VentureBeat

updated
Lithium Technologies, which builds and operates social networks for enterprises, has raised $12 million in venture capital today.

The company’s clients include Dell, AT&T, Sony PlayStation, Univision, and PayPal — all businesses with large user communities and heavy customer service and product support needs. Lithium’s community sites are designed to help these clients streamline the interaction with their customers and improve brand loyalty. To get an idea of how the sites function, take a look at the one Lithium designed for Dell. With features such as Dell forums where customers can engage with each other to answer support questions and share tips, the main point is to build brand loyalty in a two-way conversation with consumers.

The idea is to use best practices to stir up people like Jeff Stenski, a Dell customer who has voluntarily spent the equivalent of 141 days of his time over the years and posted more than 22,000 answers to technical support questions on Dell’s community web site. Stenski’s answers have been viewed more than a million times, saving Dell more than $1 million, according to Lithium. That prompted Forrester Research analysts Charlene Li and Josh Bernoff to call out Lithium in their social networking book, “Groundswell: Winning in a World Transformed by Social Technologies.”

A number of startups have moved to deliver similar social networking communities to the enterprise market. Marc Andreessen’s Ning social-networking platform can be used to build enterprise communities. Liveworld, Igloo, HiveLive and KickApps also promise companies that they can build thriving social networks. But Lithium has attempted to set itself apart by using game-like motivators such as leaderboards, rewards, reputations and profiles.

We mentioned the trend of using game-like features in non-game applications in our earlier story about Funware. In the Dell IdeaStorm voting, the most-frequent contributors can get “iSquared powers,” meaning they get ten times the voting power of other community members when it comes to selecting which of the IdeaStorm product ideas are the best.

“We’re managing sites for companies that collectively get a billion page views a month,” said chief executive Lyle Fong. “Our job is to get those one percent of users who are hardcore fans and turn them into the company’s biggest evangelists.”

Lyle Fong, by the way, is the brother of Dennis “Thresh” Fong, a professional video game player who won a Ferrari at age 20 when he was crowned the world’s best.

The boyish-looking Fong brothers of Los Altos are legendary in video games. Dennis dropped out of UC Berkeley to play video games for a living. He picked up honors as the world’s best “Doom” and “Quake” player. He was one of the first people to actually make video gaming a profession, winning big cash prizes and the Ferrari.

Dennis co-founded another company, GX Media, with Lyle. At first, they were selling gaming computers out of a dorm room. In 1997, they founded Gamers.com, a site that offered news and community forums for hardcore gamers, as well as game fan site FiringSquad.com, started with their other brother, Bryant. They raised $11 million in venture financing from CMGI in 1999 and lived the good life. Gamers.com even threw a party at the Playboy Mansion during an E3 show.

In 2001, Ziff-Davis bought Gamers.com and GX Media spun out Lithium Technologies under Lyle. Dennis went on to found Xfire, an instant-messenger service for gamers which was purchased by Viacom’s MTV for $102 million. Dennis is now head of the startup Raptr, a gamers social networking client.

Lithium is based in Emeryville, Calif. This second round of funding was led by Benchmark Capital. The cash will help the company expand its marketing and product development as it faces new kinds of competitors. The company previously raised a $9 million round from Shasta Ventures and Emergence Capital Partners in 2007.

Social web browser Flock has garnered a lot of hype since its release in 2005. It’s also won a lot of fans. Both likely played a role in its new $15 million fourth round of funding announced today. The round was led by Fidelity Ventures, with all previous lead investors, including Bessemer Venture Partners, Catamount Ventures and Shasta Ventures, participating.

Impressively, this round of funding actually surpasses all of Flock’s previous rounds combined.

This money will be used for the usual purposes such as research, development and marketing. An emphasis will be placed on global expansion as well as the company sets its sites on the 230 million members of social networks globally.

Flock is a browser just like Firefox or Internet Explorer except that it has built-in functionality for various social networks on the web. Say for example you sign in to your Flickr account, you can have Flock remember your info and keep it open in a sidebar tab and update you when your contacts post new photos. It also works with more traditional social networking sites as you might expect such as Facebook.

