VentureBeat

LucidEra offers a web-based service that helps companies collect and analyze data across their internal software systems to make them more efficient, and has just raised $15.6 million.

LucidEra is another company in the somewhat crowded “business intelligence” industry.

These companies try to help a company’s management get a more granular, immediate view of factors affecting their business. For example, they show a sales manager how quickly potential clients are being converted into paying customers, and which sales staffers are being the most successful.

LucidEra is notable because it is one of the early leaders among startups trying to offer web-based or “on demand” business intelligence services (previous coverage) — it is also competing with other startups including Seatab Software, Host Analytics, and Oco. It collects data from a company’s systems, automatically checking for errors like duplicate customer accounts, then runs its own analysis of the data and produces live, online reports about what is happening in the company.

Cognos, Business Objects SA, Microsoft and others currently provide on-site hardware, software and consultants to help companies analyze data generated by their software systems used in their various departments. These companies already work with most Fortune 1000 firms.

LucidEra is targeting firms with annual revenue of $20 million to $500 million and 100 to 1,000 employees, says chief executive Ken Rudin. These smaller companies face multiple problems. Not only do they have to pay a lot to get the on-site software installed, they also need to pay extra IT costs to keep the software running once it’s installed, as well as pay consultants to keep analyzing the data for them, he SAYS [tells us].

Rudin says he saw the problem first-hand, while running his own business intelligence consultancy. His staff would go to a company, install hardware and software, then discover six months later that the system had fallen apart. One client at the time told him it was like “trying to manage a nuclear reactor when I just want electricity,” he says.

LucidEra began offering a “forecast-to-billing” service last quarter, aimed at improving a company’s sale cycle. The company didn’t divulge further details on growth and revenue.

The company says it isn’t concerned about the dominant business intelligence companies moving down-market. Its larger competitors have a difficult time turning their on-site technology into a web-based service, according to Rudin. The chief executive of Business Objects appears to agree, suggesting on this blog that his company is looking to make acquisitions.

Besides competitors, the biggest risk for LucidEra is that people still won’t use it: The rap on business intelligence is that it costs precious resources while sometimes delivering “reports almost no one reads.”

The market for web-based business intelligence services is roughly equal to that of web-based CRM software, estimates Crosslink Capital investor Peter Rip, or around $600 million, and growing 30 percent compounded for the next five years, he says.

The round was led by Crosslink Capital, joined by existing investors Benchmark Capital and Matrix Partners.

Rip will join LucidEra’s board of directors with this investment. Last month, he wrote a poignant blog post about deciding to invest in the company, calling the deal “love at first sight.”

Updated

New Internet technologies, defined vaguely as “Web 2.0,” have gone mainstream, but the cycle of innovation may be slowing, suggests a venture capitalist.

Separately, data shows that venture investments in Web 2.0 companies last year increased strongly, but that valuations actually dropped.

Peter Rip, of Crosslink Capital, who has invested in several Internet companies considered Web 2.0-focused, including Riya, Vast and Teqlo, posits that one way to check the “energy dissipation” around Web 2.0 is to look at Web 2.0-centric media, including Techcrunch, Gigaom, and Technorati.

All three of these properties show a similar falloff in reach from their Q4 peaks, all notably right around the Web 2.0 Conference, he notes, pointing to graphs from traffic-measuring service Alexa.

Peter’s post is here. He suggests the early easy wins by new companies targeting Web 2.0 have been had. Now that Web 2.0 has gone mainstream, the hard work begins.

The real debate takes place in comments on Peter post, which he has already shut down.

Of course, Alexa data is notoriously unreliable.

Update: Another controversy is how Web 2.0 is defined. One good definition has been produced by VentureOne and Ernst & Young (we wrote about their definition here).

Today, the two released their latest report, which shows venture capitalists more than doubled their investments in this area last year (see table below), but that the valuation they placed on these companies actually dropped. On its face, this suggests a cooling in the hype around the sector. However, the value drop may stem from other factors. For example, investors may be having to find and invest in Web 2.0 companies earlier in their cycle, because the companies need fewer overall dollars to grow– and so bypass taking capital later on. That means the value of the companies is lower at the time of the investment, but doesn’t necessarily mean a cooling off of interest. Indeed, many investors we’ve talked with say valuations are higher than ever, once you factor in how early these companies are in their traction.

Update II:

VentureOne and Ernst & Young have released a very useful table of Web 2.0 investments and their details here (download Excel file)

And here is a ranking of the most active venture capital investors in this latest cycle (more detailed info here; downloads Excel file)

(Updated) end of week roundup:

Peoplesoft founder Dave Duffield launches new company, Workday — Some details have already leaked out, but the launch announcement coming is Monday. No surprise that it’s related to his former love, Peoplesoft, which got gobbled by nemesis Oracle — something he says he he took pretty hard. Duffield, who always loves to rally the troops, is back at it again: Workday is doing the sort of back-office software stuff that Peoplesoft was known for: It’s an “enterprise resource planning” (ERP) company, and will deliver its software online. It was founded in March 2005 by Duffield and Aneel Bhusri, a former Peoplesoft exec and partner at venture firm Greylock. Last time we checked, it was based in Nevada, and Duffield was being accused of evading taxes while jetting to the slopes. (Update: More details about the company in this Merc story: Duffield and and Greylock Partners invested $15 million into the company in 2005. They plan to kick in an additional $20 million next year.)

YouTube planning mobile phone version — You can already load videos to YouTube from your phone, but now YouTube apparently plans to bring YouTube to you, according to comments from CEO Chad Hurley. You’ve heard of YouTube to Go service, launched in May, which lets you send a video you’ve taken with your phone to a YouTube email address, which then uploads the video. These latest comments suggests they want to bring YouTube videos to your phone — and thus tricky streaming requirements.

Microsoft making big, some would say desperate moves lately — Microsoft has partnered with Novell to make the Windows operating system work with open-source Linux software, which is a significant move — it risks eating into Microsoft’s revenues if people start relying on the open-source version. Earlier this week, Microsoft announced a partnership with Cupertino’s PHP software company, Zend, conceding that many developers aren’t using the .Net platform. And its Zune music player goes on sale Nov. 14 for $249.

Visto’s hard-headed chief — Wireless messaging company Visto has sued just about everybody, but is still losing money after ten years and after raising $267 million; the the Merc has a good summary of the company. Venture capitalist Stewart Alsop, once a backer of the Visto’s chief executive Brian Bogosian, but who ended up pulling his support, calls Bogosian a “hard-headed son of a gun.” We’ve heard he’s one a tough guy. Indeed, he’s just persuaded Oak Investment to pump in give him even more cash. Latest, though, is that competitor RIM is now fighting back, suing Visto. Meanwhile, Visto is announcing it has signed deals with carriers in…. Nigeria? And while Visto is still fighting its legal battles, Google’s out there, delivering email via an application you can download straight to your Java-enabled phone (which includes most new phones).

Venture Capitalist Peter Rip moves to SF for contacts — Venture capitalist at Leapfrog Ventures has joined Crosslink Capital in San Francisco as a General Partner. He writes he’s changing because of “relationships,” noting that SF-based Crosslink invests in everything from start-ups to buyouts, and he’ll have 15 people to help him out — instead of two guys. Yes, perhaps its a coincidence that Crosslink is in SF, but there are more and more companies up in SF these day, and more people telling us that’s the place to be. Sure, until the latest Web bubble bursts! ;)