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SiliconBeat: News about tech money and innovation (10 unread)

Doerr’s crusade on global warming

Posted: June 1st, 2007, 6:30pm CEST by Matt Marshall

When John Doerr spoke at the Ted conference in March, he broke into tears at the end of a 20-minute talk about global warming.

We heard from some participants that the speech was moving.

The talk is on YouTube, and is worth watching. Doerr summarizes what large companies like Wal-Mart can do, what governments can do (citing California’s emission-capping legislation, but more, such as geothermal policy), what entrepreneurs can do (make “designer bugs” for biofuels, for example) and what citizens can do (sign up for carbon neutral programs, or otherwise help policy leaders).

China will pump 22.9 gigatons of greenhouse emissions by 2050, up from 3.3 gigatons, which would be catastrophic. We can’t tell them to stop, because we’re emitting seven times what Chinese do on a per capital basis. In other words, we’ve got to start at home to take urgent measures, to set an example and start pushing urgent measures internationally.

(Hat-tip to Dan Primack)

In separate but related: A Russian scientist, Yury Izrael, says a sulfur-based aerosol sprayed into the atmosphere at a height of 10-14 kilometers (six to 10 miles) could reflect the sun’s rays, and help slow down global warming.
Russia finally gets serious about venture capital

Posted: June 1st, 2007, 5:24pm CEST by Yuri Ammosov

(Editor’s note: Yuri Ammosov is a senior policy officer of the Russian Government in charge of the venture capital and high tech development programs. In this piece, he introduces the new Russian sponsored venture capital program. It opened in March, but has just made its first commitments. Also, see BusinessWeek’s pieces about Russian and Eastern European VC for more context.)

What do you do if there is no venture capital in you country? Well, one way is to go out and buy some.

We in Russia just bought our three first venture funds.

People in places like the Valley seem to take availability of angel and venture capital for granted, but every tech economy has a jump-start before it becomes self-sustaining. Pioneering Silicon Valley venture capitalists, for example, got help from the U.S. government’s SBIC program in early 1960s. Other geographies were less lucky. In the last 20 years, other countries began catching up - Britain, Taiwan, India, Israel, China - but not Russia.

A few years ago, it became obvious that Russia’s tech economy was not going to start by itself. Not that the Russians aren’t able entrepreneurs when placed in a proper environment (Brin and Levchin, to name a couple), but in the absence of venture capital, who would build a startup knowing it might consume millions of dollars before even reaching the hope of breaking even?

Lack of success stories in tech and startup culture, coupled with Russia’s booming domestic market sucked all the capital into bricks-and-mortar businesses.

So a vicious circle had to be broken. Last year, Russian government set up a $600 million (RUB 15 billion to be exact) fund of venture funds. Russian Venture Company, as the fund is officially called (for legal reasons, it was structured as a business development company) promised to provide 49% of capital to venture firms that meet its criteria and which raise the remaining 51% of their funds from private sources. This money came with a few strings attached: A firm could capitalize only one fund from the government; funds were supposed to be from $40 million to $110 million in size (again, in Russian currency, RUB 1,2 to 3 billion); funds had to put 80% of funds in early stage companies; all funded companies had to be high-tech. And the tastiest bit: all returns made on government money above 5% or inflation, whichever is greater, go to investors and managers.

Effectively, it means almost double the return for funds - and for fund managers, the windfall is simply enormous.

Previously, such a fund of funds program worked well in Israel. Russian government took note and took a short-cut - hiring Yigal Erlich, the former leader of Yozma program, to serve on the board of Russian Venture Company. Another prominent international board member is Esko Aho, former prime minister of Finland and current chief of innovations policy European Union. Complete with these board members, Russian Venture Company just held its first round of funds selection on May 11.

As a result, Russia now has three venture funds with a combined capital of almost $300 million. Of those funds, only one originated from Russia.

