it also wants to use Danger’s software-as-a-service technology to offer “Microsoft Services” such as search, mail and instant messaging on the Danger platform, using it to compete with Google Android.

Like Om, we believe Microsoft should open up Danger’s platform in a more radical effort to make it attractive to developers. In the mobile world, it still has a lot less to lose than it does with an open strategy in the desktop software business, and in fact, it’s probably the only way it will win at this stage.

Update: Danger got in touch and said the company raised $144 million in equity (as stated in the official S-1). In addition, there was some “minimal debt financing” for ongoing operations, the company said, but it wasn’t specific.

Updated

Reactrix, a Redwood City company that beams interactive advertising onto the floors of malls and theaters, has raised a very large $45 million to allow it to expand and attract new advertisers.

In malls, Reactrix’s product beams light down on to a rectangle mat on the floor. This lets people kick virtual footballs or other objects around on it, among other things. Big brands, such as Coca-Cola, Dockers and Hilton can place their virtual products in the middle of the mat (see image at left).

The company says it has signed exclusive agreements with the nation’s six largest mall owners (known as REITs, for Real Estate Investment Trusts), which the company says gives it access to more than 80 percent of the malls in plum geographic areas. It has got 165 installations, and will be profitable this year, said Reactrix chief financial officer, Peter Bardwick. The company has now raised $68 million since 2001.

He said the large round would be the company’s final one.

Leading the financing were The D.E. Shaw Group and Menlo Ventures. Existing investors Mobius VC, Thomas Weisel Venture Partners and Worldview Technology participated.

One question we have about this: What happens when mall visitors get immune to this sort of thing and begin to glaze over? Will advertisers pay big bucks for this — enough so that this company can make a return on the large amount of cash now invested in it?