Photograph by Jeff Chiu/AP Photo

Lyft, which serves San Francisco, Los Angeles, Seattle and Chicago, helps arrange more than 30,000 rides per week.

Lyft Inc., a service for connecting drivers to ride-seekers via smartphone software, has raised $60 million from venture firms led by Andreessen Horowitz LLC as it seeks to almost double its staff and take on rivals.

Lyft, which competes with Side.Cr LLC and Uber Technologies Inc., received funds from the firm co-founded by Internet pioneer Marc Andreessen, according to a blog post from the San Francisco-based ride-share company. Previous investors Founders Fund Management LLC and Mayfield Fund also contributed.

Carpooling apps, which let any driver make extra cash by shuttling passengers to their destination, are increasingly popular in urban areas, where congestion and gas prices are forcing commuters to find alternatives to vehicle ownership. With the new funds, Lyft plans to increase its staff to 100 from 55 by the end of this year and expand beyond the four cities where it’s offered now, said Chief Operating Officer John Zimmer.

“It’s important that we grow at a good pace,” Zimmer, who co-founded the company in 2007, said in an interview. “We’re going to move fast, but we’re not going to move fast at the expense of building a great community.”

The social tools built into Lyft’s software — which requires each driver and passenger to log in with their real name and Facebook account — give the company an edge in an increasingly competitive market, said Scott Weiss, general partner at Andreessen Horowitz.

“This is a passionate community around ride sharing,” Weiss said in an interview. “They are incredibly loyal, they are incredibly social and all of that shows up in the numbers.”

Weiss compares Lyft to Airbnb Inc., another Andreessen Horowitz investment that helps users share rooms in their apartments and homes with strangers. Both startups have benefited from the social ties they use to help users form online and in the real world, he said.

Lyft has raised a total of $83 million from investors and offers ride sharing in San Francisco, Los Angeles, Seattle and Chicago. It takes a portion of the fares paid by passengers, and now helps arrange more than 30,000 rides per week. Zimmer declined to discuss Lyft’s sales or what the closely held company’s value would be following the latest financing round. Weiss will become a director, while Ann Miura-Ko, co-founding partner at Lyft investor Floodgate Fund LP, will leave the board, she said in an e-mail.

Lyft and Side.Cr, another San Francisco-based startup, face challenges from California officials who say they violate state regulations for taxi carriers. The companies received cease-and-desist notices in August from the California Public Utilities Commission.

“In these kinds of businesses, that’s one of the major risks,” said Weiss. Lyft should be able to overcome regulatory concerns in part because the company has “cracked the code on trust and safety,” he said.

Bloomberg LP, the parent of Bloomberg.com, is an investor in Andreessen Horowitz.

Original post is Andreessen Backs Lyft Ride Sharing With $60M Investment by Tech Deals.

Courtesy Tableau Software

An example of Tableau’s chart-making ability, a Web Traffic Trends Dashboard.

For New Enterprise Associates, its investment return on Tableau Software was — fittingly — off the charts.

NEA’s $29.2 million stake in the digital chart provider, which made its stock market debut today, was valued at more than $925 million at mid-day, making the firm the top venture capital winner so far this year.

As any Silicon Valley pundit knows, the vast majority of venture capital bets fail. What makes the business work — and turns Ford drivers into Ferrari speedsters — is the very rare 3,000 percent gain on an investment, like the return NEA has thus far achieved on Tableau.

NEA first backed Tableau in 2004, a year after the company was founded, gaining two board seats and providing $5 million to “expand sales operations and invest in product development,” according to a statement at the time. NEA put in another $10 million in 2008 and $14.2 million in 2010.

Original post is Chart This: NEA’s Investment Return on Tableau — 3,000% by Tech Deals.

Original post is Draper University Gets Aspiring Entrepreneurs Out of the Classroom by Tech Deals.

And by “internationally,” they mostly mean Asia. SoftBank Capital is the venture arm of Softbank Corp., the Japanese company that agreed last year to buy  a controlling stake in Sprint Nextel Corp. The fund is also backed by Alibaba Group, the largest online business-to-business company in China, and Yahoo! Japan.

Often when U.S. startups go international for the first time, they expand somewhere in Europe because the culture and business practices most resemble those of the U.S., said Matt Krna, a principal at SoftBank Capital. But the European market has slowed down as U.S. startups face increasing competition from Asia.

“A lot more companies are looking to Asia first as their international expansion plan,” Krna said in an interview. “We have the connections to make that happen.”