VTB Asset Management was organized by a leading national banking group that hired a team of several fund managers who previously worked for other private equity groups. Two other funds are joint ventures between Russian and international partners. A smaller one was founded by Finance Trust, a small private equity group in Russian, and Tamir Fishman, a leading investment bank from Israel with 15+ years of venture experience. The third fund, Bioprocess Ventures, was established by a biotech group Bioprocess and Silicon Valley veteran VC Pitch Johnson who set up his first fund in Silicon Valley with Bill Draper in 1962, over 40 years ago.

Not bad for a start. In fall 2007 we plan to place another 11 billion RUB. What would that be in US dollars? Around 400 million? Probably more, as dollar is sliding relative to ruble. That means 8-10 venture funds in addition to three we already got; and enough capital to fund 150-200 startups for Rounds A and B. Interestingly, people in Israel are already getting anxious: “If Russia takes our venture funds, what happens to our high tech economy?”.

I wonder if US readers will feel this way now - or when more US funds will show at the door of Russian Venture Company in September 2007.

Because, trust me, there are plenty of LPs around but very few of them give money away with a 5% cap. And there is just one major geographical area left where there is plenty of tech talent, booming tech products market - and no abundance of startups yet.
Roundup: Google’s Korean clutter, Real’s player, Panoramio and more

Posted: June 1st, 2007, 9:28am CEST by Matt Marshall

Here’s the latest action:

Google Korea has cluttered page — This is a striking departure from the spartan interface Google is known for. Details here. We checked with Google, and a spokeswoman confirmed the Korean site was developed in response to market research and feedback from Korean users. She called it a “new intuitive and easy-to-use design” that helps discover Google products and services.

AOL serving ads in IM and chat — AOL subsidiary Userplane lets Website publishers install IM, chat and other widgets and serve advertising within them, sharing revenue with Userplane. It is called Userplane Money.

Volpi joins Joost? — Mike Volpi, who gave up his CEO-in-waiting job at Cisco in February, is reportedly joining Internet TV company Joost as CEO (source: PaidContent). Volpi served on the board of Skype, the previous company of Joost’s co-founders Janus Friis and Niklas Zennström, so this isn’t out of the blue.

RealNetworks releases new player that lets you capture Flash video — With one click on a video you see online, you can save the file — whether Flash, QuickTime or Windows Media — to your desktop, and burn it to a CD or DVD. The player will be out next month. This capability has been offered by other companies, but not by a major player like Real. Video with DRM, however, won’t work. If you’re interested in this, Scoble has details in the video below:

Google Street View continued — They should have called Google’s latest map service, Street View the Google Living Room View instead. Turns out Google has been driving its own cars around the Bay Area and collecting street level views, including of tabby cats in people’s homes. Bizarre. Google also partnered with Immersive Media for the street service.

Panoramio, bought by Google — For every company squashed out of existence by Google for doing mashups that Google can easily replicate, there’s one that ends up getting snapped up with welcome Google dollars. Panoramio, which lets users upload their photos to share them on Google Earth, is the latest.

Senator Hillary Clinton’s clean-tech agenda — Passing through Silicon Valley today, she lobbies for the establishment of a Strategic Energy Fund to coordinate research on energy and global-warming solutions, provide tax incentives for home and businesses to become more energy efficient, and help install E85 pumps for ethanol-enhanced gasoline and more. See the WSJ, which reports she’d even support the creation of bacteria to remove radioactive materials from the atmosphere.

Despite past failures, another effort to take on the NFL — Bill Hambrecht, the well-known San Francisco banker who tried to take on the IPO establishment with his “Open IPO,” is doing it again. He’s starting a professional football league called the United Football League. So far, he and his partner, Tim Armstrong, a senior executive at Google, have pledged $2 million each. Mark Cuban, the billionaire who owns the N.B.A.’s Dallas Mavericks, will be a team owner. Hambrecht, you may forget, has a history. He was part owner of a team of the earlier failure, the United States Football League. (See NYT)

Facebook’s Platform slammed this afternoon — After seeing Facebook’s Platform site down periodically over the course of this afternoon, we checked with Facebook to ask what was up. Spokeswoman Brandee Barker: “We’re experiencing an unexpected surge in the number of applications being built on Facebook Platform – more than 300 as of this morning.”

