Kaggle has facilitated breakthroughs in NASA’s analysis of dark matter, improved Allstate’s actuarial methods, predicted many of the top finishers of the Eurovision Song Contest, and is currently hosting a $3 million prize to devise ways to reduce unnecessary hospitalizations.

The company, which started last year in Northern Australia and has now relocated to San Francisco, has been endorsed by some of the tech industry’s best-respected brains via a new $11 million round of funding that was apparently highly competitive.

Led by Index Ventures and Khosla Ventures, the Series A round included PayPal co-founder Max Levchin, Google Chief Economist Hal Varian and Factual CEO Gil Elbaz, as well as SV Angel, Yuri Milner and the Stanford Management company.

Kaggle founder and CEO Anthony Goldbloom, a former statistician for the Australian treasury, says his company addresses “a serious market failure.” That is: Companies have data and can’t analyze it as well as they’d like, and academia is desperate for real-world data sets.

Kaggle’s short history is full of charming anecdotes about its democratic approach to yielding better and unanticipated results. Goldbloom wrote in a recent blog post, “In past Kaggle competitions, breakthroughs in astronomy have been made by glaciologists, chess rating systems have been beaten by non-players, and bioinformatics problems have been solved by SEO specialists.”

Goldbloom hired Kaggle’s most successful competitor, Jeremy Howard, and made him president and chief scientist.

Today, Kaggle’s 17,000 participating data scientists — which happen to include former Netflix Prize winners — participate mostly for the challenge and the chance to prove themselves. But Goldbloom and Howard want to make it worth their while.

“In five years’ time, I want to do 10,000 competitions per year,” Goldbloom said. “I’m hoping competitors can earn a full-time income from Kaggle.”

On that front, Kaggle will now start paying small groups of data scientists — selected based on their past performance on Kaggle — to analyze sensitive data sets for which companies require NDAs.

In closing the fund, the Menlo Park, Calif., firm is bucking two prevailing trends in the venture-capital industry, including an anemic fund-raising environment that has winnowed the number of venture firms that can raise large pools of capital.

Read the rest of this post on the original site »

Previously on AllThingsD: What Bad Economy? Three Big Silicon Valley VCs Poised to Haul in $2B in New Fund Raising.

Three of Silicon Valley’s more prominent venture firms — Khosla Ventures, Redpoint Ventures and the Founders Fund — are nearing the closing of new funds that will total almost $2 billion.

This despite a bad economy, turbulent markets and lackluster venture returns of late. That said, limited partners looking for an investment edge apparently seem to still be adding more dough to the VC kitty.

Sources familiar with the fundings, in fact, said the raises have been much easier than previous ones.

Khosla has raised almost $2.4 billion since 2009, including $1.3 billion in 2010. Its fourth is now nearly completed, at just under that, which the firm had previously signaled in regulatory filings it planned to raise.

The third fund has been spent on cleantech companies, but also on early-stage high-profile Internet start-ups such as Square.

Redpoint will focus its fund — which sources said was $400 million — on growth opportunities.

Its last fund in 2010 was $400 million, too. It has invested that money in start-ups, such as Jumptap, Kabam and Pure Storage.

Lastly, the Founders Fund — with high-profile partners Peter Thiel and Sean Parker — is aiming at a $350 million fund with a $150 million “cushion” to raise more. Its last fund of $250 million was raised last year.

Founders Fund has recently made investments in Path, Azumio and Topsy.

The world’s data mining experts seem to be incredibly compelled to apply their talents to this all-important question of picking an establishment at which to dine. (See our recent stories on Alfred, Nosh and Chewsy.) It’s a noble task, but you have to think there might be some greener pastures somewhere else.

Anyways, though, Ness is still worth talking about, especially since the Los Altos, Calif.-based company says this U.S.-based restaurant app is just the first instantiation of its personalized search technology, which combines machine learning, social graph data mining and natural language processing.

The Ness app, which is quite sleek (so much so it requires at least iOS 4), combines users’ expressed ratings with global tips and check-ins from Foursquare and their personal social graph from Facebook. It has worked to “canonicalize” location data so it can understand mentions of a venue across various local services.

