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Scores of cities in China have more than a million people, and 51.com has beat out its rival social networks to be the most popular in many of them, even if it’s not the most popular in cultural centers like Shanghai and Beijing. It faces both international rivals looking to enter China — including Friendster, Facebook and MySpace — as well as domestic startup rivals like Xiaonei, and social networking features on Tencent’s Qzone.

But, the company’s popularity in what some call “second and third-tier” cities in China contributes to its 31.5 million monthly unique visitors and more than 120 million total users. So it’s only a little smaller than Facebook’s monthly visitors in the US.

51.com isn’t sitting still as more social networks eye the growing Chinese market. When I wrote about the company’s $50 million funding in May, it said it was looking at offering a developer platform, as many of its international competitors were.

Today, the company has announced the name of its new backer: Giant Interactive Group, a publicly-traded Chinese game development company. This is a strategic move by Giant, the rough Chinese equivalent of game maker Electronic Arts buying a large amount of stock in Facebook or MySpace. More from Giant chairman and chief executive, Yuzhu Shi:

“[W]e are positioning Giant at the forefront of the trend towards increasing convergence between online games and social networking communities. Enhancing the community-building and social networking aspects of our online games has been one of our key strategic initiatives, most recently highlighted by the launch of our expansion pack Neighboring Friends for ZT Online. The combination of Giant’s online game platform and expertise at free-to-play game monetization with 51.com’s social networking business provides a unique opportunity to broaden our player base, expand our community-building opportunities, reinforce user stickiness, and extend the lifecycles of our games.

The company bought a 25 percent interest in 51.com, for a more-symbolic $51 million — valuing the social network at $204 million. Previous investors also particpated, including Sequoia Capital China, SIG, Intel Capital and Redpoint Ventures.

San Francisco startup Heroku has been rolling out tools to help developers build, deploy and scale web applications, and it has gotten some pretty positive buzz in the process. But that’s just the beginning, says co-founder James Lindenbaum. Heroku has now raised a $3 million first round of financing led by Redpoint Ventures, and that means the company can “start to build out some of the rest of our vision,” Lindenbaum says.

Heroku’s offerings are based in the Ruby on Rails framework, and they include in-browser tools to simplify the application development process, automated deployment through Amazon web services and, most exciting, application programming interfaces (APIs) that are the first to allow developers to edit their applications in the Internet cloud using any tools they want. Since Heroku first launched in October, those offerings have attracted more than 10,000 developers who have built more than 12,000 applications, Lindenbaum says. There’s still a waiting list, too, although Lindenbaum hopes to make the company’s test products fully available to the public soon.

That’s particularly impressive for a team of three guys, and the company is already working to expand the team. With a larger staff and more financial resources (the startup was incubated by Y Combinator) , Heroku is ready to tackle other parts of the development process. Lindenbaum won’t give me too many specifics, but he says future releases will tie into the founders’ big goal of making the app development process easier and more accessible. That’s likely to include products related to collaboration, products focused on businesses and an emphasis on linking Heroku’s community of developers.

Lindenbaum adds that there’s one thing that probably won’t change — the company’s focus on Ruby on Rails. (The field has seen two other recent investments from Benchmark Capital alone. Both companies — New Relic and Engine Yard — could be seen as Heroku competitors, particularly if the startup continues to expand its service.)

“It’s the best language and framework for accessibility,” he says.

Undisclosed angel investors also participated in the round.

LeadPoint, a site that provides online lead-generation tools for advertising buyers and web publisher sellers, has raised $6 million in a round led by Silicon Valley Bank Ventures, with Redpoint Ventures participating.

Los Angeles-based LeadPoint calls itself “the first and largest leads exchange” marketplace on the web. Online lead generation broadly means helping advertisers to find potential customers via search results, and various forms of advertising.

LeadPoint helps advertisers in auto, real-estate, mortgage, debt and other industries purchase various forms of ads that appear as paid search ads, organic search, as well as ads on portals and other web sites sites. Its services include letting you create order forms for the types of ads buyers would like, as well as tracking, bidding and matching of ads between buyers and sellers, reporting and billing.

The company claims that its marketplace platform has worked so well that it has gained market share and expanded across a number of industry verticals — even as competitors saw business drop off due to vertical advertisers like large mortgage companies collapsing earlier this year. However, not all competitors are doing poorly, it seems: Education-focused lead generation company Lead Media Partners has also just raised an undisclosed amount of funding.

Leadpoint has also seen growth in verticals like education and credit repair — in a business like lead gen, as long as buyers and sellers are making money from your service, you can still make money even during hard times.

Previously, in 2007, LeadPoint increased its number of sellers by 67 percent and its number of buyers by 90 percent although the company isn’t releasing specific traffic numbers.