Is EMI’s music really DRM-free? — Well, that’s the announcement we covered earlier, but what we didn’t know at the time is that the EMI songs sold via iTunes without DRM still have a user’s full name and account e-mail embedded in them, which means that dropping that new DRM-free song on your favorite P2P network could come back to bite you (Arstechnica).

News corp confirms Flektor and Photobucket purchases — See statement here. Photobucket deal rumored to be $250 million.

Attributor to track copyright material for AP — Attributor, a company in Redwood City, Calif., said its filtering technology will be used to fingerprint AP copy and to identify and document its display wherever it appears across the Internet. Attributor is just one of many digital fingerprinting technologies that have popped up over the past year.

Yahoo’s technology chief resigns from Yahoo — Farzad Nazem leaves just six months after Yahoo named him head of the company’s newly created technology group, saying he simply wants to retire.

Want to try Spock? — Here are a few invitations for Spock’s people search engine, still in closed testing.

Google Mapplets — Just when you thought you’d seen enough Google Maps, there’s another barrage coming: Google has introduced Mapplets, giving developers a way to perform specialized searches directly within Google Maps. The example below is of movie search. You type in a zip code and a movie, and voila.
LiveFuels raises $10M to turn algae into alternative fuel

Posted: May 31st, 2007, 8:33pm CEST by Matt Marshall

LiveFuels, a Menlo Park, Calif. company seeking to turn algae into an alternative fuel, has raised a $10 million round of capital.

The investor was David Gelbaum at the Quercus Trust, which has previously backed environmental organizations such as the Sierra Club and the Wildlands Conservancy.

We reported earlier that LiveFuels was looking to raise the money, and ran a column by LifeFuels’ founding investor Rich Hilt about why using algae makes sense.

Why algae? Well, as the company puts it, the slimy critters…
* are naturally comprised of up to 60 percent oil.
* grow happily in marginalized lands where corn fears to tread.
* can be grown in fresh or brackish water (saltier water algae are oilier)
* thrive on sunlight, CO2 and nutrient rich agricultural run-off and waste.
* offer per acre yields that are 250 times that of soybeans.

You know things are hot in the clean-tech area when several algae companies emerge to do the same thing. Berkeley s Aurora BioFuels and Menlo Park’s Solazyme Inc. have also raised recent rounds.

LiveFuels hopes to have its biofuel ready by 2010.
Multiverse raises $4M for virtual world offering

Posted: May 31st, 2007, 7:23pm CEST by Matt Marshall

Multiverse, a Mountain View, Calif. company that provides a tool-kit for develops to build multiplayer online games and virtual worlds and then make money off them if they want, said it has raised $4.175 million in a first round of funding.

The company is co-founded by Bill Turpin, a Web pioneer whose first company helped create the beginnings of what later became JavaScript, and an HTML Web page creator that was built into the early Netscape browser (clarification: Turpin’s Livewire, which Netscape renamed Javascript, became the script for the server side; Brendan Eich was actually responsible for creating Javascript on the client side, based on idea by Andreessen).

You can download its client at Multiverse, and test it out. We did, and it certainly looks state-of-the-art.

The company says more than 10,000 development teams have already signed up to use the Multiverse platform, and over 150 teams have begun building products ranging from fantasy and science fiction MMOGs to educational worlds. It plans to launch a consumer network of games later this year or early next year.

If a developer doesn’t want to charge consumers or run ads in their world, they don’t pay Multiverse anything, though the world does have to be part of the Multiverse Network to be opened to consumers. If a developer wants to use the platform commercially, Multiverse offers them two options: revenue-sharing or up-front payment.

Sterling Stamos Capital Management, a hedge fund, led the round, which included angel investors.

