VentureBeat

RockYou, the fast-growing online widget company — that lets you post images and slideshows in social networks and other web sites — has apparently hit a major juncture in its decision to raise funding or not. And I’m wondering if it may have decided to go a different route.

The company, which is in a cut-throat competition with Slide, needs to raise cash — or sell. It isn’t profitable, and needs to keep up with Slide, which raised $50 million at a valuation of $500 million in January — a humongous financing that was considered a coup, considering how little cash the company is generating and the anemic economy (not great for advertising revenue).

We’ve learned from several independent sources that, as of about two weeks ago, RockYou had attracted some interest from investors at a valuation of $400 million, including from venture capital firm Interwest Partners. That valuation level matches the RockYou’s initial plans, which leaked out two months ago, of wanting to raise money at a $400 million valuation. But at that level, RockYou still lacked a “lead” investor, or one willing to make a sizable investment and round up enough other investors for a total of between $50 million and $70 million in funding. What’s more, the offer, we’re hearing, carried some additional terms that weren’t very attractive to the company. Two other investors offered a $200 million valuation with more favorable terms. So the goal - again, this was two weeks ago — was to hold out for a public market investor that might lead the round at the higher valuation.

However, here’s the twist: I got in touch with the company yesterday, and initially was told that the reports I’m hearing are “old” and “inaccurate.” The company suggested it had taken a change in direction, and indicated that some sort of announcement is close. In a second call yesterday, I reached co-founder Lance Tokuda directly. He wouldn’t comment on the fund-raising effort, said reiterated the fundraising news I’d heard is now inaccurate.

It supposedly could go after some debt financing, a la Facebook, but that is dangerous, because it assumes future cash flow.

Or could it mean that the company has decided to heed the advice we’ve heard it was getting from some of its investors? That is, consider a sale instead. Why not try to sell for $200 million or so, a level where each co-founder would make tens of millions, and still return a profit to its main investors — Sequoia, Partech and Lightspeed? If RockYou really did raise money at a $400 million value, this would put immense pressure on it to reach a $800 million valuation before selling (to give investors a solid profit), which would be extremely difficult to do. If they were to fail, never get revenue, and sentiment turns sour, they’d risk losing everything.

So this comes down to a really tough call, and it will show what sort of guy co-founder Lance Tokuda is. I’ve heard he is incredibly ambitious, determined to beat Slide. On the other hand, he’s human too, and his “cautious” gene has got to forcing him to consider the sale option.

Goojet, a company that offers a mobile “organizer,” a place to store notes and other things so that you can access them while on the go, has won the start-up competition at the conference Le Web 3 in Paris, France.

The company combines your mobile and web world, letting you access its software from both your phone and your computer. You can organize notes, votes, RSS feeds, pictures, and other documents. Yesterday, Goojet launched their beta version.

More than 30 startup companies participated in the competition. Second place went to Palo Alto, Calif.’s PLYMedia, which develops transparent media layers over web video. Third place was taken by the web based operating system G.ho.st, with headquarters in Israel and Palestine (which we’ve covered previously).

Goojet wants to make mobile services simple, and serve all java-enabled phones with internet access. You register online, and then you get an SMS sent to your phone, which lets you download the application.

The company has filed several patents.

CTO and co-founder Ludovic Le Moan (pictured below, with a modest grin) told VentureBeat his goal is to keep navigation simple, with drag and drop features. The service is free, but the company is also planning to offer some premium services. One example Le Moan mentioned is conference calls. It also wants to let people create their own services for the software, and then share any resulting revenue with them. Theses services can then be used by, and shared, with other users.

Goojet recently raised 2.3 MEUR ($3.4 MUSD), mainly from two VCs: Partech International and Elaia Partners. The company was founded one and a half years ago, and is based in southernFrance (Toulouse) and employs 15 people.

[This was written by Anders Frick, a VentureBeat contributing author]

Dailymotion, a Paris, France-based video-sharing site that’s a distant competitor to YouTube, has raised $34 million in funding, according to the Wall Street Journal.

