VentureBeat

updated

Four venture capital personnel moves:

Robert Theis, a venture capitalist who left Silicon Valley firm DCM last year after serving for eight years, has joined Scale Venture Partners, also in Silicon Valley, as managing director. Thies will focus on investment in “technology infrastructure and applications.” At DCM, Theis invested in companies PGP, Roamware, NeoPath (acquired by Cisco) and the now-public VanceInfo. We’re not certain why things didn’t work out at DCM (all sides say something different), but it’s true that DCM has focused more on investments in Asia of late, and a refitting was needed. Previously, Theis was an executive at New Era of Networks (NEON), and before that spent a decade at Sun Microsystems.

Erika Brown, a long-time reporter at Forbes covering venture capital, is leaving to join venture capital firm Matrix Partners‘ office in Silicon Valley, where she will be director of marketing and business development (see her Facebook message). She told me she’ll serve the firm in a number of roles, for example helping market portfolio companies, but also providing research on what companies to invest in, including due diligence. Brown, you’ll recall, is the reporter who puts together the Forbes Midas list of the top 100 investors (see most recent Midas List). Now the question is, who takes over her role? Who will draw the ire of the VCs who are left of the list, those who complained so vociferously each year to Brown.

Separately, Bob Lisbonne, a partner at Matrix, who was a key product manager during Netscape’s early days, is leaving the firm. Too bad to see one of the more geek-friendly VCs leaving the field. He’s known to still code occasionally. Among Lisbonne’s board positions are Blue Lane Technologies, Consera Software (acquired by Hewlett-Packard), Euclid Media, LucidEra, PostPath, Renkoo, TeaLeaf Technology and Xign. In a statement, he said: I intend to explore some new ideas, have fun writing software, and ultimately pursue one or more entrepreneurial endeavors. I’ll continue to work out of my office at Matrix, so all my contact info remains the same.

Christopher “Woody” Marshall, has left Trident Capital to joined Technology Crossover Ventures as a general partner in Palo Alto, Calif. Among the investments he managed at Trident were AccountNow, Advanced Payment Solutions, Bytemobile Inc., Merchant e-Solutions, MapQuest, SideStep and Xata. TCV is investing a huge $3 billion fund, raised last year.

Update: This just in, courtesy of PEHub: Cynthia Ringo has left VantagePoint Venture Partners, and is partner at JP Morgan spinout DBL Investors , which is raising its second fund. This becomes her third VC gig. Ringo has moved around a lot. Previously, she was CEO of CopperCoom. She led the failed Pluris. She was also executive at Madge Networks and Red Brick Systems. Before VantagePoint, she was at BluePrint Ventures.

Updated

Travel search engine Kayak has taken on $196 million in additional funding from a prominent group of investors.

It has separately purchased main rival SideStep for $180 million, as well as $20 million in the company’s bank account for a total of $200, Techcrunch first reported. [Update: We now hear from a source that the total sale was for slightly less: $175 million plus $18 million in cash, for a total of $193 million.]

Together, the companies will aim for a “tremendous” initial public offering next year, said Woody Marshall of Trident Capital, an early investor in SideStep, confirming the news.

[Update: The company itself is demure about the possibility of an IPO, saying instead that it wants to focus on being the number one travel site in the coming year.]

There has already been “strategic interest” in both companies — potential acquirers — Marshall said.

Both provide search-based travel sites where users can find travel information such airline flights, car rentals, hotel reservations, and discount travel deals. Search results may send you to other aggregators, like Orbitz, or online travel agencies. SideStep also offers travel guides, hotel reviews and downloadable toolbar, that will now be accessible by Kayak users.

Norwalk, Connecticut-based Kayak and Santa Clara, Calif.-based Sidestep are the two market leaders in this search vertical (see Hitwise graph below), and have mostly separate user bases, according to Marshall (note: He’s no relation to Matt Marshall, VentureBeat’s editor) .

Smaller travel search competitors include Farecast, Mobissimo, cFares, Tripit, niche travel products, off-the-beaten-path vacation search Tripology, and many others. The larger of these startups may now be acquisition bait, as leading travel sites like Expedia and Orbitz or large internet companies like Yahoo and Google look to expand their travel search services.