Global expansion is becoming a bigger priority for startups, Krna said.

“Companies are looking at that a lot more early on in their maturation than they did 10 years ago,” he said.

SoftBank Capital’s new fund is its largest for growth-stage companies, Krna said. He expects the fund will end up supporting about 13 portfolio companies.

Original post is SoftBank Capital Raises $250M Fund to Help Startups Expand to Asia by Tech Deals.

Courtesy Houzz

There are over a million home design photos to browse and save, to create your dream space.

Like so many entrepreneurs, Adi Tatarko and her husband, Alon Cohen, got into the startup game after they couldn’t find a solution to their problem.

The Israeli couple wanted to renovate their newly-purchased Palo Alto home, but picking the right contractor and architect proved difficult. Tatarko, who was working for an investment company at the time, said the team they hired came up with a plan that didn’t at all match what they wanted.

So in 2009, after that headache, she and Cohen, an engineer at EBay at the time, started a site to match homeowners with professional architects and interior designers. The company, Houzz, now employs 60 people and its website serves 12 million users a month with a database of 160,000 professionals across the U.S. and Canada.

The popular site has also caught the eye of high-profile Silicon Valley investors. Houzz announced today that it raised $35 million from New Enterprise Associates and GGV Capital, with participation from Sequoia Capital, Kleiner Perkins Caufield & Byers and Comcast Ventures. Additional investors include Yammer founder David Sacks, who discovered the site while renovating his own home, and longtime startup backer Oren Zeev. The company has raised a total of $48.6 million.

“Most of us are not designers or architects,” Tatarko, 40, said in an interview. “We don’t have all the information and don’t understand the terminology. With Houzz, the entire process became way easier for homeowners and a great tool for professionals.”

In addition to funding the startup’s expansion, the fresh capital may help Houzz fend off  future competitors. Recent fast-growing consumer web companies such as Airbnb, Pinterest and TaskRabbit have quickly attracted clones in the U.S. and abroad. A big balance sheet can ease that risk.

Along with the financing, Houzz announced the availability of a new premium marketing product that lets professionals promote their services to local homeowners. The subscription service was released in San Francisco, Los Angeles and Washington, D.C., late last year and will now start to roll out more broadly, Tatarko said. The premium tool adds to the brand advertising Houzz started about a year ago, which lets professionals target consumers based on their interests and needs. Tatarko said the company is unlikely to seek future funding and is on its way to profitability.

Houzz plans to use the capital to hire more engineers and designers as it at least doubles headcount in the next year to meet rising demand from its growing community. Whether homeowners want the top designer of eclectic kitchens in Atlanta or best wall painter of traditional home offices in Baltimore, Tatarko wants Houzz to be the single destination for photos, reviews and recommendations. All the things she wishes she had when she was remodelling.

Original post is Houzz Raises $35 Million to Connect Architects and Homeowners by Tech Deals.

Photograph by Erik Dreyer

Among crowdsourced Q&A sites, the winner may be whoever can answer the business question first.

ChaCha, a website where you can ask about anything and get answers from volunteers or the site’s database of 2 billion queries, doesn’t have a response yet to one big question: Is crowdsourced Q&A a standalone business?

Enter that into the search box on ChaCha‘s site, and the automated system doesn’t have an answer. But a new round of financing will buy the Carmel, Indiana-based company more time to figure it out.

ChaCha Search announced today it has raised $14 million in a funding round led by VantagePoint Capital Partners, Rho Ventures and Qualcomm. That brings the total amount raised to $82 million, said Scott Jones, the chief executive who has invested  $30 million of his own money in the seven-year-old startup. Jones previously co-founded Gracenote, a media-data provider that was sold to Sony in 2008 for at least $260 million.

Whereas Google proved many years ago that Web search is a serious business, crowdsourced Q&A has yet to find its cash cow. As ChaCha remakes its site and apps to look more like a social network, Jones said advertisements targeted at the context of a question should be very effective. Imagine asking about a restaurant and getting the option to book a reservation or call for a cab to take you there, he said.

The biggest Q&A site out there is Yahoo! Answers. It had 69 million visitors in December, an increase of 11 million compared to the previous year, according to research firm ComScore. All the while, Yahoo has made minimal improvements to the site, as it’s been overtaken by silly questions and often useless answers.

In 2010, Google acquired Aardvark, a crowdsourced Q&A startup. The next year, Google shut down the service.