The site, like many others, lets you share personal videos privately with friends or publicly with anyone. Like its competitors, people can also comment on each other’s videos, embed Dailymotion video clips in other sites, tag videos, view selected channels, etc.

However, Dailymotion has distinguished itself by tailoring its site to country locations. In France, it offers a French language site, and does community-building events there — for example, it months ago it started foster debate among French politicians, before YouTube started something similar here in the U.S. Dailymotion is neck and neck with YouTube for top ranked video site in that country. Dailymotion does something similar in Germany and other European countries. It lets people click on a flag icon at the top, for example the UK’s flag, if they want to view the site in English (see below)

Other distant competitors to YouTube have also raised large amounts of funding recently. Metacafe raised $30 million last week, Veoh raised $26 million in June.

One might call these sites also-rans compared to YouTube — YouTube has 61.77 percent of the US market, for example, while Daily Motion has 0.76 percent, according to Hitwise (table below). Internationally, the news is better for the company, as it was the ninth-fastest growing site on the web in May, with 28 million users, according to Comscore.

With these large cash infusions, these video sites may better described as also-runnings, not also rans. Video sites are expensive to run because they require the constant transfer of large amounts of video data between their own servers and end user’s computers — and need cash to pay for large amounts of traffic.

The hope of these investors, maybe, is that consumer web companies with solid traffic levels are still attractive purchases even if they aren’t market leaders. Many larger media companies are looking to establish their own online video brands, and have the money to buy their way into the market.

For example, Fotolog, a photo-sharing site not unlike Flickr (purchased last year by Yahoo) and Photobucket (purchased months ago by Fox/Myspace) was itself purchased last week by French media firm Hi-Media for $90 million.

New investors include Advent Venture Partners LLP and AGF Private Equity, which is a division of Allianz AG. Previous investors, Atlas Ventures and Partech International, participated in the round.

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TVtrip.com, a website providing detailed information about hotels, has raised €3.5 million ($4.8 million) in a first round of financing.

The site caters only to European hotels for now. It offers a search engine for hotels; then, for each listing, if offers videos of rooms, ratings, a summary of amenities and maps of surrounding areas.

This service is so obviously useful, as we noted when it launched last month. Finding decent hotel rooms can be a painful experience — at least if you’re booking a vacation on a budget. Competitor Trivop, meanwhile, has raised €600,000 from European angels, and is also focused on Europe.

The TVTrip funding comes from Balderton Capital and Partech International.

The company covers 10 major European cities including London, Paris, Madrid, Rome and Berlin. It will soon add Lisbon, Prague and Venice. By the end of 2007, TVtrip.com said, it will cover more than 1,500 hotels in 50 cities.

The site is available in five languages: English, French, German, Italian and Spanish.

To become truly useful, the site does have more room to go. The site does give you a price selector tool, in the form of a slider that lets you filter for hotels listed below a certain price. But its not clear where the prices are coming from. Right now, if you want to check rates and book rooms, it ushers you off to partners such as Booking.com, Expedia and Venere — and it provides no clear explanation for why it sends you to one or the other service. You’re left wondering if you really have the best price for that hotel available on the Web. For now, its best left as a useful research tool when you’ve already got a short list.

The mobile TV market is expected to have more than 130 million customers by 2011, according to Screen Digest.

So DiBcom, a France-based semiconductor-for-mobile-tv company has received another $27 million in funding from its many investors, this time adding French bank NATIXIS. The company says it will use the money to continue improving its TV-streaming technology, and to spread faster internationally to phones, laptops, cars and other devices around the world.

We’re speculating that the company timed this round with the recent news that the European Union’s regulatory agency, the European Commission, has decided to favor the DVB-H (Digitial Video Broadcasting - Handheld) system, which rivals Qualcomm’s MediaFlo and South Korea’s DMB (Digital Media Broadcasting) systems. The three offer rival ways to stream remote data onto devices, which is especially important for telecoms trying to expand their mobile offerings. In contrast with the US and other countries, the EU agency favors a single-standard approach to decide how best to deliver mobile TV.

