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With Google CEO, Eric Schmidt, acknowledging that Google has yet to find a way to make money with YouTube, it’s not clear that video advertising and user-generated content mesh. But Jivox, a San Mateo, California video ad network, would beg to differ. The company, which launched its advertising network in March of this year, says it has had early success placing ads in user-generated videos and has already grown to over 40 million monthly viewers across video publishers in both the United States and India. On the strength of what Jivox says are strong revenues, the company has just raised a substantial $10.7 million in its first round of financing.

The market has no shortage of video advertising start-ups capable of reaching millions of people. YuMe (coverage) leads Microsoft’s video advertising and claims to reach 129 million monthly viewers on over 400 video sites. Tremor Media (coverage) says it has about 109 million. VideoEgg, a pioneer in video advertising (coverage), has a social ad network that spans Facebook, Bebo, and Hi5, and has partnerships with companies like Buzznet, imeem, and Metacafe. But Jivox is notably different.

Unlike YuMe and Tremor Media, which primarily target brand advertisers advertising on premium content, Jivox is going after the local advertisers. Jivox founder and CEO Diaz Nesamoney says that the key to his company’s early success is its do-it-yourself video ad creator. Using web-based editing tools and a large inventory of pre-made video clips and catchy music, local advertisers who would otherwise not have the budget to produce a video ad can do so, and for free. Because small-time advertisers are less brand-conscious than their big-name counterparts, Jivox can place their ads in user-generated videos.

This strategy might sound dubious, but there’s actually something to it, because Jivox steers clear of the lowest-common-denominator. One of its main partners is ExpoTV, a site for user-generated video product reviews. While one might argue that user-generated video product reviews aren’t exactly riveting (and it seems ExpoTV’s traffic has recently taken a dive), an advertiser on ExpoTV is not going to see his or her company represented near a video of homeless people fighting and someone watching a video product review is likely in the mood to buy.

Nesamoney says that 2-3% of viewers click on Jivox’s in-stream ads, which appear before, after, or in the middle of a video as it plays. These ads generate between $30-$40 for every thousand views, despite the fact that the majority of people dislike them.

The round of funding was led by Opus Capital, and included a large investment from India’s Helion Venture Partners. Nesamoney says the nascent Indian ad market will be key to his company’s growth, and that he went with Helion because its partners know how to maneuver within it.

1. Yandex, Russian search engine, grows quickly
2. Opus launches hedge fund in New York
3. Matrix goes to China
4. Dogster takes $400,000 in financing
5. Semantic search engine Powerset raises $2M
6. Pubmatic, draw ads from all networks
7. Boobik, the Twitter clone, but for sex
8. Branson taking global warming to space
9. Oversee.net gets $150M to monetize domains
10. Google’s Palimpsest hosts terabytes of raw data

Yandex, Russian search engine, grows quickly — Yandex did more than a million billion searches last month, which is comparable to AOL and Ask. It is was the ninth largest search property worldwide, according to comScore. Meanwhile, Yandex revenue has doubled for the past five years, and is on target for $140 million in 2007.

PubMatic, the site that helps publishers draw ads from the highest paying networks, expands — Before, it drew ads from a handful of networks. Today, it said it can draw ads from any ad network. We haven’t tested its claim, but that’s quite a move.

Branson might save us from global warming, by taking the warming to space — There’s a great line by Branson in the stories (here and here) covering the vision of the Virgin Galactic project: One day we might be able to use space for energy production. While I believe aviation has to get more carbon efficient, seemingly benign industries like IT have outpaced aviation in carbon output. [One promise of a commercial space industry is] the ability to launch low-earth satellites that could literally take some of the heat out of the planet, by serving as a repository for information technology.

Boobik, the Twitter clone, but for sex — The squeamish shouldn’t click to this site; there’s a large number of people exhibiting themselves in images.. (Don’t go there if you dont’ like explicit images.)