As such, Ness recommendations are equal parts social, personalized and collaboratively filtered — most other apps focus on one or two of those factors.

And as a nice little launch present, Apple is featuring Ness today in the App Store.

Ness co-founder and CEO Corey Reese said to expect the Ness app to add entertainment, music, travel and shopping search in the future.

Two-year-old Ness has raised $5 million from investors including Khosla Ventures, Alsop Louie Partners (where it was incubated), TomorrowVentures and Anduin Ventures. It had 15 employees and no business model yet.

Jawbone, the maker of elegant mobile and wireless devices, has added $70 million in funding to its coffers, with a new investment from J.P. Morgan Asset Management.

The San Francisco-based company has now raised a total of $170 million, which includes a recent $49 million venture round from high-profile Silicon Valley VC firm Andreessen Horowitz in March.

Jawbone also has raised money from Sequoia Capital, Khosla Ventures and a number of prominent angel investors.

All are making a big bet on consumer electronics, an always dicey arena, and on Jawbone’s innovative products, such as its initial Bluetooth headsets.

The start-up has more recently expanded its offerings to the Jambox Smart Speaker, which has become a fast-selling wireless speaker.

Both have been particularly popular with Apple users, and Jawbone has been prominently featured in its retail stores.

Jawbone CEO Hosain Rahman certainly sounds like Apple CEO Steve Jobs when he talks about an all-encompassing digital solution.

“We’re going to get into some new categories of products,” said Rahman, about what he plans to do with the new funding, especially around making smaller, embedded and wearable devices. “We want to be an end-to-end experience.”

While he would not be specific, Rahman said that this area of computing is changing to encompass the entire mobile lives of its consumers.

“We want to leverage the power of the tool in your pocket,” he said. “This is just the beginning.”

Here’s the official press release from Jawbone:

JAWBONE SECURES $70M IN GROWTH FUNDING FROM J.P. MORGAN ASSET MANAGEMENT

Jawbone to Expand its Products and Services for the Mobile Lifestyle

SAN FRANCISCO –- July 12, 2011 –- Jawbone, a leading innovator of products and services for the mobile lifestyle, today announced it has secured $70 million in funding from investors advised by J.P. Morgan Asset Management.

Jawbone is one of the largest privately-held, venture capital-backed consumer electronics companies in the world, and this round brings total investment in Jawbone close to $170 million to date. The funding will allow Jawbone to continue its rapid growth and expand into new markets and categories, building on its successful portfolio of premium mobile products and services.

“We seek to invest in the best high-growth companies,” said Larry Unrein, managing director of J.P. Morgan Asset Management. :Given the widespread adoption of smartphones globally, we are seeing a massive shift in user expectations around having a complete, high-quality and seamless experience wherever they are. Jawbone, with its long-standing expertise in mobile user experience, has been delighting customers by enabling them to get the most out of their smartphones through a combination of cutting-edge technology and great design. We believe Jawbone is poised to be the next great mobile computing company coming out of Silicon Valley.”

“Funding from J.P. Morgan Asset Management is fantastic for us as we continue to rapidly expand our business,” said Hosain Rahman, CEO of Jawbone. “As people’s digital lives become increasingly centered around mobile devices, we see no shortage of opportunities for our technology and products to unlock the potential of a full mobile experience. The support of J.P. Morgan Asset Management will help us be even more aggressive in our pursuit of these opportunities.”

Jawbone’s innovation has resulted in unprecedented demand for its products and services on a global scale. The company is known for leading and disrupting categories with its breakthrough software, strong commitment to design, and award-winning products.

“Jawbone is one of the most important mobile companies with which Sequoia Capital has partnered,” said Roelof Botha, partner at Sequoia Capital and Jawbone board member. “Jawbone’s relentless building of great products that consumers love gives the company a unique ability to redefine established markets. We are delighted to have J.P. Morgan Asset Management on board.”

Jawbone first made its mark in the industry by creating an entirely new class of intelligent Bluetooth® headsets, and has successfully expanded its portfolio of products for the past decade. The JAMBOX Smart Speaker™ is one of the best-selling speakers globally, and the recently-launched Jawbone ERA™ headset is the first to include HD audio and motion sensors.