Quora, which was co-founded by a former Facebook executive, is popular within Silicon Valley and raised $50 million in financing last year. But it received just 1.9 million visitors in December, though that is nearly double what it had a year ago, ComScore said. The Mountain View, California-based company, which has 45 employees, expanded beyond Q&A last week when it gave users their own blogs, Quora executive Marc Bodnick said in an interview last week.

ChaCha, with 52 employees, had 16 million visitors in December, ComScore said. Many people also use the service through mobile applications or via text message. The company, which runs banner ads alongside its content, generated $12.2 million in revenue last year, up from $7.7 million in 2011, Jones said. It hasn’t had a profitable year, although some months have been, he said.

As for when the company might go public or seek a buyer?

They’re still working on answering those questions, too.

Original post is Can a Q&A Site Be a Real Business? $14M Will Help ChaCha Find Out by Tech Deals.

Still, the 17-year-old company hasn’t received the publicity of newer ventures such as online higher education startups Coursera and Udacity, computer programming site Codecademy and the nonprofit Khan Academy.

That’s about to change, in a big way.  In the largest U.S. venture financing round on record for an online education company, Lynda.com is announcing today that it raised $103 million led by Accel Partners and Spectrum Equity. The company, located near Santa Barbara, California, plans to invest internationally, bolster its content library with 400 new courses this year, grant stock options to employees and soon air television and radio commercials to promote the brand.

“Our biggest problem is people don’t know who we are,” said Weinman, 57.  ”We’ve grown organically and watched other people get all the glory.”

According to the National Venture Capital Association, no education company dating back to 1980 has raised this much money in a single round. Only five have raised more than $100 million total, led by Chegg, which has pulled in $193.2 million over 10 financing rounds, the NVCA said. Since the end of 2010, 36 education startups have raised at least $10 million in venture capital, led by 2U, which brought in $58.6 million in two rounds.

Late last year, Bloomberg.com’s Tech Deals Blog published a five-part series on startups that have succeeded without venture capital. The founders we highlighted resisted taking money because they wanted to maintain control, were concerned about investors with different visions and didn’t want to be pushed into selling their business or going public.

For all of those reasons and others, Lynda.com has spent the past five years skirting venture capitalists. The company has had term sheets on the table with unimpressive valuations from investors who expected a definitive return within a given amount of time, said Chief Executive Officer Eric Robison. Though he isn’t disclosing the valuation, Robison said this deal is much more favorable and comes with no expectation of an IPO or sale.

“Today, the types of interactions we have with investors are very different and the deal terms are very different,” Robison said. “We got an amazing deal because we waited. There’s no exit plan, no deadline.”

Accel’s Andrew Braccia and Spectrum’s Vic Parker are joining the board. Spectrum is a private equity firm with offices in Boston and Menlo Park, California. Accel is a Palo Alto, California-based venture firm with multiple strategies, including a growth fund that invests in more mature companies, like Lynda.com. Growth investments include game company Rovio, the maker of “Angry Birds,” and business software maker Atlassian.

“We look for companies that are bootstrapped and have flown under the radar but built incredible businesses,” said Braccia. “This is a great coming out party for the company.”

Weinman, the author of an early textbook on web design, and her husband  Bruce Heavin, 45, started Lynda.com in 1995. They later opened a brick-and-mortar school in Southern California that offered in-person training. After the dot-com crash and Sept. 11 terrorist attacks in 2001, business dried up because people were less willing to travel and there was waning demand for web experts.

So in 2002, they started producing online videos at a time when many people still accessed the web via dial-up connections. A decade later, with ubiquitous high-speed web access, Lynda.com sells access to its library of 83,000 instructional videos to schools including Harvard University, Yale University and the University of Southern California, as well as companies such as Qualcomm, Walt Disney and Apple. Individual memberships start at $25 a month, and the company sells institutional licenses with discounts.

Along with its 40 percent sales growth, Lynda.com increased its staff by about the same amount last year and now employs 400 people. Even with new players jumping into the online education market, the company insists that it doesn’t need money to fend off competitors. And that’s why the terms were so attractive.

“The best time to take money is when you don’t need it,” Robison said.

Original post is Lynda.com Lands $103 Million in Biggest Education Financing by Tech Deals.

Photograph by Fragments from Olympus

One of the most successful campaigns on Indiegogo aimed to raise money to buy back Nikola Tesla's old laboratory.

