Venture Capital

MOUNTAIN VIEW, Calif.--At an Internet conference here Wednesday, venture capitalists and entrepreneurs tried to predict the future of the social-media business. Guess what? It looks a lot like the Web business model we have now.

Why the prognostication? VCs and executives are all trying to figure out how they can build the next Bebo, a social network that sold to AOL for $850 million. But because those deals are few and far between, especially in a shrinking economy, executives are taking a much more practical stance on the kinds of companies necessary to deliver social-media sites to the next … Read more

WASHINGTON--The U.S. economy as a whole may not have the sunniest prognosis lately, but Google's chief economist and other industry watchers on Friday diagnosed the Internet sector as relatively healthy.

During a panel discussion at Google's D.C. headquarters, professor-turned-in-house-economist Hal Varian argued that an analysis of search queries at his company's site mirrors deeper economic trends. Job-related searches are up as a share of total searches, for instance, and real-estate and luxury goods searches are down--exactly what you'd expect in a "recessionary environment," Varian said.

But overall, the total number of searches … Read more

The co-founders of Skype, Niklas Zennström and Janus Friis, are raising about $450 million for their London-based venture fund Atomico, according to a report from GigaOm.

Zennström and Friis, who also co-founded Joost and Kazaa, are heavily invested in European media companies through Atomico. The venture fund has put money into video upstarts Deca, WooMe and Seesmic, as well as the music site Last.fm, which sold to CBS for $280 million.

RightScale, a software service provider for applications that run on Amazon Web services, is expected to announce Thursday that it raised $4.5 million in first-round of funding from Benchmark Capital.

The Santa Barbara, Calif.-based RightScale, which was founded in May 2007, sells management software that helps start-ups tap into the remote computing power of Amazon data centers so that they can run Web applications at a lower cost than if they bought their own servers. In other words, RightScale sells so-called cloud computing services.

Kevin Harvey, a Benchmark general partner who has joined the company's board, said … Read more

MENLO PARK, Calif.--If you want to make money as a venture capitalist, the consumer Web offers the highest, most consistent returns, according to Steve Jurvetson.

The low costs required to start these companies is a big part of the appeal, Jurvetson, a partner in Draper Fisher Jurvetson, said in an interview at the Nordic Green conference here this week. By contrast, biodiesel start-ups need millions to get through the experimental stage and then tens of millions to go into pre-production.

Networking also works well with Web companies. A successful word-of-mouth campaign that costs almost nothing can propel growth rates. … Read more

HopStop.com, an online and wireless guide to New York City transit information, said Monday it raised money from a group of private investors, including Yaron Galai, co-founder of search-advertising company Quigo. Terms of the deal were not disclosed.

The New York-based company also said that it now draws 8 million monthly page views and 1.5 million monthly visitors. Galai, who sold Quigo to AOL last year, will join HopStop's board of directors.

Companies seeking venture capital dollars have had a bit less luck in the past year, according to research released Saturday by Dow Jones VentureSource and Ernst & Young.

Overall United States-based VC spending in the first quarter of 2008, totaling $6.8 billion in 603 deals, is down 7 percent year over year and 9 percent since last quarter, according to the research, indicating that venture firms are keeping a tighter grip on their wallets in a time of market volatility and uncertainty.

Hit hardest are companies in the health care sector, which reached its lowest funding quarter in two … Read more

TripIt, which organizes personal travel information, expects to announce Thursday that it has raised $5.1 million in a series B round of financing from travel behemoth Sabre Holdings and German investment group European Founders Fund.

Seed investor O'Reilly AlphaTech Ventures, which had previously put $1 million into the company, also participated in the round.

San Francisco-based TripIt, which was founded in October 2006, helps people plan trips, including flights and restaurant reservations, and then share their travel itineraries with friends and family. That the company raised millions from an old-school travel company like Sabre proves there's still … Read more

Cuill, a search upstart founded by ex-Googlers, said Tuesday that it raised $25 million in a second round funding led by Madrone Capital Partners. The company had previously raised $8 million from Tugboat Ventures and Greylock Partners.

Cuill, based in Menlo Park, Calif., was founded by Anna Patterson, former technical lead of Googlebase and an architect of Google's large search index TeraGoogle; Russell Power, who was also a technical lead on TeraGoogle; and Tom Costello, who developed an early prototype of IBM's WebFountain, an advanced search engine for mining business intelligence.

The company also employs search veteran Louis … Read more