DiBcom has had a string of semiconductor innovations based around DVB-H, beginning in 2005. It has landed deals with mobile carriers in Europe, and with a broad range of consumer electronics firms. The company also says it has over 300 mobile TV trials underway across the world.

There will be stiffer competition in the US. DVB-H is prominently supported here through the Mobile DTV Alliance, which includes Nokia, Motorola, Microsoft, Intel and Texas Instruments. AT&T, Sprint Nextel, and Verizon, however, are using Qualcomm MediaFLO standard. The third rival, DMB (Digital Multimedia Broadcasting), which was born out of a South Korean national IT project, is not as big in the US, but is also spreading around the world.

And mobile TV itself is still a risk. While it is fine for analysts to make their projections, the mobile TV market has yet to take off significantly. It’s unclear how many people are really wanting to watch full programming on their phones. Many may prefer user-generated content, like friends’ video clips. Indeed, as the parent company of DVH-H based Modeo said in a recent filing:

Modeo’s business has certain risk factors different from our core tower business, including an unproven business model, and may fail to operate successfully and produce results that are less than anticipated. In addition, Modeo’s business may require additional financing which may not be available.

Besides NATIXIS, investors include: 3i, Cipio Partners, Convergent Capital, Credit Agricole Private Equity, Intel Capital, Partech International, SGAM Alternative Investments, UMC Capital, and WI Harper.

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Here’s the latest action:

USA Today launches new social networking features, but stiffs Google — The newspaper has offered an array of new features, letting registered readers have their own profile pages, where they can recommend articles, solicit comments — and there’s more. Alas, the new content of all these users won’t be tracked by Google or found in Google’s search results, because USA today has used Javascript technology to defy it. That hurts USA Today’s traffic. VentureBeat contacted Steve Kurtz, director of IT at USA Today. He said use of Javascript was intentional, explaining the company is being careful “about what content is associated with the brand…We’re still a newspaper.”

Reuters wants to start a financial Myspace — Details here.

Latest Google tidbits — Here are the latest items emerging from Google’s latest filings: It has 30 subsidiaries and many international offices ; it has about $11 billion in cash and other liquid assets to spend; it paid 100 times YouTube’s $15 millon annual revenue when it bought the photo sharing site last year for $1.65 billion. Meanwhile, the troika of leaders at Google (Sergey, Larry, Eric Schmidt) earn $1 salaries again, while four other Google executives will get $450,000 this year, or $200,000 more than last year: Robert Eustace, senior VP of engineering and research; Omid Kordestani, senior VP of global sales and business development; Jonathan Rosenberg, senior VP of product management; and George Reyes, the company’s chief financial officer.

Google criticized — Google hasn’t had a very smooth early marketing of its paid software application package. Meanwhile, its chief foe, Microsoft goes on the attack, its lawyers saying Google is “cavalier” when it comes to copyright protection. Google, in response, points people to a comment by the CCIA, which says Microsoft is out of line, and that it should consider its own practice of reverse engineering products under “fair use.”

Latest Newswire stories — There’s Peer39, which wants to bring natural language technology to an ad marketplace. It has backing former Shopping.com CEO, Dan Ciporin, and $3 million from Dawntreader, VentureBeat has learned.

There’s Clearspring, a company that says it serves 30 million widgets a day (!), and which has just raised $5.5 million. It’s smart, going after mainstream users. For example, its widgets are being offered by the NBA to fans, giving them a way to feature NBA all-star dance team members (see photo left) on their sites, scoreboard tables and more.

Finally, Ticketsnow gets $34 million for event tickets online.

Rockyou raises $11 million — Speaking of widget companies, Rockyou, which provides a way for you post your photos/slideshows on other sites, has raised $11 million in venture backing, led by Partech International, a VC with offices in SF and Europe, and including Sequoia and Lightspeed Venture Partners. Rockyou has a valuation of more than $50 million, or around the same as competitor Slide, according to Techcrunch. It raised $1.5 million earlier from Sequoia and Lightspeed.

Webcasters to get snuffed by music royalties? — The music industry has pushed up royalty rates paid by Internet radio sites like Pandora and Last.fm, potentially causing them serious pain.