Multiverse had a post-money valuation of $10.5 million, according to VentureWire.
Jazz slashes expected IPO price, follows “date rape” controversy

Posted: May 31st, 2007, 6:02pm CEST by Matt Marshall

Jazz Pharmaceuticals, the generally unexciting specialty-pharmaceutical maker that hoped to raise $179.4 million in an IPO, has collided with reality.

The Palo Alto, Calif. company today slashed its expected IPO price by a fifth.

We’ve written before about Jazz and its wildly overrated strategy of salvaging poorly performing or cast-off drugs from other companies. David Hamilton, of VentureBeat LifeSciences, is on the trail, noting other worrying signs, such as the fact that the active ingredient in Jazz’s lead drug, a narcolepsy treatment called Xyrem, is derived from gamma hydroxybutyrate (GHB), a “club drug” linked to overdose deaths and use in date rape.
GooTube strikes deal with EMI, after label shuns DRM with Apple

Posted: May 31st, 2007, 5:21pm CEST by Matt Marshall

EMI Music, the world’s third largest music label company, said it has reached a deal with Google and its YouTube property to allow YouTube users to exploit EMI music while creating videos.

The move follows Apple’s move yesterday to start selling EMI songs without copy protection (digital rights management, or DRM) through its iTunes store. It means EMI songs bought on iTunes will work on other portable music players.

Adding to the flurry of deals, Apple also said yesterday it will begin featuring YouTube videos on Apple TV within weeks. Apple is also including Google’s search and mapping applications on Apple’s iPhone, to be released next week.

EMI Music includes artists including David Bowie, Coldplay and Norah Jones.

EMI said it has “agreed to work” on models to allow access for user generated content featuring EMI-owned and copyrighted audio and video works, but didn’t provide many details. EMI did say it will use YouTube’s content identification technology to help it track and monetize its content, and to allow it to request the removal of copyrighted content (suggesting this is far from a straight-forward carte blanche for users to do anything they please).

Separately, Apple said it would start selling Apple’s TV with 160-gigabyte hard drives. Its move to allow other content, such as YouTube videos comes after some criticism that the set-top box was not delivering a big enough variety of content.
Private company values — are they really dropping?

Posted: May 31st, 2007, 4:33pm CEST by Matt Marshall

The median valuation of U.S. private companies dropped from the six-year high reached late last year, but remains higher than a year ago, according to the latest quarterly valuation report from Dow Jones VentureOne.

Valuations on venture-backed companies are negotiated by venture capitalists and entrepreneurs. If valuations head lower, that is not great for companies because it means they give away a larger stake of their company for the dollars they get from venture capitalists.

At $18.5 million for the first quarter of 2007, the median pre-investment valuation is modestly above the $16.4 million median recorded in the first quarter of 2006, but slightly below the $20 million median it topped out at in the fourth quarter of last year. See the full data here (downloads excel file).

This comes after a report last week by law firm Fenwick & West showing that a greater percentage of companies negotiated higher valuations in follow-on rounds than in any other quarter on record (79 percent of SF Bay Area companies negotiated up rounds vs. 9 percent down). This suggests the investment climate is still hot.

The two reports are compatible. Overall valuations can decline slightly, even as a greater percentage of companies negotiate higher valuations than their previous rounds (its just that the overall levels of those valuations are not as high as the quarter before). Confused? Well, put simply, we’ll have to wait another quarter or two to see if things are really cooling down.

Biopharmaceutical companies posted the most significant increase in values, according to the Dow Jones report, with the median valuation rising to $28 million from $15 million in the first quarter of 2006. The healthcare industry overall, however, was down with the median valuation dropping to $22.1 million in the current quarter from $27 million a year ago.

Information technology company valuations held steady from a year ago, at a median $15.4 million, although each segment within the IT category posted some declines during the most recent quarter, according to the data.