Full-scale massively multiplayer online games (MMOs) are generally built by giant studios, not venture-funded startups, but Sparkplay Media is one of the few exceptions, with an upcoming game called Earth Eternal.

The game will come with its own distinct Web 2.0 angle, though — the ability to tie in with social networks like Facebook. Although CEO Matt Mihaly is being quiet on specific details, he says that there will be applications and activities on social sites that can have a direct influence on characters in the main game.

Based on an altered version of the real world, Earth Eternal will also have a distinct emphasis in-game on social activities instead of fighting or gaining levels, as in a game like World of Warcraft.

Mihaly says the game is being designed to “gently push people toward each other.” In-game activities like fishing, for example, will often be more effective if performed in groups.

The target market is people in their mid- to late-teens to their early twenties, although it will also be family-friendly. The game will be free to play in either a web browser or separate application, and Sparkplay will make its money from in-game item sales.

Partial versions of Earth Eternal that Mihaly calls “Groves” will be released this summer. In the meantime, the company is releasing a Facebook application called SuperVillains in the next week or two to create some initial buzz and will begin hiring more people to finish the main game.

Sparkplay’s funding is for $4.25 million, from Redpoint Ventures and Prism VentureWorks. It was previously bootstrapped with about $750,000 of the founder’s own money. The company is based in Mill Valley, Calif.

Microsoft Corp has agreed to acquire Danger, a Silicon Valley company that makes the software for the Sidekick and other mobile devices, for an undisclosed amount.

Danger has worked away for ten years on its device software, and recently filed for an IPO, which we termed as risky (see our piece The Danger-ous IPO), because Danger has not been as open as trends would suggest it should be, and it’s difficult to see how it could really thrive on its own. It is still losing money. The IPO route has become even more risky, given the downturn in the market, and also because household budgets (upon which Danger relies) might continue to tighten.

The acquisition is somewhat surprising because because Danger has operated a platform independent of Microsoft’s Windows Mobile. However, Microsoft said that Danger’s youthful audience and popular entertainment offerings make it attractive. Microsoft is also feeling pressure from the iPhone’s raging success and from Google’s emerging Android project.

Danger’s software offers HTML Web browsing, instant messaging, games, multimedia, social networking, Web e-mail and personal information management applications. Microsoft said wants to combine these services with Microsoft’s technologies, “including MSN, Xbox, Zune, Windows Live and Windows Mobile,” but it was vague about exactly how it plans to do so.

From Microsoft’s statement:

“The addition of Danger serves as a perfect complement to our existing software and services, and also strengthens our dedication to improving mobile experiences centered around individuals and what they like.”

The Palo Alto, Calif.-based company provides services that allow people to keep in touch, stay organized and keep informed while on the go through real-time mobile messaging, social networking services and other applications ― all blended together on a single phone that is intuitive and customizable.

“Danger continues to provide an effortless and fun mobile experience for consumers,” said Henry R. Nothhaft, chairman and CEO of Danger Inc. “Now by combining our uncompromised application software and powerful back-end service with Microsoft, we can expand our innovative service offerings even further and take mobility to a new level.”

Danger was previously backed by $134 million, coming from players like Redpoint Ventures, Mobius VC and T-Mobile Venture Fund, Adams Street Partners, Deutsche Telekom, Diamondhead Ventures, inOvate Communications Group, Institutional Venture Partners, Meritech Capital Partners, Orange Ventures, Softbank Capital Partners and VSP Capital.

We last covered Mig33, an integrated mobile service that’s been growing fast around the world, back in May when it raised $10 million.

Then, Burlingame, Calif.-based Mig33 had gained four million subscribers in less than 18 months, by offering an integrated mobile download application that includes features for text messaging, IM, and cheap calls. Now, it has more than nine million total users, including two million in South Africa.

The company is especially popular in developing countries, where the average person is now able to afford cell phones and data services for doing things like accessing the internet.

Mig33 has just raised another $13.5 million Series B round led by DCM, with existing investors Accel, TVP and Redpoint joining in.

The company is currently getting two million user sessions per day, worldwide, with 45 million messages sent per day and more than one million pictures shared per month.

It has also introduced an affiliate program in South Africa, where merchants can sell calling cards for long-distance calls on Mig33, at lower rates than competing calling services (verify that claim for yourself by checking the company’s pricing per country here).

Having lived in Johannesburg for a year, in 1999, I can see why Mig33 is doing well in the country. The standards of living have been rising for many since apartheid, a policy of racial division in the diverse country, ended in 1994. Mig33’s software is the part of the first experience that many South African have with owning a phone — and if it offers the cheapest rates, so much the better.

Mig33 also launched in the U.S. market at DEMOfall 2007. CEO Steve Goh told us there are some specific challenges in the American mobile market, and Mig33 has had to adapt – mainly by focusing on compatibility with existing carriers. Goh declined to provide the company’s U.S. numbers, but he said Mig33 should make real headway here in 2008.