For more information, images and product demos, please visit www.Jawbone.com/Press, or follow @Jawbone on Twitter.

I love the smell of blog wars in the morning!

Acting as Facebook often does to Google, a new site started by former Engadget editor Josh Topolsky just hired away yet another passel of tech journalists from the giant gadget news and reviews organization.

Editorial movement is not uncommon on tech news sites, but this level of it from one site to another is somewhat, um, aggressive.

Engadget, which is owned by AOL, is one of the largest tech-focused sites on the Web. Topolsky left his editor-in-chief job there in March.

By April, he had grabbed eight prominent Engadget staffers who had left the huge tech site amid editorial tensions, in order to start a new competing gadget property for the well-funded sports content start-up SB Nation.

Now, sources said, Topolsky has added Thomas Ricker, an Engadget senior editor, who had run its European coverage; Sean Hollister, a senior associate editor, who ran its West coast team; and Joseph Flatley, an associate editor.

Also hired: Thomas Houston, editor-in-chief of Switched, an AOL tech site that was recently subsumed into its Huffington Post Media unit; and Dieter Bohn, who was editor-in-chief for the Smartphone Experts network of sites, including Crackberry and others.

And other possible new hires soon from Engadget: Another European editor, Vlad Savov, and writer Jacob Schulman.

The Topolsky-helmed site is still unnamed but is now operating as This Is My Next. It already has 16 writers, compared to Engadget’s two dozen, and is set to debut in the fall with a new name.

It will be the first content expansion at the Washington, D.C., SB Nation, which completed a $10.5 million Series C round, led by Khosla Ventures, in the fall.

Before that, SB Nation had already raised about $13 million in total venture funding from Accel Partners, Allen & Company and Comcast Interactive Capital, as well as from angel investors such as Ted Leonsis and others in Silicon Valley.

Another AOL link: SB Nation was founded by former AOLer, CEO Jim Bankoff, who had bought Engadget for AOL many years ago.

Engadget Editorial Director Josh Frulinger said that the impact of the talent drain on Engadget — mostly from This Is My Next raids — has been small, since the site has also been aggressively hiring.

“We’re past the people leaving and into celebrating what we’ve accomplished in six short months, and we welcome any new competition,” he said. “Dana Wollman, Brian Heater, Myriam Joire, Zach Honig, Joe Pollicino, Richard Lawler, Michael Gorman, Sean Buckley, Joseph Volpe, Brad Molen, Terrence O’Brien, Amar Toor and Sharif Skar — all brought on in the past six months — are your Engadget stars of tomorrow.”

To prove it, AOL said unique visitors for Engadget in June were up 1.1 percent from May and will be up again for July. In recent reports, the site had 14 million unique monthly visitors.

The funding came from new investors Accel Partners and Khosla Ventures along with existing investors Andreessen Horowitz, Bill Campbell, First Round Capital and Ron Conway, and brings Accel’s Jim Breyer and Khosla of Khosla Ventures in as board observers.

RockMelt has been especially embraced by young users, said CEO Eric Vishria. Fifty-six percent of active RockMelt users are age 24 and younger, and most of them use the browser’s chat feature on a daily basis.

Rockmelt has for most of its short life been known as a “social browser,” given its deep sharing and chat integration, especially with Facebook. But the company’s ambitions are broader than that, Andreessen — co-creator of the first Web browser — said in an interview.

“When we created the browser 15 to 20 years ago we had no idea what the killer apps would be,” Andreessen said. “Had we known about these things we would have built it very differently.”

The first killer app for the browser — for function — was search, Andreessen said. I asked Andreessen if he thinks the current ubiquitous browser business model — revenue sharing from search toolbars — will change if user activity becomes less about search and information retrieval.

“I think search continues to be very important,” Andreessen said. “Google had a billion uniques last month. But social is next.”

After search and social, Andreessen said, he envisions a half dozen more killer apps for the browser — basically, all the stuff we do online all day. Some examples might be daily deals and phone calls. “How much better could it be if that were built straight in?” Andreessen asked.