According to the company, since January of this year Flock’s user base has increased by more than 250 percent while its revenue has risen by more than 400 percent. As we’ve reported previously, Flock makes money thanks to a deal it has with Yahoo to use its search technology. This is similar to the deal Mozilla’s Firefox browser has with Google.

Flock is currently testing out its 1.2 Beta version of the software, which includes Digg integration. This is a pretty good idea and certainly hardcore Digg users will go crazy over it. While I don’t think anyone can accuse the browser of not looking nice, I still find it too slow for my tastes in what I use a web browser for: browsing the web.

Another service, Minggl, shares some similar social functionality of Flock but does it via a Firefox or Internet Explorer plug-in rather than an entirely different browser.

With so many online travel sites crowding the market, you’d think we were nearing a Web 2.0 travel bubble. But according to travel information search engine UpTake, which is launching May 14, there’s still an untapped niche in the market: a travel-opinions supersite.

The market is extremely fragmented with thousands of micro-sites for individual hotels, beaches, airlines and leisure activities. UpTake’s goal is to gather opinions from all of those sites together and become the most comprehensive research tool used by travelers.

“The booking sites are good when you know that you’re going to Maui on May 17 and want to stay in a Hilton Hotel. But if you don’t even know whether to go to Maui or Kauai, it’s not that easy,” said CEO Yen Lee, who was General Manager of Yahoo Travel before he left to start UpTake in late 2006.

The site features a personalized filter that, unlike traditional search engines, lets you customize your search according to profiles such as “kid friendly”, “beach”, “romantic” or “adventurous”. These keywords are matched againt a database of more than 20 million traveler opinions from more than 1,000 review sites across the web, including WAYN, TripSay, IgoUgo and, potentially, another newcomer by the name of Tripwolf (more on them later). The ratings collection now spans about half a million places to go, things to do and places to stay. The database will expand rapidly, according to Lee. Searches will be matched with search word ads displayed along with non-commercial search results.

A traveler with unclear travel plans visits, on average, 22 sites before booking a flight or hotel, according to a recent study by Google and Comscore. UpTake wants to turn these 22 jumps into one smooth stop. “We’re like Google, but we’ll only do travel”, said Lee. But he added that unlike Google , UpTake’s database is prepared to ask travellers the big questions: why they’re travelling and who they’re travelling with.

Read the rest of this entry »

Marketcetera, maker of an open source platform for automated trading, has raised $4 million in a first round of venture funding.

To stay competitive, Wall Street firms need to make trades more and more quickly, says chief executive Graham Miller, so many of them are going automated. The equity market is already 30 percent automated, and should reach 50 percent by the end of the decade, he says. Although FlexTrade offers a proprietary automated service, most companies are still building their own in-house systems.

That’s Marketcetera’s opening — using the San Francisco startup’s platform is a lot easier and faster than building your own system from scratch. The fact that the company is open source gives it two big advantages over FlexTrade, too: Trading firms can easily customize it to their needs, and the basic product is free.

It’s still too early to gauge the company’s success: The platform is in public testing mode, with an official 1.0 release tentatively scheduled for the last quarter of 2008. But the approach is a smart one, and Miller says he’s excited because some big Wall Street firms are already expressing interest.

Miller also brings a good combination of experience to the job — he has a computer science degree from Stanford, and he helped Jane Street Capital build its automated trading system. When Miller describes the problems involved in creating in-house systems, he knows what he’s talking about.

Miller also spent some time at software incubator Reactivity, where he met Mozilla founder John Lilly. Lilly has been advising Marketcetera, Miller says, and helped connect the startup with its investors — Shasta Ventures and Jack Selby, managing director of Clarium Capital.

Miller plans to make money by charging for financial data that should be helpful for firms using the Marketcetera’s technology.

Kango, a travel search engine that finds lodging and activities that match your personal preferences, is launching a closed testing version and announcing that it raised $4 million from Shasta Ventures earlier this year.

