VentureBeat

DeCarta, the creator of a popular platform for managing location-based (LBS) data, has raised $20 million in additional funding. That includes financing from the Hotung Group and TransLink Capital, as well as existing investor Norwest Venture Partners and a previously announced $6 million from the T-Mobile Venture Fund.

The location-based market still looks like it’s heating up — for example, location-based social application companies like Loopt and Whrrl have been getting a lot of attention, especially with the release of the iPhone 3G with GPS support. Loopt even won the best application award at our MobileBeat 2008 conference last week. But at the same conference, Rich Wong of Accel Partners noted that it’s an extremely competitive market, and “there are a lot of bodies on the beach.”

DeCarta benefits from the excitement without competing with the application companies directly. Instead, it provides the layer between the geospatial data provided by companies like NAVTEQ and applications created by customers like Loopt and real estate search startup Zillow. The platform takes the raw data and translates it into something that’s easily searchable. The company also has deals with carriers including AT&T, Sprint and Verizon. Chief executive J. Kim Fennell told me DeCarta’s biggest competition will probably come from companies like Apple and Nokia, who are rumored to be developing LBS platforms of their own.

The latest funding comes quite close to the $21 million goal that we previously reported, and brings deCarta’s total third round financing to $35 million.

Updated

Location-based technology is an increasingly important feature for mobile applications, and the market continues to heat up — with the iPhone’s just-announced GPS technology, we’re already seeing the beginning of the new wave of location-based applications. Now T-Mobile Venture Fund (the mobile carrier’s investment branch) has made a $6 million investment in a location-based platform called deCarta.

San Jose, Calif.-based deCarta doesn’t make applications on its own, but instead provides the technology that powers other applications, including local search, mapping and location-based social networking. It’s competing with some pretty big players, including Yahoo’s FireEagle platform, which launched earlier this year. But deCarta, which was founded in 1996, says it has already staked out a strong position in the market — its technology supports applications that account for 90 percent of the location-based revenue at its carriers, including AT&T, Sprint, Verizon and a dozen more.

The company touts the range offered by its platform, which can power everything from off-board, server-based applications to “connected navigation” enabled by real-time, two-way connectivity between your smartphone and different data sources. I’m planning to interview chief executive J. Kim Fennell later today, and will update this post with more details on what makes deCarta’s platform stand out.

The company is going after substantial capital, too — it took in $15 million last year, and now it’s raising a second part of its third round. The T-Mobile investment appears to be a part of the larger round, which is targeted for $21 million, and the company says it will be announcing more investors soon.

Update: I just spoke to Fennell, who makes a pretty convincing case that deCarta is the dominant platform in this market. For one thing, there’s the customer list — not only are well-known location-based mobile applications like Loopt and Pelago built on deCarta, but the platform also supported Google Maps during its first three years.

Essentially, deCarta translates the geospatial data provided by companies like Navteq into a format that can be quickly searched by applications like Zillow (another deCarta customer). The other companies in this area died out because they started too early, Fennell says, which is also an issue that deCarta struggled with. He says that Yahoo’s FireEagle isn’t really a competitor, since it’s more socially-focused. (As we’ve written, FireEagle’s big selling point is allowing users to control what personal location data they provide to applications. On the other hand, the products are similar in that they’re both platforms for application developers.)

The real action is going to come from Nokia, Google and Apple, who have all been sending signals that they’re going to launch location-based platforms of their own — Nokia, for example, has agreed to buy Navteq. That’s pushing more carriers to support deCarta, Fennell says, because the solutions offered by Nokia and Apple will probably be tied to a specific device.

As for the funding, Fennell confirms that T-Mobile’s investment is part of the second tranche of deCarta’s third round. He won’t confirm the $21 million target, but he says the tranche will be “in that range.”

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.

Updated again

It’s dangerous to predict your IPO. Hank Nothhaft, chief executive of Danger, the Palo Alto company providing the software for the T-Mobile Sidekick, said confidently back in 2004 that Danger had raised its last round of venture capital. An IPO was in the cards for 2005, he said.

But that’s history. Danger has just raised $10.3 million more in funding. It plans to top it off for a total new injection of $12.3 million fifth round of capital, according to a regulatory filing — and it comes at a time of increasing competition.

Redpoint Ventures, Mobius and T-Mobile Venture Fund were among the backers. (Update: We’ve heard from the company, and turns out the investors mentioned are incorrect. This is more likely money from a strategic investor; we’ll be confirming this and other details about the amount — which may also be wrong — next week).

The company had already raised $114 $134 million. We requested comment early this morning, but still haven’t heard back from the company. Increasingly the software it provides (it doesn’t provide the hardware) appears headed toward commodity status.

Berggi, a Houston start-up, is just the latest to try to “make dumb phones smart,” having raised $3 million from investors like Adara Venture Partners, to offer a download that bundles email, IM and texting capabilities, at $9.99 per extra month, according to GigaOM. (With Berggi, your phone needs to be data-enabled. It doesn’t work over Verizon or Nextel networks.)

You could argue that the device that goes with Danger’s software (called the “hiptop” by Sharp, and the “sidekick” by T-Mobile) is unique, but the effective bundle of services its offering is no longer as unique as it was back to years ago.

Update II: We’ve since talked with Hank Notthaft, and clarified a few things.
–He maintains that he never set a timeline for the IPO. We didn’t say he did, but did say he said in 2004 that it was an option for 2005. He says we over-interpreted that earlier conversation.
–The company raised $10.3 million from an undisclosed company that is a Danger customer, and thus this is not a VC round — and so Hank is still living by his word in 2004 that he wouldn’t raise another VC round. The $12.3 million total number referred to above includes $2 million in extra stock the company has allocated for various deals Danger signs; partners often request a portion of payment in stock, he said.
–The company is experiencing considerable demand, so much that it is hiring engineers aggressively, which is why it keeps opening more offices, most recently in Mass. and Atlanta. While the company is not yet profitable, it will be shortly, Hank said. “We’re not declaring victory, but we’re certainly happy with the way things are going,” he said.
–As for our Berggi comment and the threat of commoditization, Hank disagreed. He said Danger’s converged client-server application is unique. Danger and RIM are the only two selling such a package to carriers. Even Danger and RIM are different, he said. Danger serves a more youthful, more IM-focused clientele, while RIM serves a more professional, email-focused crowd, he said.
–He said the company’s valuation increased with the latest investment.