But back to RockMelt’s other challenges: What about the not-so-little issue of competition from other browsers? Khosla said in a separate interview, “When a browser changes from an information retrieval tool to a social media tool it’s probably some new company that’s going to figure it out … When shifts happen I sincerely believe start-ups are the best at entering the new market.”

Facebook and RockMelt recently worked together to create a custom Facebook experience when the site is visited from the browser. As for potential competition if Facebook were to build its own social browser, both Andreessen and Khosla shrugged it off. Khosla’s take: “These things [browsers] are not easy to do.” Andreessen’s: “I’m in a conflicted situation as a Facebook director so don’t want to speak on Facebook’s behalf. But as a RockMelt director, RockMelt is thrilled with our relationship with Facebook.”

Vishria said the new funding will be used for marketing, business development and hiring. Mountain View, Calif.-based RockMelt employs 40 people now, which he expects to double within the next year.

RockMelt’s first round of funding came in September 2009, just over a year before it put out a product.

Please see the disclosure about Facebook in my ethics statement.

Earlier this week, he hired away eight staffers from AOL’s Engadget in order to create a competing tech news and gadget reviews site.

And now, according to sources close to the situation, the former AOL content head is close to hiring another former top AOL media exec, Marty Moe (pictured here), to manage it and also more niche sites the blog network is contemplating launching.

Sources said the hiring of Moe is not yet complete, but is close to being struck.

Tyler Bleszinski, SB Nation’s founder and sports editorial director, will continue to manage the start-up’s sports blog network, while Moe will focus on the company’s tech vertical and any other future categories.

Moe left AOL less than a year ago, after nine years working at the New York-based portal, including with Bankoff.

Both had been involved in the purchase of Weblogs Inc., which included the flagship Engadget site.

Now, it seems they will be trying to remake the concept of a content network, although in a more entrepreneurial and innovative setting.

The new tech site–which is still unnamed and will be helmed editorially by outgoing Engadget Editor in Chief Josh Topolsky–will debut some time in the fall. It is the first content expansion at the Washington, D.C., SB Nation, which has heretofore been exclusively focused on sports.

Topolsky will be joined by former Engadget managing editor Nilay Patel and also former staffers Paul Miller, Joanna Stern, Ross Miller, Chris Ziegler, Justin Glow and Dan Chilton.

All of the above had left Engadget in a series of departures of late, all due to increasing unhappiness with AOL’s management and content strategy.

Paul Miller and Ross Miller, who are not related, both stated publicly that they did not like the editorial direction AOL was going in, especially a controversial content strategy document titled “The AOL Way.”

New AOL content head Arianna Huffington has shifted toward a more journalistic path, but the talent bleed began before AOL’s $315 million purchase of the Huffington Post.

Many new upstart content sites such as SB Nation have begun to try to eat away at the big portal’s content strategy–pushed by its CEO Tim Armstrong–with perhaps more nimble efforts of their own.

And those smaller companies are also well funded.

SB Nation completed a $10.5 million Series C venture round, led by Khosla Ventures, in the fall.

It had already raised about $13 million in total funding from Accel Partners, Allen & Company and Comcast Interactive Capital, as well as from angel investors such as Ted Leonsis and others in Silicon Valley.

Jim Bankoff, the fomer AOL exec responsible for buying Engadget for the Internet portal, has grabbed eight staffers who had recently left the huge tech site amid tensions, in order to start a new gadget property.

The site–which is still unnamed and will be run by outgoing Engadget Editor-in-Chief Josh Topolsky–will debut sometime in the fall. It is the first content expansion at the Washington, D.C. sports news site SB Nation, which is helmed by Bankoff.

“The technology we built is applicable beyond sports,” said Bankoff, in an interview with BoomTown tonight. “It was an opportunity to apply our model…into another content category where there was an overlap in demographics.”

That would be fanboys and, well, boys-who-will-be-boys.

UPDATE: In related news, sources said that AOL has zeroed in on Tim Stevens, Engadget’s automotive editor to replace the outgoing Topolsky. The New York-based company had already named Darren Murph as its new managing editor.

Now Stevens will be competing with Topolsky, as well as managing editor Nilay Patel, who will also lead the Engadget tech-exodus (techxodus?). The others include former Engadget staffers Paul Miller, Joanna Stern, Ross Miller, Chris Ziegler, Justin Glow and Dan Chilton.