Oversee.net gets $150 million to monetize domains — The Los Angeles company got the money from Oak Hill Capital Partners, a Silicon Valley private equity firm to help it monetize domains for domain owners.

Google’s Palimpsest project to host terabytes of data — Google is accepting the data sets and making them free. Wired has some details.

Opus launches hedge fund in New York — If you’re a Silicon Valley venture capital firm, and seeing all the profits being made by the hedge fund guys, its tough to move into hedge fund or other money management areas because your limited partners preclude you from doing so. So Opus Capital, of Menlo Park, has done it a different way. It has quietly launched a fund in New York, but says it hasn’t devoted any of its resources from its current fund. The firm didn’t want to talk about it, but when pressed, a spokeswoman explained that Opus Select, as the New York operation is called, was “started by two industry veterans whom we have known for many years, have set up their own operations and are making use of our financial and back office infrastructure.” Opus, you’ll remember, has a history of itchy feet. It was the group that split off from Lightspeed Venture Partners.

Matrix goes to China — Another venture capital firm making moves is Matrix, which like other successful firms Sequoia and Kleiner before it, is finally moving to China. It is raising a $250 million for a first China fund, according to a regulatory filing.

Dogster takes $400,000 in financing — Dogster, the social network for dogs and cats, has raised $400,000 in bridge financing. The company has long been around break-even, and with the economy teetering, what better time to take a little cash to keep you out of the dog house.

Semantic search engine Powerset raises $2 million — The bridge loan is designed to tide it over until it officially launches its site in March. The company has been testing searches using the structured online encyclopedia Wikipedia, and Powerset will apparently launch with that limited focus. We’ve covered the company before. Investors were disclosed.

When we first talked with Pudding Media CEO Ariel Maislos in September, he showed us his company’s software — a voice-recognition system capable of picking up keywords from conversations and using them to deliver contextual advertising to users.

The system isn’t working perfectly, but Pudding Media provides a good example of a company that’s moving into new territory hoping to succeed against significant technical barriers. Its potential has now led VCs to place a significant $8 million bet on the technology.

When working as planned, Pudding’s software listens to the conversations of users for keywords from its database. For instance, if we were talking about having a lunch meeting, it might pick up the words ’sushi’ and ‘San Francisco’ to pop up an ad for a local Japanese restaurant.

To become more accurate, Pudding must assemble a large database or “taxonomy” of terms that people might use. Part of the challenge for the company is simply building that database, much as Google’s Adsense built a database of relevant keywords people use in searches.

The difference between what Pudding does and web advertising is that Pudding won’t save your conversations and keywords to build up an advertising profile over time. The keyword lists from each conversation are deleted upon its conclusion, a measure the company has taken to forestall user concerns over privacy.

Instead, the advertisements will be entirely determined by the conversation at hand, and will attempt to track, in real-time, what users are talking about. That can have some interesting (and inaccurate) consequences, as we found before, but the results should continue to improve with time.

For now, the company has some breathing room. There are no direct competitors to its service. It’s also only active through its own ThePudding.com website and a partnership with Meebo, for the moment. However, Pudding’s keeping an eye out for potential partnerships.

Even mobile carriers might eventually want to use the service, suggests Ken Elefant of Opus Capital, the lead VC firm in the investment. Because consumers are not willing to pay as much for minutes as in the past, mobile carriers are having to begin thinking about how they will advertise. Pudding could also work on a cellphone, though perhaps less effectively than for a user watching a computer screen.

The $8 million investment is Pudding’s first full venture round. Besides Opus, BRM Capital also participated.

Tucked unobtrusively away in corners and out-of-the-way places, sensors record the world around us — tracking air quality, electricity usage, temperature and other variables. The modern world needs such measurements, but installing and maintaining the sensors is costly.

GainSpan is a Sunnyvale, Calif. company that says it can help cut costs by using wireless sensors that tie into the same 802.11 WiFi radio bands that ordinary computers use, which reduces the number and complexity of the sensors needed. Also, having cheaper, more easily deployed sensors could help raise efficiency through more intelligent monitoring.

