VC investing in search hits record

In 1999, a tiny unknown company received venture capital funding. Back then, 32 search startups received funding. It was the most active year for venture investing in the search space.

That was of course, until the last two years. Last year saw a record number of search startups get funded.In 2005, 47 search startups received an aggregate of $262.9 million in venture funding, according to VentureOne, a unit of Dow Jones. The dollar volume last year was the highest since 2000, when nearly $280 million was invested into 18 search startups. All told, $916 million has been invested in 130 search-related startups in the last five years, with 82 of those deals done in 2004 and 2005.

Last year's recipients include Feedster -- for blog, podcasts and news searches, X1 Technologies -- for desktop search, Onmeta -- a search engine focused on entertainment, and 4Info -- for mobile search, to name a few. 

Why are VCs pouring money back into search startups? Why not? As they say, "Let 1,000 flowers bloom."  Oh, and that tiny unknown search engine that received funding in 1999 was Google.

Read Net Sense on MarketWatch.

Let me know of any search companies you think I should review.

Comments

[john]

The answer to why are VCs investing now is simply NOT "why not?" How about doing some REPORTING?

[MarketWatch]

John:
Why not read the rest of the column on MarketWatch? I use this blog to post just snippets of my columns. I've provided a link.

[Cem Sertoglu]

I have been keeping an eye on Hakia.

[Chase Norlin]

Bambi suggested I post a link to our new visual search engine - www.pixsy.com.

[Jon G.]

Am I the only one that finds "niche-market" search engines completely lacking in the revenue model that the behemoths like Google and Yahoo have (obviously with respect to market size)?

They're providing an avenue of search for users seeking very specified, completely free content. Much more so than the users of Google and Yahoo. Also, the costs associated with developing and maintaining engines that search and display multimedia and other (non-text) content is undoubtably greater than what the behemoths spend on more general engines.

A smarter, smaller market with correspondingly smaller revenues + greater costs => tiny profits. Sounds more like the kind of nonsensical attitude that fueled the... (need I say it?) Dot Com era.

Of course, VCs likely don't care, because they know they can shake and bake out an internet IPO faster than the multitude of mouth-breathing public investors can collectively scream, "LOL, intarweb!!11oneone!"

[Chris Forhan]

Bambi,

You were asking us about our favorite search engines and if there are any that you should be aware of, specifically with regards to specialized search. I believe the leader in this area is a company called GlobalSpec, The Engineering Search Engine at www.globalspec.com.

GlobalSpec was recently mentioned in John Battelle's book "the search". The premise of GlobalSpec is that engineers and the technical community can find information much more efficiently than using a Google or a Yahoo, per se. For example, someone looking for "pumps" on goolge has to wade through advertisements for woman's shoes at Bloomingdales, while on GlobalSpec, the engineers who run the company have compiled the relavant info behind the scenes to help satisfy the technical search requirements, thus helping an engineer do his/her job more efficiently. They have weeded out the irrelevant results and provided valued content.( Sourcing products,services or researching the latest on patents, standards and applications).

Yes by the way I do work for GlobalSpec and can help if you have any questions, but I think you will truly be impressed if you check out what we have built at www.globalspec.com.

I enjoy your writing, keep up the good work.

Best Regards,

Chris Forhan
cforhan@gmail.com

[Jason Freidenfelds]

The 1UP Network targets the videogaming vertical, and as part of that, we're making moves into vertical search for gamers.

We've partnered with Kosmix to build a new kind of vertical search engine specifically for videogamers. Our site (name yet to be disclosed) is smarter than Google, because it categorizes sites based on the meaning of the content and its relation to other sites, not just based on the words in the sites themselves. For example, it knows a site is a "game review" even if the words "game" or "review" don't appear anywhere on the page. It doesn't just crawl the web like Google; it actively categorizes and sorts all web content.

The new search engine we're building organizes gaming content throughout the Web according to key terms we set up, like "reviews," "screenshots," "demos," "cheats," "videos," etc. That means you can search for "Quake 3," and then narrow the results to "reviews" only. So it saves the searcher a lot of work and time, and quickly lets them get a multidimensional view of Web content relevant to their search query.

Search is also integral to GameTab.com, our searchable, customizable news aggregator just for gaming business news and reviews:

http://GameTab.com/

It culls news and reviews from a huge number of gaming sites, including our own (1UP.com), and it's fully searchable. It stays up to date and highlights items that are new since the last time you visited. Very useful -- it's long been the homepage of lots of people in the gaming business, which is why we scooped it up last year to add it to our 1UP Network as part of our integrated media strategy.