Stern and Ziegler are still on Engadget’s editors site as current employees.

All of the above had left Engadget in a series of departures of late, all due to increasing unhappiness with AOL’s management and content strategy.

Paul Miller and Ross Miller, who are not related, both stated publicly that they did not like the editorial direction AOL was going in, especially a controversial content strategy document titled “The AOL Way.”

In his blog post, Topolsky threw another smackadoo at AOL, noting “SB Nation believes in real, independent journalism and the potential for new media to serve as an answer and antidote to big publishing houses and SEO spam–a point we couldn’t be more aligned on.”

New AOL content head Arianna Huffington has shifted toward a more journalistic path, but the talent bleed began before AOL’s $315 million purchase of the Huffington Post.

In a blog post, which is embedded below, Topolsky said the new SB Nation gadget site will be similar in pace and topic, but it will be broader than Engadget.

The move is an interesting one for SB Nation, which completed a $10.5 million Series C round, led by Khosla Ventures, in the fall.

It had already raised about $13 million in total venture funding from Accel Partners, Allen & Company and Comcast Interactive Capital, as well as from angel investors such as Ted Leonsis and others in Silicon Valley.

In related news, also restarting tomorrow will be a popular gadget podcast that Topolsky, Patel and Paul Miller had done for Engadget.

The New York Times’ David Carr mentioned the new site in the middle of a column earlier tonight.

Here is Topolsky’s blog post on the move, titled “This Is My Next Project”:

As you may have already heard (or read), there’s some activity going on in the world of Joshua Topolsky. Earlier this evening, David Carr published a piece in the New York Times about a new project that I’m embarking on…and I want to just say a few things about it.

Firstly: yes, this is happening. I’ve decided to join the team at SB Nation to build something brand new in the tech space. Now I know it might seem odd to some that I would be partnering with a sports publisher to build a technology news site, but that’s only half the story. This isn’t just about sports, or tech, or lone silos. What we will build together at SB Nation is a new media company–buoyed by the absolutely incredible work SB Nation has already done in publishing–and part of that new media company will be the as-yet-unnamed gadget and technology site that I’ll be working over the next few months to create. When we launch (hopefully in the fall), I will be editor-in-chief of a property that I hope will inform, entertain, and engage fans of technology in whole new ways.

I should say that I wouldn’t want to build something like this alone, and thankfully, I won’t have to. I’ll be joined by some very good friends at this new venture–people like Nilay Patel, for instance.

Of course, the natural question I’m sure a lot of people have is: why SB Nation? The easy answer is that the people at SB Nation share my vision of what publishing looks like in the year 2011. They think that the technology used to create and distribute news on the web (and mobile) is as important as the people who are responsible for the content itself. And that’s not just pillow talk–SB Nation is actively evolving its tools and processes to meet the growing and changing needs of its vast editorial teams and their audience communities. They’re building for the web as it is now. From the perspective of a journalist who also happens to be a huge nerd, that’s a match made in heaven. SBN isn’t just another media company pushing news out–it’s a testbed and lab for some of the newest and most interesting publishing tools I’ve ever seen. In short, I was blown away when I saw what kind of technology they’re using to get news on their front page and engage audiences, and even more blown away when I started talking to them about what could come next.

But beyond the technology (and possibly more important than the technology), there’s another factor here that’s driving my decision. It’s that SB Nation believes in real, independent journalism and the potential for new media to serve as an answer and antidote to big publishing houses and SEO spam–a point we couldn’t be more aligned on. This is a group of people that not only think independent media works, but are reaping the rewards of new publishing done right. As the fastest growing online sports publisher, they’re seen as a source for credible and honest journalism, which is why industry stalwarts like Rob Neyer have recently joined their ranks (ranks which include hundreds of talented sports experts). This isn’t tabloid page grabbing or content farming–it’s news and insight by and for a passionate and informed group of people. And that’s exactly where I want to be.

So, what happens next? We get to work.