In many parts of the Eurozone, now is not the best time for an entrepreneur to go to the bank and expect to skip away with a loan. But a growing alternative for some Europeans could be crowd-funding websites, which are expanding there.

Indiegogo, a popular site for entrepreneurs to raise money for their projects, added three new currencies today in a bid to draw more users from outside the U.S. Pledges can now be made in euros, British pounds or Canadian dollars, said Danae Ringelmann, the co-founder and chief operating officer of Indiegogo, in an interview.

By the end of the month, Indiegogo will also begin allowing fundraisers’ pages to be written in French or German, the company said. The site, which has been open to users worldwide, will introduce early next year home pages tailored by region for people based in either the U.S., Canada, France, Germany or the U.K, highlighting local projects, Ringelmann said.

“This is something that we’ve been building toward for a long time,” she said. “Thirty percent of our business is international, which is a shockingly big number considering our site is only offered in English and in U.S. dollars.”

By the middle of next year, the San Francisco-based startup plans to establish a subsidiary in the U.K. to reduce costs from its expansion to Europe, she said. New York-based Kickstarter, a giant rival that’s funneled $368 million to its creators, added the U.K. as its second country in October. About 2 million pounds were pledged to British projects in the first month, the company said.

Kickstarter and Indiegogo are going up against European startups, such as London-based Seedrs, which allow for small investments in exchange for equity. That’s something the U.S. companies don’t do because the practice  isn’t yet allowed . (A provision of the Jumpstart Our Business Startups Act that hasn’t been implemented yet would change that.)

American crowd-funding popularized the rewards-based system, where a pledge of, say, $30 gets you a T-shirt or $60 gets you a copy of whatever it is you’re backing. Considering that most startups fail, a shirt might not be so bad — unless it’s the one off the entrepreneur’s back.

Original post is Crowd-Funding Site Indiegogo Is Going International by Tech Deals.

Courtesy of Gabe Rivera

Founder Gabe Rivera said he would 'hate to see Techmeme wither or die inside a bigger company.'

This is the fifth in a five-part series called “No VC,” which highlights startups that have succeeded without venture capital, the lifeblood of Silicon Valley.

Gabe Rivera often hears from Silicon Valley’s elite, who are eager to invest in his startup Techmeme, the favorite news website of technology industry insiders. But many of them, such as SoftTech VC’s Jeff Clavier, don’t get very far.

“The first time I asked Gabe if he would be interested in an angel investment,” said Clavier, “he replied something like: ‘I don’t want to deal with the obligations attached to raising money, and I still want to be able to take a nap after lunch.’”

Rivera created the site in 2005, when blogs and news outlets tracking the daily gyrations of technology giants began pouring a greater amount of content onto the Web. Techmeme collected the day’s most important headlines in one place, grouping together similar posts from different sites and constantly scanning for fresh news. Rivera had left his programming job at Intel and supported the new website and himself with $55,000 in personal savings. In 2006, he began selling ads and began growing his team.

Techmeme, which Rivera calls a “scrappy” operation, now has a staff of 12 who mostly work from his San Francisco apartment or their own homes. While the algorithm for sifting news has improved and Rivera has hired human editors to find stories the machines miss, the site looks almost identical to the way it did six years ago.

Reluctant to make revenue a priority over user experience, Rivera has resisted selling large-format graphical ads in favor of smaller promotions targeted at the industry Techmeme covers, including sponsored blog posts, help-wanted ads and announcements about upcoming events. Rivera declined to say how much the site makes, but said it covers the cost of labor, servers and everything else, “with a little left over.” Sales are at least $1 million, based on ad rates posted on the site.

However much money Techmeme makes now, it’s no secret that the potential is much greater. Rivera has turned down acquisition offers from major Internet players because he would “hate to see Techmeme wither or die inside a bigger company, and I’d hate to see our team get bogged down building another company’s doomed product,” he said. Investors approach Rivera about once a month. He tells them he doesn’t need the money and that they wouldn’t be patient enough to support the company he hopes to build.

“We’re still exploring what the product and revenue model is at a very fundamental level, and raising money too early in this process wouldn’t make sense,” said Rivera, 39. “It’s true that in many ways, more money would make many things easier, including hiring more good people. But I’m also concerned about what it might make not possible: patience in letting a product mature, or forgoing costly distractions like board meetings and fundraising.”

Clavier and other investors who have befriended Rivera over the years have stopped pestering him because they acknowledge his approach wouldn’t work for venture capital.

