VentureBeat

Shawn Fanning, who gained fame after launching early music file sharing company Napster, is in advanced stages of talks to sell his most recent social gaming start-up, Rupture, for $30 million.

The buyer would be Electronic Arts, but unlike first reported by Techcrunch, the deal hasn’t gone through. I reached someone very close to the deal but who requested anonymity, who said “nothing has been signed, but it’s getting close.”

“Is it likely to go through?,” the source continued. “Yes.”

Finally, it looks like Fanning will hit paydirt. Napster went bankrupt after facing insurmountable legal challenges, and Fanning’s second music start-up SnoCap didn’t do very well either, and was reportedly sold for very little to imeem.

We reported on Fanning’s Rupture a year and a half ago, when it first emerged with a goal to bring social networking to popular online multiplayer games like World of Warcraft. It has stayed in a private testing mode since then, having delayed its launch, so Electronic Arts is obviously buying the company for its technology and potential. The area of online social gaming is promising because millions of gamers have formed communities with each other through playing, but their interactions have been limited by the confines of proprietary software.

With social networking and online gaming all the rage (with $1 billion in subscription sales alone), it’s no surprise that Electronic Arts, the giant game maker, which has been struggling to find itself in recent years, would be interested. EA is working on a variety of online games. The company’s Mythic division has been at work on “Warhammer Online” for four years and it expects to launch the fantasy-role playing game in the fall. Spore, another single-player game with online elements, will launch in September. But it isn’t immediately obvious whether those games could use the Rupture technology. Sometimes the technology behind a game on a major title is written in stone years before its launch.

Fanning and co-founder Jon Baudanza will both join Electronic Arts under the planned agreement.

Rupture raised about $3 million last year from Ron Conway’s Baseline Ventures, Joi Ito and Reid Hoffman among others. (Dean Takahashi contributed to this post).

Fon, a Spanish startup hoping to build “the world’s largest wireless community”, has raised $9.5 million in a third round of funding, according to TechCrunch.

Coral Capital Management led the round, with participation from British Telecom, Google, Allen & Co., founder Martin Varsavsky’s Jazzya and Joi Ito’s Digital Garage. Varsavsky says he’ll use the new funding to launch Fon in Russia, and to release a new version of the company’s Fonera router.

We covered the company last October, when British Telecom joined Google as a Fon investor. It’s a cool idea: After installing a Fon wireless router, you can open up your network to other Fon users in exchange for free access to other routers when you’re traveling, or you can charge for access and receive 50 percent of the proceeds. But it’s still not clear whether the company is making much money, since it appears to be giving the routers away for free, and the most interesting part of Fon’s model also involves free wireless. (A startup called Meraki is also trying to create a free wireless network, in this case one that envelops San Francisco.)

It’s worth noting that British Telecom and Google may not see Fon as a moneymaker, but as a way to promote their own offerings. Sequoia Capital, a previous Fon investor that’s usually more interested in profit, didn’t participate in the current round.

Here’s the latest action:
1) Brightroll raises $5M for video ads
2) LGC Wireless acquired for $169M plus
3) InterviewUp, answers for job interviews
4) Alibaba.com to go public
5) Yahoo’s CMO leaves, without explanation
6) Tesla’s shocking $1M crash tests
7) Tumblr, Collective Media, Veeker, MobileEye, BioFuelBox, GameLayers, Shooner, all raise cash
8) Boston’s Entrepreneur site

Brightroll serves billionth video ad, raises $5 million – The mark comes less than six months after serving half that number. The San Francisco company, which helps large ad agencies and brands sell video ads across leading web sites, has also raised $5 million from new investor KPG Ventures,
True Ventures and Adams Streep Partners.

LGC Wireless acquired by ADC Telecommunications – As we reported last week, LGC Wireless has been bought. Now its official by who. ADC picks it up for $169 million plus about $20.5 million in debt. LGC’s technology strengthens cell signal coverage in buildings, airports and other indoor areas. LGC Wireless had sales of $83 million in year ending Sept. 30. The 11-year-old company had raised $93 million in funding. Investors included Rembrandt Venture Partners, the Mayfield Fund, Allegis Capital, Crystal Ventures, Intel Capital, Hutchison Whampoa Ltd. and Dali Hook Partners.