In the coming months I’m going to be laser focused on one thing: building the best tech site in the world–and I would love to hear what you guys think the next phase in technology and gadget news should look like. Ping me with ideas, gripes, or even better–come and work here! SB Nation is looking for new developers as we speak, and as we ramp up to launch, we’ll be bringing on lots of talent to work both on the front page and behind the scenes.

I couldn’t be more excited and enthusiastic about what we can build right now, and I can’t wait to share what we’re going to make with the rest of the world. The months ahead are going to be filled with lots of early mornings and sleepless nights, intense debates, triumphs, and trials–and I can’t wait.

If you had to pick the hotsy-totsy start-up to win the media darling of South by Southwest award for 2011–following in the precious footsteps of Foursquare and Twitter from years past–it would probably have to be GroupMe.

The group messaging/conference call/location/photo sharing service has, as these things tend to, garnered a lot of heat since its debut less than a year ago.

That has, of course, also meant the requisite big venture funding–$11.5 million in total–for the New York-based GroupMe, including from SV Angel, betaworks, First Round Capital, Lerer Ventures, General Catalyst Partners and Khosla Ventures.

And, no surprise, the dead-simple idea now has many start-up rivals, all vying to use combine mobile, texting, social, location, groups and smartphones into some unholy megatrend.

Still, GroupMe has built a slick little offering, which is likely to get scooped up by some bigger entity (or perhaps just copied, which is the sincerest form of flattery in tech).

Until then, its Co-founders Jared Hecht and Steve Martocci are enjoying their day in the sun–quite literally, at their free grilled-cheese-and-beer giveaway at SXSW this weekend in Austin, Texas.

Here is my video interview with their-future-is-so-bright-they-have-to-wear-shades pair:

]]> http://allthingsd.com/20110314/video-groupme-dudes-talk-group-messaging-phenom-and-drink-beer-at-the-same-time/feed/ 1 http://allthingsd.com/20110301/mylikes-ceo-bindu-reddy-on-how-twitter-is-the-new-tv-video/ http://allthingsd.com/20110301/mylikes-ceo-bindu-reddy-on-how-twitter-is-the-new-tv-video/#comments Tue, 01 Mar 2011 15:30:00 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=3887 MyLikes this week announced it had raised $5.55 million in a competitive Series A funding led by Khosla Ventures, named Gmail and FriendFeed creator Paul Buchheit to its board, and released new mobile apps and widgets.

We had intended to post on the news before an embargo breaker fudged up the plan, but since NetworkEffect recorded a video with CEO Bindu Reddy, we figured you might want to see her explain what the company actually does.

MyLikes, which operates primarily on Twitter, connects brands and tweeters for paid product endorsements. It is similar to Ad.ly and to some extent Klout.

The company takes pride in its founders, employees and funders being primarily composed of former Googlers.

Like many social media businesses, MyLikes has landed on the combination of brand advertising with cost-per-click payments. Reddy calls Twitter a television replacement, and her clients include familiar TV advertisers like Coca-Cola, Universal Pictures, Axe Hair and Microsoft.

Reddy works with tweeters including a fake “Family Guy” account and the reality stars Khloe Kardashian and Jon Gosselin. What her publishers have in common is an acute awareness of the direct correlation between attracting an audience and making money. They’re not quitting their day jobs yet, but some might earn enough to hire a part-time tweeting assistant.

Twitter itself does not have a celebrity endorsement product, and according to MediaMemo’s Peter Kafka is playing down its “Promoted Tweets” product where brands can pay to feature their own tweeting.

]]> http://allthingsd.com/20110301/mylikes-ceo-bindu-reddy-on-how-twitter-is-the-new-tv-video/feed/ 0 http://allthingsd.com/20110228/weatherbill-raises-42m-for-weather-insurance/ http://allthingsd.com/20110228/weatherbill-raises-42m-for-weather-insurance/#comments Mon, 28 Feb 2011 22:42:27 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=3872 As those of us who hoped to go sledding in San Francisco last weekend know too well, weather forecasting is not terrifically precise. But that doesn’t mean it can’t be a technology business. WeatherBill, a company that sells weather insurance to farmers, just got a big vote of confidence from folks in the high-tech world for its weather simulation modeling.