A number of companies decided to compete with DEMO for media coverage today by announcing some rather large acquisitions:

Paypal ponied up $170 million for Fraud Sciences, which prevents online fraud;

Nokia paid $153 million for Trolltech, which helps developers build cross-platform applications;

GSI Commerce gave $157 million for E-Dialog, an e-commerce company;

Finally, Imeem bought Anywhere.fm, an internet radio service.

Here are a few notes on each:

Paypal’s acquisition of Fraud Sciences was an all-cash deal for $170 million. The company had taken less than $20 million in funding to date, from investors Redpoint Ventures and BRM Capital. Fraud Sciences tracks online buyers to pin-point suspicious behavior, and is supposed to be particularly good at detecting fraudulent overseas transactions, a particular pain point for Paypal. (Press release)

Nokia also paid cash for Trolltech, which was a publicly-listed company on the Oslo Stock Exchange, but also had investors including Index Ventures. Simply put, Trolltech’s application development framework, called Qt, makes it much easier for developers to build applications that work across both PCs and mobile phones, as well as on the web. That sets Nokia up nicely to compete with Google’s Android, which we’ve covered here. (Press release)

Neither GSI Commerce nor E-Dialog is well known locally, but the acquisition price should turn some heads for its investors, which include Flagship Ventures and Commonwealth Capital Ventures. The company had taken about $20 million in funding, according to Xconomy. (Reuters)

Imeem likely didn’t pay that much for Anywhere.fm, at least in comparison to the price of the above three acquisitions. Then again, for a three-man startup that came out of Y Combinator less than a year ago, with no venture funding, even a few million is significant. Anywhere.fm, which only ever took angel funding, has about 60,000 users and will continue to operate as its own service. It will likely benefit greatly from the business deals Imeem has made with the major music labels, covered in more depth here. (Press release)

WiChorus, a San Jose, Calif. maker of a device giving telecom providers better control of personal data on coming high-powered WiMax networks, has received $15 million in a second round of financing .

The company has been secretive until now, and hasn’t launched yet, but its plans are notable: Its hardware, called an “access services network gateway,” lets a telecom provider track a user’s location, among other things. This way, publishers or other services transporting data over the network can serve more relevant ads to the person, according to VentureWire (subscription required). It also allows the telecom provider to control traffic and manage its services more efficiently.

WiMax networks boost the performance of wireless broadband — WiMax’s range is is as much as 10 miles, compared to WiFi’s reach of a few hundred feet. Sprint and Clearwire are building WiMax networks for use as early as next year.

New investor Mayfield Fund led the round, which included existing investors Redpoint Ventures and Accel Partners. The company has now raised $25 million.

Updated

Leeuu, a Chinese online gaming company that owns a virtual world called Romantic Chateau Online, says it has received several million dollars in funding from Redpoint Ventures, according to Chinese blog China Web2.0 Review.

The Beijing-based company’s home site offers casual games. Romantic Chateau Online, which launched in beta last month, appears to incorporate this gaming focus. It doesn’t just have virtual houses, virtual goods, chat, etc. like many other virtual worlds. It also requires users to plant virtual crops, raise virtual animals and mine virtual metal, to produce virtual raw materials that can then be sold for virtual money, reports China Web2.0 Review.

Virtual worlds are growing, and so are online games — and so is internet usage in China.

While we are not Chinese speakers — and so not able to fully appreciate what Leeuu has to offer — market forces suggest this company is a good bet.

Club Penguin, an antarctic-themed kid-safe virtual world, sold to Disney earlier this month in a deal worth up to $700 million.

Some 217 million unique visitors played online game sites in May, worldwide, according to Comscore — its report notes that Yahoo! Games dominated in Asian countries, with 20.9 million unique visitors.

More than 90 million people accessed the web in China the same month, according to a separate Comscore report. Pew, another research group, puts the total current number of internet users in China at 137 million, and says growth rates have been averaging around twenty percent per year — meaning the online market is getting big, fast (pdf).

In fact, China Web2.0 Review also points to a report (in Chinese) that another virtual world, Hipihi, has received an investment of between $7 and $10 million — also from RedPoint Ventures from an un-named source, although the company says it has previously taken on funding from the Guangcai Investment Group Co. In apparent contrast with Romantic Chateau’s virtual blue-collar economy, Hipihi promises God-like power for users (screenshot below).

Intermolecular, a new company located in the heart of Silicon Valley’s chip industry (San Jose, Calif.), has launched a technology it says will help semiconductor companies accelerate their research and development of new materials.

Manufacturing breakthroughs in semiconductors are getting more difficult, because of the tiny size of today’s chips. Finding new materials has become the hope for many chip companies. Intermolecular, which has been secretive for almost three years, has raised $36 million to develop its platform, which lets chip companies perform many more tests in R&D.