InterviewUp is Q&A site for job interviews — The site is designed to help interviewers collect challenging questions and interviewees find good answers. We’re not sure the world needs another Q&A site, but a post discussing Google’s interview questions scored over 1500 diggs. If InterviewUp can deliver juicy tidbits like these, it has a shot. For more.

Yahoo’s chief marketing officer Cammie Dunaway leaves – She was head of the customer experience division, and there was no reason given for the departure (details here).

Alibaba Group, 39 percent owned by Yahoo, plans Alibaba.com IPO for Nov. 6th in Hong Kong – The IPO is expected to be the biggest ever by a Chinese Internet company, raising as much as $1.5 billion. Earlier story here from WSJ.

Collective Media, another online ad network, raises funds –The company says it reaches 120 million unique users per month. The round was led by Greycroft Partners, with iNovia Capital participating. More here.

Tumblr, offers you a lean Web site — The New York company offers you a personal site where can collect, share and discuss what headlines and other things found online. It lets you pull in your Twitter feeds, too. Other than that, its has few frills. It has raised $750,000 in a first round of funding from Spark Capital and Union Square Ventures.

Veeker, a mobile video and picture messaging startup, appears to be stuck — The San Francisco start-up raised $2.5 million from Labrador Ventures, but is struggling amid competition.

Tesla’s $1M crash tests — Ouch, at $1M each, no wonder executives at Tesla were gasping at the cost per crash for the testing of the anticipated all electric sports car. Apparently, though, the cost per crash is now a mere $300,000 (Earth2Tech).

Goldman Sachs invests $100M in Israel MobileEye, for driving tool — MobileEye’s technology calculates the speed and distance of a vehicle in front of a car, and alerts the driver when other vehicles are too close. The company raised the money at a pre-money valuation of $500M, reports Israel’s Globes. MobileEye, which has already raised $50M, plans an IPO for next year. The company says that it will have $10M in sales this year and that it will become profitable in 2008. Here’s its statement.

BioFuelBox, biofuel refining startup, raises $9.46M in first round — Backers of the a Hollister, Calif. start-up include Draper Fisher Jurvetson and DFJ Element. PE Hub has the scoop, reporting that the company’s technology is a “bio-refinery in a box — a modular, containerized innovation that produces biofuel cost-effectively and easily.”

GameLayers, a passive multiplayer online game maker, raises $500,000 — The San Francisco company is backed by O’Reilly AlphaTech Ventures, Joi Ito and Richard Wolpert, reports PEHub.Schooner Information Technology, secretive finance company, raises $3.33 million — The company plans a $15 million total first round, according to regulatory filings cited by PE Week. The round was led by CMEA Ventures. The Oakland, Calif., company is led by Richard Busch, formerly with Sun Microsystems as research director of computer system architecture and analysis.

Social networking site for VCs launching next month in Boston – TheFunded lets entrepreneurs talk about VCs. Next month, the New England Venture Network will launch venturenetwork.vc, a place for VC’s to talk about deals. A deals section will feature a Craigslist-like listing of investment opportunities, including a place for VCs to post about companies that are looking for funding, that they chose not to invest in. A questions section will let analysts query VCs. A jobs section will let VCs advertise openings at portfolio companies. Via The Boston Globe.

Updated

Kongregate, of San Francisco, launches tomorrow with a host of Web games targeted at young males with social networking components pushing new bounds.

Kongregate is signifiacant because it targets a group that until now hasn’t been served by online social games. Social gaming has been the domain of women, especially older women (served by companies like Club Pogo, owned by Electronics Arts). Young males searching social action games have had to download large software programs to their computer, such as World of Warcraft. Or they’ve played on Xbox Live, where games cost in the millions of dollars to develop — they have social components, but users have little input into the development of those games, and features.

Kongregate calls itself the YouTube of game platforms. It is entirely Web-based, and users provide input. Kongregate lets gamers chat with each other, and even chat with the developers of the games. Anyone can submit a game to Kongregate to be licensed. Kongregate lets gamers comment on and rate the games; hot games climb to the top of the home page. Kongregate’s management then offers contests, giving users who perform points and cards they can use to enter elite play-offs. Developers, meanwhile, get a cut of any profits, which come from advertising.