Four-year-old WeatherBill is announcing today $42 million in Series B funding from Google Ventures and Khosla Ventures as well as previous investors NEA, Index Ventures, Allen & Company, First Round Capital, Atomico and Code Advisors.

WeatherBill CEO David Friedberg was previously a member of Google’s corporate development team, while CTO Siraj Khaliq led technical projects such as the company’s distributed computing infrastructure. They are actually some of the first former Googler co-founders funded by Google Ventures.

]]> http://allthingsd.com/20110228/weatherbill-raises-42m-for-weather-insurance/feed/ 0 http://allthingsd.com/20110127/on-deck-which-helps-small-businesses-get-capital-lands-some-of-its-own/ http://allthingsd.com/20110127/on-deck-which-helps-small-businesses-get-capital-lands-some-of-its-own/#comments Thu, 27 Jan 2011 12:50:15 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=2411 If the small business is indeed the engine of growth for the American economy, then most of the indications are that the engine is not yet running on all of its cylinders. One of the biggest problems facing small businesses–the dry-cleaning shop on the corner, your neighborhood bakery or pizza place, or the new plumbing-supply shop in town–is access to capital.

Small businesses have a hard time getting loans because the banks that make loans look primarily at an owner’s personal credit information and not at the day-to-day financial data related to the business itself.

The recession hasn’t made it any easier. Data from the Federal Financial Institutions Examination Council show that in 2009, banks originated $73 billion in loans to small businesses, representing a decline of 47 percent since 2007. And the overall number of loans fell by 69 percent to 1.6 million loans, from 3.6 million loans during the same period.

Raising capital doesn’t seem to be a problem for On Deck Capital. The New York-based start-up announced today that it has landed a $15-million C Round led by SAP Ventures, the venture capital arm of the German software company SAP. Its previous investments include stakes in LinkedIn, WebEx, MySQL and Red Hat Software.

On Deck is something of a right-time, right-place story, emerging as it has during a period when small businesses are struggling for needed capital. Launched in 2006, its software gathers live digital data from a business’s operations in order to help evaluate the business’s health. The point is to give banks and potential investors a tool to realistically evaluate the risk of making a loan that goes beyond the simple credit rating of the business owner. On Deck has been used to make $100 million in loans over four years.

Even in 2006, when credit was plentiful, most small businesses were able to secure loans because the banks treated them as consumers, not as businesses, says On Deck CEO Mitch Jacobs. For banks, it’s also a question of time and attention “Banks simply can’t afford to spend 80 hours to underwrite a flower shop that needs $30,000 for a relatively short period of time. It just doesn’t make economic sense.”

But at the same time, small businesses started embracing digital tools to run the shop. They started doing their banking online, and using QuickBooks to handle invoices and payroll. They started taking credit cards more often, and selling their goods and services on the Web. All of these are streams of useful data that can be captured to help paint an accurate picture of the business’s financial health, Jacobs says.

Combine that with technology that makes the repayment process both simple for the business owner and reliable for the lender, plus real-time monitoring of financial data from companies that get loans, and it’s not hard to see why On Deck is growing: Revenues tripled in 2010.

Not just any company can apply for an On Deck loan. The typical borrower company has been in business for at least a year and has at least $3,000 in credit card transactions per month. Loans range in size from $5,000 to $100,000 but average about $30,000, Jacobs said. Payments on the loan are made daily using an automated direct debit system. The small daily payments help prevent that moment that causes headaches for lenders when unexpected expenses crop up and the monthly loan payment ends up at the bottom of the priority list.

On Deck also announced that David Hartwig, managing director at SAP Capital, has joined its board of directors. Other investors include Contour Venture Partners in New York, First Round Capital, Khosla Ventures, RRE Ventures and Village Ventures.

]]> http://allthingsd.com/20110127/on-deck-which-helps-small-businesses-get-capital-lands-some-of-its-own/feed/ 0 http://allthingsd.com/20110110/square-confirms-27-5-million-in-new-round-of-funding/ http://allthingsd.com/20110110/square-confirms-27-5-million-in-new-round-of-funding/#comments Mon, 10 Jan 2011 19:36:24 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=1494 Square, the mobile payments service that’s taking on Visa and MasterCard, has confirmed it has raised a $27.5 million round of funding led by Sequoia Capital.