Finally, it’s worth noting that later-round valuations, which fell in the fourth quarter, rose in the most recent quarter — reflecting the heavy action right now in the M&A and IPO markets, where more mature companies are getting snapped up by other companies or going public. The $41 million median price set in all companies raising a third or later round was the highest since the second quarter of 2001, when it was $42.9 million.

[Disclosure: Fenwick & West is a sponsor of VentureBeat]
Mahalo.com emerges as yet another search engine

Posted: May 31st, 2007, 3:56pm CEST by Matt Marshall

updated

Mahalo.com, the latest company from entrepreneur Jason Calacanis, launched, with a stripped-down search engine designed to handle only the most popular requests in widely appealing categories.

Focused on areas such as travel, music, television, movies, cars, food, health, news and sports — and filtered with the help of a team of 40 employees in Santa Monica, Calif. — the limited results are meant to avoid the spam and other junk results that clog up the other search engines. They aim to fulfill the Web’s most repeated requests.

By cherry-picking only the most popular 10,000 search terms, it can organize results in the form of a more organized, thoughtful list about your search term’s attributes.

The challenge here, though, is that dozens of other search engines have launched to tackle specialized search already, including shopping search engines, job search engines, travel engines and engines like Hakia that organize results in similar ways to Mahalo. Moreover, there are other sites that provide real people to help assist in searches, such as ChaCha.com. Finally, Mahalo forces people to change their searching behavior, requiring them to calculate when to use Mahalo versus say Google or other engines — all things that make this a long-shot for quick, big success.

However, Calacanis, who co-founded Weblogs, a blogging network, sold to AOL for $25 million in 2005, says he has enough cash to tide him over for four or five years without turning a profit. Mahalo is backed by Sequoia Capital’s Michael Moritz, News Corp., CBS Corp., Dallas Mavericks owner Mark Cuban and Elon Musk, co-founder of online payment service PayPal.

It has completed 4,000 of the 10,000 planned pages. If you search for something Maholo doesn’t have the answer to, it defaults to Google’s results.

More details here.

Example for search term “Porsche 911″ below:
StartupSearch gives you data on start-ups

Posted: May 31st, 2007, 8:22am CEST by Matt Marshall

Updated

StartupSearch is a new site that gives you quick statistics and other data on Web 2.0 start-ups. It is built by Niall Kennedy, a former Technorati and Microsoft employee.

Kennedy wants to make it easier for people to find out more about promising young companies (see his blog post here). Once they’ve gotten steady traction in the market place, he’ll retire them from the list. For now, he’s focusing on a hundred start-ups, ranging from Twitter to Digg.

Take the example of Twitter. A profile page gives you quick stats, a map of where it is based, the latest photos tagged with “Twitter,” bios of top executives, and its “traffic” and buzz” scores. The traffic score comes from a blend of Web traffic stats from Alexa, Compete and Quantcast. Each of these sources are broken down on a separate “traffic” page.

The “buzz” page (this is a Flash site, so you’ll have to hit the “buzz” tab) is also based on a blend of factors, including the number of times the company has been cited on the Web lately — using Yahoo and Technorati data — and searched for. See screenshot below. Each company has a product page, listing its products. In the Twitter case, it is just one.

The site also lists a start-ups rounds of investments and investors, and lets you search by investor name too — additionally giving investors a ranking based on the success of their investments.

The site just launched, and so is still a work in progress. The buzz factors and VC ratings don’t mean much right now (by default, a start-up that does well gets retired from the list), but it’s a useful start for those of us who are trying to get a quick read on the youngest companies and how they’re doing relative to each other. The user interface will be improved too, to make it more intuitive, Kennedy said.

Kennedy also says he wants to keep it free. It is sponsored by True Ventures, an investor in news site GigaOM. Kennedy is looking for other sponsors. He said a free resource is more widely useful than paid or proprietary databases. Word has spread lately that such databases are being built by Techcrunch and Guidewire. Those groups hold conferences and request companies to provide them with otherwise confidential data.