VentureBeat

Plenty of rumors have circulated about BitTorrent, the popular San Francisco file-sharing company, speculating on its latest funding round and the fate of its brilliant chief executive.

Here’s word from the horse’s mouth: BitTorrent has raised $20 million in its second round of capital, led by Silicon Valley firm Accel Partners, the company told VentureBeat earlier Thursday. Existing investor DCM participated. And while we don’t know what will happen with Bram Cohen, we came away from a conversation with the company thinking he may be stepping down as CEO soon.

BitTorrent is a hot company because it’s at the center of a revolution in video file-sharing. It is controversial because it is still a distributor of predominantly pirated video. Its peer-to-peer technology defies centralized control, and so controlling piracy on its platform is a hard thing to do — but it is working on it nonetheless. BitTorrent has millions of users, and says its traffic accounts for as much as 40 percent of all worldwide Internet traffic.

BitTorrent is also working with the Motion Picture Association of America (MPAA) to remove copyright infringing content from its independent website. Over 20 film studios and television networks, including 20th Century Fox, MTV Networks, Paramount Pictures and Warner Bros. Home Entertainment, expect to publish thousands of movies and TV shows on BitTorrent.com, the company says.

As VentureBeat reported earlier, Ping Li, a venture capitalist at Accel led the investment. In that earlier piece, we wrote about the challenges BitTorrent still faces in becoming an easy, useful consumer-oriented site. Those challenges remain.

Separately, we asked BitTorrent’s director of communications, Lily Lin, about reports that there is an executive search underway to replace Bram Cohen as chief executive. She said everyone knows BitTorrent had become a large company, with 35 employees, but then she repeated what she told us Wednesday, that Bram was “here to stay.” We noted she was not saying he was CEO to stay. She paused, and said again, “he’s here to stay.”

So with the clues, we now believe Cohen will stay at the company but will step down as CEO. She referred to a bigger company, a hint that organization was needed. This Wired piece from more than a year ago suggests organizing people may not be Cohen’s forte. It is a snippet from a part about his wife’s view of him:

She pats her husband affectionately on the head: “My sweet little autistic nerd boy.” (Cohen in fact has Asperger’s syndrome, a condition on the mild end of the autism spectrum that gives him almost superhuman powers of concentration but can make it difficult for him to relate to other people.)

We may be wrong. Who cares about titles, right? Cohen could stay CEO, and the search may be on for a chief operating officer who effectively runs the company. Doesn’t really make a difference.

Updated

Web 2.0 start-up activity is hot, and here’s the latest data.

Venture capitalists invested $455.5 million into Web 2.0 companies in the first three quarters of the year, more than twice the amount invested over the same period last year.

This comes from the latest survey by Dow Jones VentureOne, which continues to do the best research on the Web 2.0 area. It gets help from accounting firm Ernst & Young.

Overall, more than $1.63 billion has been invested so far this year into 198 “consumer technology” companies headquartered in the U.S., but 79 of those companies were classified as “Web 2.0.” (See our earlier story here, for VentureOne’s definition of Web 2.0 — scroll to blue quote box)

Notably, the group finds investment valuations have remained fairly steady for Web 2.0 companies over the past two years. But it contradicts the moaning we hear from VCs and individual angel investors about how high valuations have become. (See chart at very bottom of the post; note that the valuations don’t include the angel rounds).

Below are charts outlining where the investments are going, and listing the biggest recipients and investors.

Btw, Intel Capital should be moving up the list as a big investor, based on the recent announcements it has made. We heard that Intel Capital’s Eghosa Omoigui, who has had his ear to the ground attending all the Web 2.0 conferences and parties over the past year, internally floated the idea of looking at an investment in YouTube back in March, but that the idea didn’t get much traction internally. Too bad. Intel is still one of the largest venture capital investors overall.

Intel yesterday also announced it is distributing SuiteTwo, an integrated Web 2.0 software suite for small and medium sized companies, in a hosted or self-hosted format. The package includes Socialtext (wiki software), Six Apart’s Movable Type (blogging software), Newsgator (RSS reader) and Simplefeed (RSS distribution).

It has wrapped them into a single sign-on software, through direct sales from Intel, but also via partners like Dell and NEC, Intel Capital’s Robert Rueckert told VentureBeat in a briefing Monday. Cost will be from $150 to $200 per seat per year.

SpikeSource, a company that helps integrate software, has guaranteed the suite works on Novell, Linux or Microsoft operating systems, and that they run on Intel servers.

(Update: We’ve confirmed with Intel has invested in all five of these companies — Socialtext, Six Apart, NewsGator, Simplefeed; however the amount remains undisclosed).

(Update II: To clarify, Intel has made equity investments in Six Apart and SpikeSource, but has only signed warranty deals with the other companies, essentially giving Intel the right to purchase equity if they meet certain performance guidlines.)

Valuations of Web 2.0 deals: