[Update 7/25: Tagged's Greg Tseng has gotten back to us and said there has been no funding and that the TechCrunch article "was entirely false."]
Tagged is rumored to have followed Hi5 in raising a large amounts of cash to try to conquer the social network global market.
Tagged, of San Francisco, has raised $15 million, on a reported $102 million pre-money valuation, according to Techcrunch, meaning investors value it at $117 million. Investors weren't disclosed.
The race is on. Moreover, the timing of the latest investments is likely no coincidence.
Google saw 47 percent of its ad revenue from international markets during the first quarter. Investors are betting social networks are going to see strong growth abroad. Hi5, in particular, is already quite active internationally. Moreover, some investors looked at both companies, we're hearing. When one group decided to back Hi5, the other may have signed with Tagged, though that's just speculation on our part.
Hi5 and Tagged are the third and fifth largest social networking companies respectively. They have both lost U.S. market share dramatically over the past year, according to Hitwise (see table at left, and method description below; the data is open to lots of questions).
Here are the top seven networks, according to Comscore data on unique users globally for May. We're trying to get June figures, and will update.
1. MySpace 2. Facebook 3. Hi5 4. Friendster 5. Tagged 6. Bebo 7. Piczo
Update: We've just gotten June figures from Comscore. We've inserted the chart below, which includes a range of sites not associated with full-fledged social networks, but categorized as such by Comscore's broad definition. You'll note that Tagged, for some reason, has fallen off the list.
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Hi5 and Tagged had raised the least amount of money among the top seven networks, especially Hi5, which had raised to less than $1 million previously. This makes their accomplishments all the more impressive. Both companies are profitable, based on advertising. Last night, we reported that Hi5 had raised $20 million more. Tagged had previously raised $8.5 million from Mayfield and angel investors.
Myspace is now part of a public company. Facebook and Friendster (see our recent coverage of that company's fast growth lately) have each raised much more money in the past. Piczo raised $11 million earlier this year. Last year, Bebo raised $15 million from Benchmark Capital
We just talked with David Feinleib, of Mohr Davidow Ventures, who led the venture firm's investment into San Francisco's Hi5. He wouldn't comment on the coincidence of the timing, but did say his firm had looked at Tagged too. He said there are very few companies that have been able to round up tens of million of users, and that his interest in Hi5 came from its international exposure and scrappy ability to grow despite very little backing. Feinleib says the company has a chance to get to 100 million users worldwide. It has a team of almost 40 employees.
Some have remarked that both companies, in particular Tagged, have used aggressive marketing tactics to sign up customers, making it very difficult not to spam friends with invites during the registration process, for example. It convinces new users to reveal their contact lists, and then sends invites to each of the contacts. VentureBeat has been trying to talk with Tagged about this policy for sometime. Tagged's chief executive, Greg Tseng, told us in early June he was "in the middle of a huge deal." and would talk when he came up for air.
We've put in a request for comment and will keep you posted when we know more.
Note on Hitwise data - This is what Hitwise tells us about the data. It "is based on a custom category of 21 of the leading social networking websites ranked by US market share of visits, which is the percentage of online traffic to the domain or category, from the Hitwise sample of 10 million US Internet users. Hitwise ranks more than 1 million unique websites on a daily basis, including sub-domains of larger websites. Hitwise categorizes websites into industries on the basis of subject matter and content, as well as market orientation and competitive context."