“The genuine question when you raise funding is how it allows one to grow faster, larger and more valuable,” Clavier said. “It seemed to me that Gabe was not clear that funding would get him there anyway.”

Mark Suster, an investor at GRP Partners in Los Angeles, reads Techmeme every morning and has also discussed funding with Rivera. While Suster admires the entrepreneur for his independent approach, he said that’s also what would make Techmeme a poor investment.

“Gabe is not the guy a VC would invest in,” Suster said. “I’m trying to find the guy who can say, ‘I want to change the world and have the biggest company possible.’ That’s who I need to finance. History would not suggest that he’s that guy.”

Still, Rivera continues growing the business at his own pace. He has built and staffed a separate site that aggregates media news, Mediagazer, and expects to do the same for other news-driven topics.

“I don’t believe anyone aiming to build the ‘biggest company possible’ could have made something like Techmeme,” said Rivera. “Any such person working on something remotely similar to Techmeme would instead focus on how to reach tens of millions of users as quickly as possible, and as a result, the relevance of the product for a community as focused as Techmeme’s would suffer.”

Plus, growing too quickly might get in the way of the naps Rivera takes after lunch almost every day.

“My naps are important,” he says. “We should all nap more.”

Original post is No VC: Why Techmeme’s Gabe Rivera Resists Investors by Tech Deals.

Courtesy Zoho Corp.

Zoho CEO Sridhar Vembu doesn't want to bring in venture capitalists who could ruin the fun of running the business, he said.

This is the fourth in a five-part series called “No VC,” which highlights startups that have succeeded without venture capital, the lifeblood of Silicon Valley.

At first, Sridhar Vembu couldn’t raise money for his enterprise software startup because he didn’t know how to run a business. Since figuring things out, he’s shunned investors because he doesn’t want venture capitalists telling him what to do.

Vembu, the chief executive officer for Zoho, has no aspirations to take the company public. In 2000, he turned down a venture capitalist who would have valued the company at $200 million, he said. Now, Zoho makes nearly that amount in annual revenue.

“If you take venture capital, your goals change,” he said in an interview, adding that investors ultimately will push for an initial public offering or a lucrative sale. ”I have trouble seeing myself as a public company CEO, to be honest. I couldn’t care less for Wall Street and for quarterly earnings.”

Vembu’s company started out as an excuse for him to move back home to Chennai, India. He had been working on wireless technology for two years at San Diego-based Qualcomm, as did his brother, a software engineer. Then in 1996, the pair decided to do their own thing.

“We didn’t have a very strong business plan,” Vembu said. “It took us about a year and a half to settle on what products would make money.”

The brothers also took a while to decide on a name. The company had operated under Vembu Systems, Advent Network Management and AdventNet over the years. One reason for the changes was fear of being sued over trademark infringement, which can kill a company without venture capital, Vembu said.

Early on, the startup sold software to network-management companies, including Cisco Systems and Motorola. At the height of the dot-com bubble in 2000, when there were hundreds of networking companies in Silicon Valley, AdventNet sold its products to about half of them, according to Vembu. When the industry imploded, the company’s revenue dropped precipitously.

Then in 2004, AdventNet introduced ManageEngine, a software suite for corporate information-technology departments that now accounts for $120 million in annual revenue. The following year, the company created Zoho, which includes Web-based sales management, communication and productive tools.

In 2009, Vembu changed the company name to Zoho, and for good reason: The online tools have become its fastest-growing business. He forecasts that the cloud-software division could overtake ManageEngine in revenue in a year and a half. Zoho’s customer-relationship management programs compete with those from Salesforce.com and SugarCRM. The name Zoho is a take on the product’s target market: small office/home office (SOHO).

Vembu credits some of his company’s success to its long-term research projects and extended training program, which pays high school graduates in India and the U.S. to learn to code. Graduates of Zoho University make up about 15 percent of programmers employed by the company.

He said those types of endeavors might have been frowned upon by outside investors. It would be easier and quicker for Zoho to just hire qualified engineers, he said, but they wouldn’t be as connected to the independent corporate culture that Vembu has cultivated over the years.

Workplace climate is of special interest to Vembu. With 1,500 employees, most of whom work in Chennai and Pleasanton, California, his goal is to prevent these offices from turning into a “corporate environment,” something that would be difficult to do if investor expectations needed to be taken into account.

“It would take out the fun of work,” he said.

Original post is No VC: Zoho CEO ‘Couldn’t Care Less for Wall Street’ by Tech Deals.