Kayak will be the main brand, and Sidestep will use Kayak’s search technology, although Sidestep will keep its brand, Marshall said. Key members of SideStep will join Kayak’s team. The companies say they will combine travel data, such as travel rates and availability, and other services. Affiliate partners of the companies include: About.com, Comcast, LonelyPlanet, Rand McNally and USA Today.

Both companies are generating large amounts of cash through CPM (where advertisers pay per thousand advertising views), CPA (where advertisers pay when a user actually buys a fare or ticket) and CPC advertising (where advertisers pay when a user clicks through to their site), according to Marshall. The Techcrunch article reports Kayak is doing roughly $50 million in annual revenues, while SideStep does $35 million.

The advantage of an IPO will be to boost the company’s brand awareness. Cash isn’t the paramount consideration, since the merged company already has ample funds for further expansion, Marshall says.

Both companies have racked up venture capital funding. Kayak took funding from General Catalyst, a Boston firm that first looked at Sidestep (see here), as well as Sequoia (Michael Moritz was the lead investor, and will now join Kayak’s board), Accel Partners, and AOL. Our previous coverage here.

Sidestep has taken a total of $27 million in funding from Trident Capital, Leader Ventures, Saints Capital, Norwest Venture Partners. Our previous coverage here.

Sequoia, Accel, General Catalyst, Trident and Norwest put money into this latest round, along with new investors Oak Investment Partners and Lehman Brothers Venture Partners, and debt lenders Silicon Valley Bank and Gold Hill Capital.

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.

Doppelganger, a virtual world site, has just expanded its offering aimed at teenagers and young adults– with an emphasis on music, dance, and chilling out at bars.

The new site, called vSide, finds itself competing against a number of other virtual worlds, from Second Life, IMVU and Habbo Hotel. While it will have to fight for an audience, the market is hot for these companies if they are successful. Disney recently acquired another site, Club Penguin, for $700 million — that one based on a happy world of penguin avatars for kids.

Doppelganger, of San Francisco, hasn’t experienced much buzz since the launch of its initial test version in February. It has yet to register on the radar of traffic measurement company, Hitwise, for example (see chart below for the top virtual/role playing Web sites for July 2007). However, Doppelganger’s proposition in vSide — a sort of hipper, music/video version of Second Life — makes sense. What better way to feel cool than to hang and chat with friends while listening or dancing to music in a virtual world?

Doppelganger also raises $11 million in new financing, bringing its total to $25 million. (See our earlier coverage here). The latest infusion was led by ComVentures, and included existing backers DFJ, Draper Richards, Trident Capital, KPG Ventures and Greycroft Partners

Virtual worlds are a bit of a mystery. I understand the appeal online role playing games like World of Warcraft — where there are missions to do and bad guys to kill. However, Second Life, where, to no particular end, you can walk around, hire prostitutes and barrage other players with flying penises, has always struck me as bizarre. Yet there are apparently millions of people actively using that site.

Doppelganger’s vSide falls somewhere in between the two. Like in any other virtual world, you create and customize an avatar — your digital doppelganger — and can then meet up with friends, go to clubs and so on. In an interesting touch, the site has included a “murder mystery” mini-game. To solve the murder, you have to team up with other users to investigate people and evidence. As you advance, you adorn rare clothing, which you must inspect for clues to open up new parts of the world. Solving the mystery enhances your virtual status, and gives you access to VIP sections of the club.

There are also stores where you can spend real money to buy your avatar designer clothes (Jay-Z’s Roc-a-Wear is a partner). Along with in-game billboards and product placement, selling virtual goods is the way the company aims to make money.

Doppelganger is developing relationships with a number of celebrities and musicians,, most notably Tyra Banks and the successful indie record label, Downtown Records. The virtual neighborhoods are flanked by virtual apartments for celebrities and bands. You can visit these apartments as well as create your own — where you can throw dance parties and control the music.

