edgeio.gifEdgeio, a Menlo Park start-up trying to redefine the way people list classifieds, has raised $5 million in a first round of venture capital, and may raise more. Here is the release.

The round was led by Intel Capital and included an investment from Transcosmos.

The idea behind Edgeio is audacious because it seeks to do an end-run around the incumbents like Craigslist and others, by letting people bypass them entirely.

But in a notable development, some of big players — eBay, Cafepress, and Amazon — are agreeing to play along and are sending their listings to Edgeio to make sure they are included there. Edgeo says it is compatible with these services because it only lists a small excerpt of their classifieds, and users clicking on them will be sent back to the originating site.

Now the question becomes whether Edgeio has folded its end-run strategy too early — agreeing to play with the big boys, and thereby allowing them to co-opt Edgeio by keeping their users to themselves. But Edgeio is betting that becoming a “meta” classifieds site will make it a superior search engine in the long term.

Here’s how Edgeio works: It lets people, from the home owner listing their home, to a car owner selling their car, to post their listings on whatever Web site they want — their own blog, for example — and Edgeio then goes out to find it and lists it at its own site automatically.

It can do this only if people tag their classified listings with the word “listing.” Edgeio will then add it to its database. If you’ve added other tags for the item (e.g., “San Francisco” and “Porsche”) these give Edgeio a way of classifying the ad in the appropriate category on Edgeio’s site. Directions are on the Edgeio site.

We first wrote about Edgeio here.

We just talked with Keith Teare, chief executive, after testing the site. We found the interface experience somewhat clunky, in part because the home-page is still focused on attracting people to list their classifieds there. The site will soon cater more closely to people searching for goods, Teare said, something he agrees has been neglected.

One notable development is that Edgeio has moved up in the organic search results at Google. So if you type in “2007 autos,” Edgeio has the third entry in the results. If you click on the link, Edgeio will take you to the page with its 2007 autos listings.

If you specify a city or zip code, Edgeio will show you the 2007 autos for that region. If there are none, it will show you those closest to your region.

This has opened opportunities for advertising revenue for Edgeio, since some local advertisers will advertise on these pages. So far, it has Google ads. (Below is a partial screenshot of Edgeio’s page for autos in Fremont, Ca).

Now that Edgeio is working with eBay, Amazon and CafePress, it will get paid a referral fee if the traffic it redirects back to those sites’ classifieds ends up in a sale, Teare said.

Teare is also developing a way to help blogs or other focused sites to create their own marketplaces, he said. A blog focused on BMWs, for example, could draw on Edgieo to list BMWs and other BMW components, and earn a cut in revenue on any sale.

Edgeio has launched a Chinese site, and filed a patent for its technology, Teare said.

More than 3000 publishers have uploaded their listings to Edgeio, he said. Since launching six months ago, he says Edgeio has more than 100 million listings from more than 14,000 cities in 130 countries.

The Chinese version of the site is named site named mulu100.com (which in Chinese means catalog of catalogs).

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