Early investors were CMEA Ventures and Redpoint Ventures, and U.S. Venture Partners and Symyx Technologies joined more recently.

Here’s a snippet from trade pub Semiconductor International (sorry, no link):

Today, much of the industry’s R&D is done with process equipment intended for volume wafer processing. By contrast, the Intermolecular system is intended to create “massively parallel” processes on a 300 mm wafer, up to 570 distinct process variations on a single wafer, said Gus Pinto, executive vice president of business development.

Intermolecular has worked with “a large logic manufacturer” to synthesize a unique molecule that will be used in copper interconnects at the 32 nm node. “This is a molecule that doesn’t exist anywhere else on Earth today, engineered to have properties of interest to that application,” [chief exec David] Lazovsky said. The Intermolecular approach helped the customer develop a novel integration scheme, including a specific process that allows the integration of the self-assembled monolayer. He called it “one of first implementations of a self-assembled copper monolayer.”

The company says it has more than 700 patents granted or applied for.

TheFind is a comparison shopping search engine that is unusually clean — it doesn’t ask merchants to pay for their products to show up in results. TheFind’s traffic is growing.

This purity is one reason it has just won $15 million in fresh backing from big-name investors Bain Capital, Redpoint Ventures and Lightspeed Venture Partners.

The investment, to be announced tomorrow (Thursday) makes TheFind one of the best-funded of the new shopping search engines. It wants to do to shopping what Google did to general search seven years ago — turn it upside-down by making results as relevant as possible to the user. Search for “Victoria Secret” for example, and TheFind will return plenty of results listing clothing made by that company. If you do that at Shopping.com, you’ll get nothing, because Victoria Secret refuses to pay it.

Shopping.com and a wave of other early players have matured and seen financial success — and yet all of them demand payment from retailers in return for showing their wares. With so many players, you’d think the game would be over: Nextag, Pricegrabber and Shopzilla.com — all are huge. Most recently, Nextag recently received a major investment that valued it at $1.2 billion. A slew of other start-ups, from Retrevo to Become.com, have launched too — but none of the smaller players have gotten major traction. None have received major amounts of funding.

Thefind seeks to crawl as much of the Web as possible to search for hard goods (electronics, cameras, etc) as well as soft goods (furniture, clothing, etc).

We should note that after our initial favorable review of TheFind back in March, we made several qualifications a week later when we came to realize that TheFind was not as pure as were initially led to believe. These were largely temporary issues. At the time, TheFind’s sponsored ads at the top of returned results were not clearly marked as such. TheFind has since marked its sponsored results clearly as “sponsored”. In addition, TheFind was paying for ads at search engines to attract traffic to its site, in an effort to market itself. So while it boasted a million unique users, we discovered that half of those users were directed there by an ad (suggesting its growth wasn’t as self-fueled as we’d believed). However, TheFind has since reduced its payments for such traffic. This month, 80 percent of its two million unique monthly users this month are be people going directly to the site, said chief executive Siva Kumar.

TheFind.com says it indexes 170 million products and 500,000 stores.

Adap.tv, a San Mateo, Calif. company that provides ads for online videos, has raised $10 million — as a slew of competitors, including Google, try to do the same.

The company’s technology provides contextually relevant advertising that runs at the bottom of a video as it plays (our early coverage here). This is sometimes called in-line ads, which are distinct from many other video-ad providers that include ads that take over the video player before, during or after the video has finished playing.

An Adap.tv example is a video featuring Brazilian soccer star Ronaldo, below. It includes ads that feature a book about Ronaldo’s life story on sale at Overstock.com. If you click on the ad, you’ll be taken to the Overstock sale page.

Adap.tv is going head-to-head with a number of other video-ad providers — including Scanscout, which raised $7 million in May, and EveryZing, a video-search company also working on similar technology, that raised $10 million in June.

Adap.tv’s investors highlighted its newly-formed business partnerships as important advantages in the race to monetize online video. One is with MetaCafe, an online video-sharing site, which is currently running Adap.tv’s ads (as seen in the Ronaldo example above). Another is with Comcast’s ThePlatform, a video service provider for other media organizations, which has recently begun providing Adap.tv’s services to its clients.

Google’s YouTube is also experimenting with in-line ads, although it has yet to provide details about it publicly.

Another interesting company trying to monetize videos is BroadRamp. Its core business is in content delivery. But it is also trying to highlight valuable products such as trucks or purses that appear in a video, then alerts the viewer to which items can be purchased (such as a truck that an actor is driving). The user then clicks in the item, adding it to a shopping cart. At the end of the video, the viewer can make credit-card purchases through the shopping cart.

Gemini Israel Funds made an earlier investment in the company, and was joined in this latest round by Redpoint Ventures.