Since February, Doppelganger claims to have since garnered a couple hundred thousand users. The company won’t say how many of these are active, but notes that those users log an average of 11 hours per month, and 77 minutes per session. Its goal is to become the “next generation of social entertainment.” As Dean Takahashi points out in today’s Merc, “there is so much competition for the leisure time of young people that it will be hard to rise above the noise.” And, as these Hitwise numbers show, Doppelganger will have to rise a lot:

The latest in Silicon Valley:

Doppelganger raise $5M more for virtual world focused on teens — Doppelganger is the San Francisco start-up taking aim at the teen, or MTV audience (see our earlier coverage). It launched last year with a virtual club featuring the band the Pussycat Dolls, and is signing deals with other bands. Teens can design their avatars, chat with other sexy avatars, including of the band members themselves, and dance. Chief executive Andrew Littlefield says (listen to podcast) there’s a void between SecondLife, which he says appeals to a slightly older sci-fi crowd, and Habbo Hotel, which appeals to the Nickelodeon crowd. Doppelganger’s lounges integrate with AOL’s Instant Messenger, allowing teens to use existing Buddy Lists. It has raised $5 million in a third round led by Greycroft Partners, a New York-based firm whose West Coast office is run by former VSP partner Dana Settle. This follows $11 million in earlier rounds from Trident Capital and Draper Fisher Jurvetson. Of course, there’s the ongoing legal battles around VSP that are ongoing (Primack has latest).

Draper backs sex toy company — Speaking of DFJ investments, turns out DFJ’s party-hardy extrovert partner Tim Draper is behind the new San Francisco sex-toy company, JimmyJane, we wrote about recently. Alex Haislip has the scoop. Draper is joined by Phil Schlein, a venture partner at U.S. Venture Partners. Things are apparently livening up on traditionally conservative Sand Hill Road.

Another DEMO mention: Jaman — This site, just launched, lets you download a video player so you can watch “world cinema” online, or foreign movies you can’t get easily. We downloaded the player, and it is nice enough. It costs $1.99 to rent the movies, and $4.99 to buy, but we’re not sure how this rises above the noise, or how it got to DEMO. There are lots of other movie companies, and players. More at GigaOM (which links to a full history of this Palo Alto company)

After two years of laboring away in secret, advertising network Turn launches tomorrow saying it can target online ads with unprecedented precision.

Run by Jim Barnett, former chief executive of search engine AltaVista and, later, a top executive at Overture, San Mateo-based Turn has raised $18 million from Norwest Venture Partners, Trident Capital and Shasta Ventures. We were briefed on the company last week.

It calls itself the first “automatic” targeting advertising network.

Google, of course, is the gorilla in this market — it looks at the content of pages, and matches them with relevant ads in its Adsense network. Turn is betting, though, that it can do better by providing more hand-holding to advertisers.

Until now, many ad networks have forced advertisers to sort though hundreds or thousands Web sites to determine which ones are appropriate for their advertising. But Turn is the latest to help them do more precise matching. Competitor Adbrite, for example, is a network that hasn’t let advertisers do much automatic filtering of sites. (However, Adbrite today announced upgrades including an assessment of a publishing site’s user demograpics — by assigning a site’s users a probable age and gender based on their recent Web activity within Adbrite’s network of sites. Adbrite supplements this with race and income estimates it can make by assessing where IP addresses are located geographically, and matching those addresses with U.S census information.)

Turn is offering similar matching abilities, assessing the types of users trafficking a site, if that information is available, but Turn says it also tracks 60 other variables relevant to the ad being run. An advertiser specifies the goals they want to meet, and Turn takes care of the rest.

Let’s say a Motorola makes the following choices: It will pay 75 cents to an online publisher every time a reader clicks on a Motorola advertisement, and $2.50 for every time a reader subscribers to its newsletter, and $30 every time someone buys a Motorola phone. Turn lets advertisers specify this via a Turn dashboard, and Turn takes care of the rest by matching these choices against Web sites in its network.

So if VentureBeat went to Turn seeking advertising, Turn would analyze VentureBeat’s homepage, its secondary pages, its user profiles (if VentureBeat has collected such info) and then look through its database of ads and select the most relevant. It might look for ads related to venture capital, finance and start-up services, for example. It would look for banner and skyscraper ads (which VentureBeat runs). It also assesses the past performance of ads on the VentureBeat pages.

Turn already has 1,000 advertisers signed up, and more than five million ads in its system.

Turn will take 25 percent of the advertising revenue and give publishers 75 percent, though it might take less of a cut on bigger sites.