This area is extremely competitive. Companies like Kayak and Sidestep, which search multiple sites for the best ticket prices, have raised millions from marquee VCs; cFares, which finds wholesale plane tickets at discount rates, recently raised $4.5 million. TripIt makes it easy to manage your travel plans and share them with others and raised $1 million. We recently used and like Farecast, which does much of this, and offers predictions too. The list goes on and on.

But Palo Alto’s Kango is doing something different. Rather than pricing airfare and hotels, it wants to help you plan what to do once you reach your travel destination. You can already do this using tree-based travel guides like Lonely Planet or by scouring thousands of small sites for recommendations from other travelers. But Kango wants to index these small sites and use semantic technology to detect what destinations and activities they cover, so someone looking for a family vacation in, say, Big Sur will see a different set of results than someone seeking romance or adventure.

Kango’s technology extracts the sentiment from the postings it indexes and only shows results for locations that get positive buzz. If you’re looking for activities, you can filter using a number of criteria, including theme parks, playgrounds, wineries and breweries, and spas.

In its current state, Kango only supports California and Hawaii and doesn’t expand beyond “family friendly” and “romantic.” The ability to search for “pet friendly, “historical,” “eco-friendly” and “thrill-seeking” destinations and activities is planned for later releases.

The company’s founder Yen Lee, who was a general manager for Yahoo Travel, has an insider’s perspective on the limitations of the online travel market and has used what he learned at Yahoo Travel to build a technology with a refreshing spin on travel search. With all of the money and brainpower behind online travel sites, it’s surprising something like Kango hasn’t come along sooner.

That said, getting users to visit yet another site as part of their travel planning process will be no mean feat. Once it’s fleshed out, it’d be great to see Kango’s services integrated into a larger platform that handles ticket search, booking, and TripIt’s central organization from one beautiful interface.

See our first mention of Kango here (scroll down).

Doostang, a Silicon Valley company that seeks to hook up highly qualified people with high-end employers, has raised $3.5 million in a round led by Shasta Ventures.

Doostang is in a very crowded industry. It is filled job-oriented sites like TheLadders, a job board for six-figure salaries and up, and more specialized job boards on multitudes of niche-oriented Web sites. Also, sites like LinkedIn are gaining currency among highly networked people - who ask their friends to give them suggestions about specific job openings.

Partners at Shasta Ventures, a Silicon Valley venture firm, say they think there’s still too much clutter at these other sites, and that Doostang aims to be the most selective. Doostang, as we’ve reported, is invite-only, and boasts that it started at Harvard, MIT and Stanford (thus borrowing from the playbook of Facebook, the site that became popular among colleges after it launched at Harvard). 

The challenge with this, in our view, is that the most selective candidates will always have an easier time finding jobs through their own networks, and LinkedIn, Facebook, or the proverbial “grapevine.”

The round includes other undisclosed investors. Techcrunch has also covered the news.

updated
Mint, the San Francisco company that helps you manage money online, said it has raised $4.7 million in a first round of funding led by Shasta Ventures.

Investors include First Round Capital and Ram Shriram, early investor in Google.

We’ve written several times about this company since it launched last month, and received widespread praise. The company says it has since signed up 50,000 users.

Mint also added Donna Wells, formerly vice president of corporate marketing and acting CMO at Intuit, as chief marketing officer. That’s a solid addition, considering Mint is a competitor to Intuit. Wells was also a senior vice president of marketing at Expedia. Mint also named Aaron Forth, a former director of product at eBay, to vice president of product.

Update: Here’s what Ram Shriram tells us about his motivation for investing:

I invested in mint simply because I am excited about the market space [and] its remarkable value to users to manage their daily lives (and that this was my vision at Yodlee going back to my seed investment there in 1999). I also liked the UI, the founding team and their execution skills which were better than most startups I see. In a few years a majority of consumers will transact in this manner simply because they trust the site, it saves them time and they can both personalize the data and segment it so they know where their spend is going [and] where they are making money.