Kongregate launched a test version in October, but already has licensed 300 games, many of them compelling, such as Fancy Pants. If you haven’t played Fancy Pants, try to find a few minutes to do so. It’s liberating (your character jumps all over the place), and addictive. You can play Fancy Pants at other sites, but its developer is about to release a sequel, and that will be exclusive to Kongregate.

The company has won seed funding from a number of investors, including Reid Hoffman, LinkedIn co-founder Joe Kraus, co-founder of Excite and JotSpot, Joi Ito, an investor in Technorati, and Jeff Clavier, another angel investment with prior social networking investments.

Founder Jim Greer was previously technical director at Club Pogo, where he watched that company grow to have 1.4 million subscribers paying $6 month or $40 a year. Along with premium features, ads and downloadable game sales, Club Pogo is making roughly $70 million a year, he said.

Greer has the game chops, and knows how to build community. The platform looks spiff for just nine months of work. The trick is whether Greer’s team, mainly engineers, will be able to cut the distribution deals they need with large portals, to win traffic. They’ve picked some investors with good contacts. Kongregate faces two of tough competitors, neither of which offers as many social and open sourced features. But they’re also unlikely to stand still. They are Miniclip.com, which has significant traffic and has several years’ head start, and Shockwave, now part of Viacom, and boasting tens of millions of monthly unique users.

See screenshot of FancyPants page below. Arrows pointing to the right show the social areas, such as avatars of your friends, and the place for chat, and comments; the arrow pointing left shows a contest under way. (Note: The social areas are devoid of friends/avatars and chat in this image, but that’s because we got a sneak peak of the version to be released tomorrow, and nobody was playing yet).

[Update: The seed funding was $1 million, Techcrunch has since reported]

Shawn Fanning, founder of the popular music file sharing company Napster, is back in the game with a new start-up.

This time, Fanning wants to bring social networking to popular online games like World of Warcraft, as BusinessWeek first reported.

Experts say this is a promising area, because millions of gamers have formed communities with each other through playing, but their interactions have been limited by the confines of proprietary software. Why not open up these interactions to the full richness of the Web, let gamers flirt with each other, communicate offline or any number of other things?

Fanning’s new company start-up, Rupture, results from Fanning’s own frustration with WoW, which has 7.5 million players. The more he played, the more of a stake he had in the game, but the more he felt hampered in organizing game playing and learning about others’ identities.

He has raised seed money from investors including Ron Conway and Joi Ito. That makes sense because Conway has backed Fanning in his previous endeavors at Napster, and subsequently at SnoCap, a music store service that recently partnered with MySpace.

There are other services that extract character names, profiles and other data from WoW and other games. But few, if any, have sought to take it to the next level, personalizing it all in other ways. Rupture will create individual and guild rankings and facilitate playing and chat, starting with WoW, but pulling in information from other games, too, according to BusinessWeek.

There are several other stealth start-ups working on this, Susan Wu, venture capitalist at Charles River Ventures, says. She dismisses concerns that they may violate WoW’s terms of service. There’s tension, certainly. The walled garden has benefits — a rich and immersive storyline in a constrained but focused environment. However, players of WoW tend to spend time outside the game interacting with their “guildmates,” but have no easy way to do that. And there are thousands of plugins that have established precedence for how services get layered atop WoW, she points out.

Check out Allakhazam (plugin info here), for example, where you can view people’s WoW characters, guild rosters and quests. There are hosting providers that provide your guild with its own Web site, with ranking, communications, and management tools.

However, most of these other services are run by small grassroots contributors, have lacked a spectacular user experience, and there’s opportunity to offer a more cohesive and more comprehensive networking toolset, Wu says. Allakhazam’s focus on extracting user content (tips, maps, strategy, quests) has, perhaps incidentally, helped bridge communications between in- and out-of-game networks (forums are a bit part of Allakhazam). But social networking, i.e., building relationships, hasn’t driven its experience. That’s apparently what Rupture wants to do. Rupture will launch sometime in the first half of next year; for now, you can request more info at the site.

Below is a screenshot of a Modded Wow interface (with numerous plugins installed):