Intel Capital Leads $13M Round for SweetLabs in Bid to Re-Invent Desktop Experience

9/29/11Follow @bvbigelow

SweetLabs scored what could be construed as a Google seal of approval in April 2010 when the San Diego startup, then known as OpenCandy, landed $5 million in a Series B round of venture funding led by Google Ventures.

Today, the four-year-old startup says it has scored a similar coup—raising $13 million in a Series C round of venture funding led by Intel Capital, the Santa Clara, CA-based chipmaker’s global investment arm. Google Ventures and another existing investor, Bessemer Venture Partners, also participated in the round. With this latest cash infusion, SweetLabs has now raised a total of $21.5 million in venture capital.

“What’s interesting is that we weren’t officially raising capital,” says SweetLabs CEO Darrius Thompson, who co-founded the Web 2.0 startup in 2007 with Chester Ng and other expatriates of San Diego-based DivX. Thompson says Intel was among several groups that came to SweetLabs with an offer to provide additional, unsolicited venture funding. Thompson says the deal also served as a kind of pre-emptive strike by Intel to keep other potential SweetLabs investors at bay.

Investors’ keen interest was triggered by the beta launch of Pokki, a new platform the company developed to provide an “always on” app-like experience for desktop PC users. As I reported at the time, SweetLabs used the occasion to also change its name from OpenCandy—the company’s original product category—and which SweetLabs continues to operate as a Web-based advertising network and online marketplace for downloading open source software.

SweetLabs San Diego Office

Ng, who is SweetLabs director of business development and sales, might have gotten Intel’s attention when he described today’s desktop PC experience as almost “prehistoric.” He explained that SweetLabs had developed the Pokki platform as a way to bring the simplicity and ease of the mobile app experience to the desktop.

While the Pokki platform is a cloud-based system, Thompson says Pokki apps are a kind of hybrid that reside partly on the computer and partly in the Web. Some online games, for example, simply run more efficiently when part of the program is installed in the computer.

In any case, the Pokki concept resonated within Intel, according to Thompson. He says the Santa Clara chipmaker is “completely aligned” with SweetLabs’ idea of re-inventing and revitalizing the PC, which remains one of the largest ecosystems for software development.

“It was definitely really exciting for us,” Thompson says. Among other things, Intel’s willingness to invest in SweetLabs represented a huge vote of confidence that SweetLabs was right to focus on re-inventing the desktop experience. “We closed the deal in six weeks,” Thompson says, “From our first meeting to closing the deal and getting the money in the bank. That’s pretty unusual.”

As part of its June 28 announcement, SweetLabs unveiled eight apps that had been created for the desktop, including Google mail, eBay, Facebook, LivingSocial, and other popular Web-based services. The company initially developed Pokki for the Windows 7 operating system, and has extended that to include Windows Vista and Windows XP. A Pokki for Apple’s Mac “will be launched sometime in the future,” Thompson says.

To spur the creation of additional apps, SweetLabs said in June that it was making its software developers kit available to third-party programmers. Since then, Thompson says two large online music providers, Gainesville, FL-based Grooveshark and San Francisco-based Rdio, have introduced their own Pokki apps for the desktop. SweetLabs’ CEO says consumer reaction to Pokki also has been positive, “with a lot of really great sentiment around the product. The biggest negative sentiment was around, ‘Why isn’t this available on the Mac?’ “

As part of the company’s continuing effort to build out its catalog of Pokki apps, SweetLabs is today announcing an online contest intended to reward independent developers for creating additional Pokki apps, using standard Web languages like HTML5, JavaScript, and CSS3. The company plans to award a first-place $30,000 prize, a second-place $13,000 prize, and a third-place prize of $7,000, based on such criteria as utility, appearance, user experience, and quality. SweetLabs says entries must be submitted by Nov. 15 at http://www.pokki.com/contest.

The $13 million in unanticipated venture capital also will be used to hire additional product developers, product management, software engineers, designers and other new employees, Thompson says. The company recently moved into a new and bigger office in downtown San Diego (see photos on preceding page, and above), and opened new offices in Silicon Valley and Seattle. Thompson anticipates that SweetLabs will double its current workforce of 60 employees over the next year. One of the additional benefits of getting venture funding from Intel and Google, Thompson adds, is that they are major brand names among the technorati. As he puts it, “That helps with recruiting.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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