Turn, a San Mateo, Calif. company that delivers advertising tailored for Web sites, depending on their readership and other variables, said it has raised $8 million in second round financing.

Turn was launched by Jim Barnett, the former chief executive of once-popular search engine Altavista. We wrote about Turn last year after it rose $18 million. Since Turn launched, other ad network companies have emerged to bring about more targeted ads for Web sites, while others have been acquired. Turn uses numerous variables to select advertising for a site, such as a site’s subject matter, its design, and its owners’ preference for click-through versus impressions.

Norwest Venture Partners, Trident Capital and Shasta Ventures are among the investors in the latest round, according the regulatory filing about the financing cited by PEHub. However, regulatory filings are notoriously unreliable. A lead investor hasn’t been named.

SayNow, a Palo Alto company that provides a free calling service to bands on Myspace to stay in touch with their fans, has raised $7.5 million in venture capital.

For now, it’s difficult to see how SayNow can make serious money from its model. Free calls?

To recap, the service (previous coverage here) offers bands a dedicated phone line, allowing them to leave a voice message for their fans. The musicians do this by placing a widget on their Web site, listing a unique phone number. Fans can call and listen to the message, leave messages for the band, and register to get updates. The musicians can give the number out at concerts — and the one-to-many relationship is made very easy. (See screenshot below for example of a Web page widget for Alicia Keys).

But with phone calls extremely cheap, and with musicians having many voice-message alternatives for outreach, how does SayNow plan to make money — the boatloads of money that venture investors pine for?

Chief executive Nikhyl Singhal explains that the trick is to take a cut of advertising in audio ads played during the voice recordings. SayNow will also let musicians pitch a ringtone to their fans. They’ll talk about their latest song, and offer fans a way to download a ringtones version of it. Fans press “1″ to buy the ringtones, for say $2.99. SayNow might get 25 cents of that. Singhal says between 20 and 50 percent of fans are actually buying the ringtones in tests.

The company isn’t disclosing revenue, but it’s cutting revenue sharing deals with musicians — now that it has tested its platform for a year. The ringtones sale feature is still being tested, however, with revenue share contracts to begin next month, Singhal says.

SayNow has 870,000 subscribers, or fans who have opted to receive messages from musicians. Certain musicians get a lot of calls. Chris brown, for example, had 25,000 callers in five days after publicizing his number. If you do the math, even that volume isn’t robust enough to build a great business on. The advertising rates are relatively high: Advertisers pay $20 and $60 per a thousand calls. That’s good, but SayNow only gets a cut of that, and gives most of it to the publisher.

SayNow competes with companies like Snapvine, which gives out a single number, and then provides individual extensions for each artist. That company has sought to drive adoption among individual users, directing them to register at the site to get their own Web widget too. That company says it has millions of users. Mozes, another competitor, lets bands give out a text code to stay in touch with fans.

Investors include Shasta Ventures, Tugboat Ventures’ Dave Whorton and Costella Kirsch.

Advertising-supported Web sites serving consumers like you and me may be all the rage.

But rarely have other Web sites, those serving companies, tried to rely on ads — because there’s not enough people to look at the ads.

But Spiceworks, an Austin, Texas company, has raised $8 million more in venture capital to deliver on its model of serving ads to on its site that offers software to manage the information technology assets of medium sized companies.

The funding was led by Shasta Ventures, and included Austin Ventures. The company raised $5 million from Austin Ventures last year. We wrote about the company around that time.

The logic is that it can sell targeted ads to IT professionals. It has sold direct ads to Hewlett-Packard, Symantec, McAfee and Rackspace, according to Dow Jones.

TeeBeeDee is the latest social network catering to a special demographic: those aged 40-plus.

MySpace has got the teens. Facebook has the 20-somethings. Friendster says it has bagged the 30-somethings. And on the other end, you have Eons, for the 50-plus generation.

So you knew this 40-plus angle was coming. The San Francisco company has just raised $4.8 million in a first round of funding led by Shasta Ventures, and joined by Monitor Ventures.