And it's such a simple technology to implement, especially in the clean way we've done it, that we're seriously considering turning out versions that cover other verticals besides gaming (although gaming is our forte).

[Brandon]

Hi Bambi,

I have been reading your newsletter for a long while. You mentioned to send you a note about any start ups you might want to watch in the search space. I have one for you that is in the search space, CongoJungle.com ( http://www.CongoJungle.com ). It was actually started by myself and a few friends from biz school.

A some quick background for you: I founded the largest recreational fishing interactive media commerce site on the internet back in 1996 called WorldwideAngler.com. We bootstrapped it for a few years, raised a little over $2m over three rounds of funding by 2001. In 2001 we had to shut the doors because of the market, I bought back some of the assets and launched a site called Tidal Fish ( http://www.TidalFish.com ) which is one of the largest fishing communities on the net with over 32,000 registered members (not a lot compared to huge general sites out there, but big for fishing). It is a true community, we have real world get togethers with a few hundred people showing up, fishing tournaments etc. It’s real. Anyway, I ran and built TidalFish.com in my “spare” time and went into the venture business after shutting down WorldwideAngler.com working for a $125m fund in Northern Virginia investing in the IT space. The market kept going down, that fund quit investing and I went to America Online where I worked in the Broadband and then Premium Services Division. From there I left and went to another venture firm in Northern Virginia that invested in the enterprise software. While there I looked at a lot of spaces to invest, but one of the places was search of which really sparked my interest level and I dug deep looking for a company to invest in. What I found was that there are a million different technologies out there that do all sorts of things for the user. I started to think to myself, while all these “technologies” are cool and useful for some applications when searching for things, at the end of the day sites still to this day get recommended between people from others. And when someone we trust recommends a site we usually visit it. Then I thought about, what if I am looking for the top auction sites, would I go to Google or any other search engine out there and would it return the top sites. Probably not, I would call someone I trust that I know would know and get a recommendation. Same thing happens when people want to go fishing in the Bahamas; they do not Google “Bahamas fishing” and just pick a place. They might Google to get an idea, but they usually ask a friend who has fished in the Bahamas and gets a recommendation of a place and/or guide. People can fool search engines every which way, even opinion sites are clogged with viral markers in there giving opinions about products, sites etc just to drum up biz and you do not know whether to trust the stuff or not. Even if some are real, the fact that opinion sites and search engines have biased people in there taints everything; who knows what to trust. So I spawned the idea of CongoJungle.com with a few friends. It’s back to old school search where we have qualified “guides” recommending and reviewing the top 10 sites in a category. We are now working out a few bugs with the software, but its up and running to check out. You can also learn more by going to our “About Us” section at: http://www.congojungle.com/about.php . Of course there is how we will make money which we will do with paid search appearing in a clearly labeled section of the site below the reviews we publish and we will look for general sponsorhips. We have some Google stuff up there now, but it was just an experiment which will not be used on the full roll out.

Oh yea, I quit the venture firm where I was working after I graduated from UNC, Chapel Hill biz school last year, build CongoJungle.com and am launching of all things an apparel company leveraging TidalFish.com as marketing vehicle. If you have any questions about CongoJungle.com just drop me a line.

Thanks

Brandon

------------
Brandon White
CongoJungle.com

[Bruce Colwin]

While everyone out there seems to be focused on building a new vertical or local search site, Transparensee has been developing a better database search technology.

Our "BestMatch™" site search technology can dramatically improve the users' experience and provide more relevant results when searching any structured data - whether it's real estate, dating, automotive, travel or ecommerce.

Here's a link for our presentation at the recent DEMO 2006 Conference ... http://www.demo.com/demonstrators/demo2006/63040.html

[Dan Abrams]

Dear Bambi,

Thank you for your excellent articles about the evolving state of search. The "Tower of Babel" situation is crucial.

My new search engine (www.Optevi.com) is perfectly suited to the "Tower of Babel" situation you have identified.

Wouldn't you prefer that you see your trusted sites first in the search results? With Optevi you can.
There are 5 other major tools not yet released that I would love to discuss with you.

And if you contact me I'll prove a scandalous situation regarding fraud that (to the best of my knowledge) has NEVER BEEN REPORTED BEFORE.

Every major search engine makes a claim that is, for the user, unusable and false.

This may sound cryptic but I'm trying to encourage you to give me 1 minute and 45 seconds to explain.

Thanks and good karma to you.

Regards,

Dan Abrams - President
Optevi
www.optevi.com