The funding, which has been rumored for some time, also includes previous investors Khosla Ventures, which led a $10 million round in late 2009.

The San Francisco-based start-up now has a valuation of around $240 million, up from a valuation of around $45 million in its prior round of funding, according to a person familiar with the matter.

Sequoia Capital’s Roelof Botha, who was a former CFO of PayPal, will join Square’s board.

Square charges either 2.75 percent plus 15 cents per transaction if a credit card is swiped, or 3.5 percent plus 15 cents per transaction if a credit card number is keyed into its mobile application. Square’s dongle, which plugs into an iPhone, is free, and the company doesn’t require contracts, setup fees or minimums like many of the competitors do, making it attractive to small merchants.

Mountain View, Calif.-based Intuit announced today that its GoPayment mobile payment service will offer a free credit card reader and no monthly service fees to business owners who sign up by mid-February. Square also faces stiff competition from Visa, MasterCard and American Express, which are all working on mobile solutions.

The cash will be used to build up the company’s team, which currently numbers 64 employees, including contractors. The company expects to grow its staff to 150 by year’s end, The Wall Street Journal reports.

]]> http://allthingsd.com/20110110/square-confirms-27-5-million-in-new-round-of-funding/feed/ 0 http://allthingsd.com/20101222/lookout-mobile-security-picks-up-funding-steam/ http://allthingsd.com/20101222/lookout-mobile-security-picks-up-funding-steam/#comments Thu, 23 Dec 2010 01:03:32 +0000 Ina Fried http://mobilized.allthingsd.com/?p=1221 Lookout Mobile Security, a firm that specializes in buttoning up wireless devices, is announcing that it has scooped up another $19.5 million, marking the second time this year it has taken on additional capital.

The new funding comes from previous backers Accel Partners and Khosla Ventures, with Index Ventures being added to the mix this time around. Index partner Mike Volpi, a former Cisco executive, will join Lookout’s board.

Lookout raised $11 million in Series B funding back in May.

The company was launched in 2007, with its founders taking 18 months to develop a new core technology focused on mobile devices. While some of the big-name security firms are in the mobile arena, their approaches are brought over from desktop and PDA security efforts, CEO and co-founder John Hering told Mobilized.

“I think there’s a very reasonable opportunity to create the next Symantec but built around the mobile platform,” Hering said, noting that over the next three to seven years mobile devices will become the primary computing device for millions of people.

Although threats to mobile devices are still comparatively rare, their highly mobile and always connected nature makes them an increasingly attractive target for those seeking to do harm. A year ago, Hering said that most attacks were proof-of-concept or attacks for notoriety. This year, though, has seen the rise of financially motivated malware, including an attack on Android where an app posing as a movie player sent premium SMS messages costing infected users $5 a pop. A separate attack in China infected more than one million phones, Hering said.

Lookout aims to stop those kinds of attacks and also allow capabilities like device tracking and remote wipe capabilities. Its software currently works on Android, BlackBerry and Windows Mobile (but not the new Windows Phone 7) operating systems. Hering said the company plans to expand to other popular operating systems and said some of the new funding will be used to expand to new platforms.

Ping Li, a partner at Accel and a board member at Lookout said the company’s approach of splitting work between the device and the cloud to more efficiently work on a mobile device is part of what attracted him to the company. He also pointed out that Hering and his co-founders are in their twenties and just have a different awareness of the devices than their older competitors.

“They grew up hacking mobile phones,” Li told Mobilized. “They never grew up hacking PCs.”

Part of growing as a security company is having the right product in place when a new threat emerges, Li said, pointing to Webroot, which came out of nowhere to become a significant business when spyware emerged as a major security issue.

The company has more than four million users of its software, although the vast majority are getting the software for free. The company recently launched a $3 per month premium service, but Hering won’t say how many customers it has.

Hering said Lookout’s model aims to follow that of desktop antivirus firm AVG, which has a popular and well-known free product but makes money by selling a premium service.

As for whether the company could make an attractive acquisition target for another security company looking to jump-start its mobile efforts, Hering was noncommittal.

“We’re just trying to keep up with the growth,” he said.

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