It’s a pretty straight-forward social network. It features discussions, and questions and answers about the usual topics, from sex to stress. People with top answers get ranked highly, along with their mug shots, and therefore there’s an incentive to play along. Member create profiles so they can network.

The company was started by Robin Wolaner, an entrepreneur who is the founder of Parenting Magazine, former executive of CNET Networks, and author of Naked in the Boardroom: A CEO Bares Her Secrets So You Can Transform Your Career.

The name TeeBeeDee comes from the acronym “to be determined,” which the company says reflects its view that the next phase of life is “full of opportunity.” The site says it plans a full launch in September.

The desire people to express themselves and feel belonged somewhere online continues to surprise us, so we’re not going to dismiss this company as an also-ran, despite its relatively late entry. However, this particular demographic of 40-something is a difficult nut to crack. People in their 40s don’t want to be reminded of their age. They’re having fun, and they want to feel part of the Facebook crowd, or at least be allowed to associate with groups that embrace those younger than they are. On the other hand, they’re the mid-life crisis bunch, and may be seeking counsel in areas they haven’t before.

Previously the company had been backed by individuals, including Ron Conway and David Nierenberg; Jan Brandt, former vice chair and chief marketing officer of AOL; Jim Hornthal, founder of Preview Travel and former vice chairman of Travelocity.com; Ruth Owades, founder of Calyx & Corolla and Gardener’s Eden; and Bill Sahlman, senior associate dean of Harvard Business School.

Tumri, online advertising company that lets publishers choose the type of advertisers they want to run in a so-called AdPod on their Web sites, has raised a $10 million second round of funding.

Lehman Brothers Venture Partners led the round, which included existing investors Shasta Ventures and Accel Partners.

There’s a whole gaggle of new advertising networks, perhaps too many, but with merger and acquisition fever raging in this sector, it makes sense that investors double their bets in the hope their companies get snapped up by a Google, Yahoo or Microsoft or a handful of more traditional ad giants seeking to enter online world.

Last month, VentureBeat covered Mountain View, Calif.-based Tumri’s AdPod service which allows publishers to display targeted product ads with themes that are relevant for their own sites (see example below). Tumri’s network includes advertisers such as Wal-Mart, Sears and Zappos. Revenue is split between Tumri and the publisher on a cost-per-click (CPC) or cost-per-action (CPA) basis.

Tumri also added two VPs to its management team. David Kim comes from search engine marketing firm Efficient Frontier to lead business development. Sandeep Nawathe comes from supply chain management firm Amphire to lead engineering.

This latest round brings Tumri’s total funding to $16.5 million.

Tumri, an online ad network, today releases a service called Tumri Publisher to give publishers more control over ads displayed on their site.

Tumri Publisher allows users to create custom, branded ads called AdPods based on product category. For example, a blog about books could choose to only display book ads from Amazon.com. It also lets you create AdPods for specific merchants and price ranges.

AdPods display inventory from over one thousand merchants including Shopping.com and Overstock. Unlike some competitors, Tumri allows publishers to set specific rules about the types of ads they wish to display. For instance, Google AdSense lets you filter out specific competitors or advertisers but currently has no way to specify ads you’d like to include. Google has recently started testing “gadget ads” (see Niall Kennedy’s piece), but these don’t appear to give publishers as much control. There are several other ad widget companies, such as the less developed Boobox, doing something similar. Zlio, more advanced, also lets you make money from selling products through widget stores (our coverage here).

Tumri’s ads — such as the ones below — look more like product offers than contextual advertising. Tumri allows publishers to control ad look and feel and monitor performance of different types of ads. Lack of creative and editorial control is a drawback to popular solutions such as Google AdSense.

Tumri, based in Mountain View, gives publishers a 50 percent split of revenue it gets from advertisers. Publishers may make money if a customer clicks on an ad or, in other cases, only if they actually buy the product, depending on the arrangement (see how it works). The three-year old company has raised $6.5 million in a first round of financing from Shasta Ventures and Accel Partners.