For example, if sensors are placed throughout a large industrial building they can monitor temperature more effectively, allowing selective use of heating and cooling systems.

Wireless sensors have been around for over a decade, but they’ve used costly non-standard wireless communication protocols for reasons of battery life. GainSpan says it has tackled the battery problem, extending the life of its WiFi sensors to a standard five to ten years.

If GainSpan can sell businesses and governments on using its sensors, they can be used both for the above scenario and dozens of other purposes, like tracking the movements of miners underground or monitoring the structural integrity of bridges.

There are, however, some challenges to GainSpan’s plan, including signal interference from too many devices. For more on the technical ins and outs, take a look at this paper by University of Virginia researchers. There are also competitors, including Ember and SquidBee, making WiFi sensors using the open-source ZigBee standard.

Opus Capital led the $20 million second round, while existing investors Intel Capital, New Venture Partners, OVP Venture Partners and Sigma Partners also participated. GainSpan’s total funding, with its $10.5 million first round, now stands at $30.5 million.

Pudding Media, an ambitious San Jose company, is developing a way to detect the words you speak on a mobile phone. It will then make your calls free. It will pay for them by serving ads and other content relevant to the words you speak.

We’re the first bloggers to be able to try out the technology. It isn’t working too well right now and certainly isn’t ready for usage by kids, but it is very early in development. See below.

If this sounds ambitious, and technically challenging, that’s because it is. There’s also huge privacy implications involved with a company that taps into what you’re saying — although the company says it will ensure individuals’ identities are not linked with specific words they use, just like Google says it won’t publish words you search using its engine.

Pudding has been secretive until now, and we’ve been waiting to write about it, having talked with Ariel Maislos (see profile), chief executive and co-founder several months ago about his goal. His co-founder is his brother, Ruben. Like many other companies with Israeli founders, it has its roots in the Israeli army, where the brothers worked as intelligence experts.

Maislos previous founded Passave, a broadband company he sold last year to telecom chip-maker PMC-Sierra for $300 million. ThePudding raised $3.5 million from Opus Capital in May (see our coverage; scroll down).

With this latest venture, he’s brought on some key engineers, many of them from Israel. His ambition is significant. Maislos worries that he’s only got a short window in his creative life to launch another serious company. He says he wants this company to become a sort of Google for mobile phones, serving up ads, videos and entertainment and other content – almost as results to key word searches his server makes based on the words cellphone users are speaking.

Incredulous that technology exists right now to facilitate this, we asked Maislos how he’s going to pull this off. He smirks and suggests he’s got some tricks up his sleeve. It will take some time to perfect the product, but not too much, he says. It uses voice recognition technology to monitors the calls, and filters for words that match with those in its database.

Pudding’s technology aims to allow any communications provider – mobile carrier, Internet telephony service, even Web publisher – to offer new ad-supported calling plans. Advertisers, meanwhile, will be able to select from tens of thousands of keywords.

The company already has a testing version here: www.thepudding.com. You can enter a phone number and make a free call to any number in North America.

We tried it out. We started talking, and mentioned the words San Francisco and restaurant. You’ll see below that it catches the restaurant part, offering up tips about food. We didn’t see anything clearly marked about San Francisco however.

This is early days. It didn’t do very well on other tests. On another call, we talked about going down to Santa Cruz, for swimming and surfing at the beach down there, hoping to catch some sun before the end of the summer. Somehow Pudding delivered ads about a Yale sex scandal, a sex blog, a philosophy course, an item about black women and, worse, another item with clear profanity. The company says its safe for kids, but this testing version certainly isn’t.

Pudding wants to offer news, sales offers and other content on the screen as you speak the words. Mention a movie, and you may see link to trailers, reviews and show times for nearby theaters. Talk about the Giants, and SF Giants game statistics may show up.

Eventually, Pudding Media says it will support any call: Mobile, and also fixed line and VoIP.