Yahoo’s Mixd shuts — Wow, that was quick. The SMS group networking service launched by Yahoo at test in November, rendered some lessons, but has been discontinued — though it might live on in future mobile products, Yahoo tells Read/Write Web.

Geni, the Web site for family trees, raises a $10 million second round of financing — It is led by Charles River Ventures. See our earlier coverage here. By all accounts, Geni is doing well. The Los Angeles company got unexpected traffic from people abroad, clamoring to use it in their native languages. [Update: David Sacks, the chief executive, confirms that company is valued, after the investment, at $100 million, a significant jump from the $10 million valuation of the company after it raised money in June. Some 100,000 users have input about 2 million people on the site (themselves and their relatives).]

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Wazap is a search engine company focused exclusively on games, and is growing quickly — as you may expect, given the popularity of games.

It’s another of those ideas that seems so obvious in hindsight, you’re left wondering why it hasn’t been done before. It boasts 11 million unique users a month, with 200 million page views. It logged $1 million in revenue last year, it says.

It has just raised $7.9 million in a second round of funding led by Partech International, with participation from Wellington Partners. Wellington led the first round financing of almost $4 million. Wazap’s roots are in Japan and Germany, where it has launched sites. It has launched in China, and launches in the U.S. next month.

It provides search results for games you’re searching (see screenshot of a search for “World of Warcraft” at the German site below). The left arrows point to how similar it looks to Google: sponsored results at the top, and regular results below that. The right arrow points the right hand column, which has things like “related games.”

Wazap also provides news articles, and tips and tricks about how to play games — for example, a video clip demonstrating how a gamer is able to slay a particular dragon.

The company first launched in game-crazy Japan in 2004. Traffic on the Japan site is far ahead of the German site, in part because the Japanese site let users participate in forums early on.

Co-founders Andreas Rührig, 29 and Timo Meyer, 28 have formed two gaming companies before, including Games.de, and sold them for a combined $60 million euros. They’ve brought much of their Games.de team with them to launch Wazap. They’ve hired Thom Kozik, who formerly ran Yahoo Games (which also has a video game search engine), to launch the U.S. version. Kozik is based in Los Angeles.

The company is negotiating deals with portals, such as Germany’s Web.de, to provide search for their games pages, in return for a cut in the ad revenue. Wazap hopes eventually to negotiate rights to operate the entire games pages of large portals — arguing that it will have the large userbase to make those sites more popular.

Wazap is also introducing a specialized site, ezoom, dedicated to the needs of hardcore gamers — such as those who spend hours on World of Warcraft. This will have a tab from the home page.

Notably, the Japan site is getting more traffic from mobile phones than it is from PCs, the company says.

Ever gone online to make a big-dollar purchase — a phone, a computer for example — and gotten almost to the end, but then aborted because you still had questions?

We’ve been there. Often, we end up calling a live customer service person, to double-check things like the length of warranty, the credit plan, or number of free minutes.

InQ, a Los Angeles company, detects when a customer has neared the end of the shopping process, and pops up a screen and offers to engage the customer in live chat. The customer service person also picks up the phone, if requested, to answer the customer’s last-minute questions. InQ claims to have increased sales 25 percent for big customers like Sprint and Bellsouth. Really? “It’s mind-boggling,” says Jason Green, venture capitalist at Emergence Capital, “I didn’t believe it myself.”

Tomorrow, inQ will announce it has raised $7.75 million a third round of funding, led by Green of Emergence Capital, and Partech International. Existing backers, Dolphin Equity Partners and Hudson Ventures also participated.

The company says the e-commerce shopping cart abandonment rate is about 40 percent. That gives it a strong market, even if the real number is half that.

InQ only gets paid if customers use it. It serves clients with high-priced goods, though, so typically gets paid between $25 and $100 per deal it closes.

Emergence’s Green said it inQ is better than competing service LivePerson. Live Person, he says, forces companies to use their own employees to conduct the chat or calls, but they may not have the training to do that. inQ’s chats are all conducted by inQ’s representatives, 55 of them sitting in Los Angeles.

Notably, inQ reports that half of shoppers agree to the chat.