Entrepreneurs in the crowdsourced-services niche must be feeling a lot like the knights battling the killer rabbit in Monty Python and the Holy Grail these days. San Francisco service-networking site TaskRabbit, fresh off a $17.8 million funding round, is eating up the competition.

According to an e-mail received Tuesday night from TaskRabbit marketing staffer Johnny Brackett, the startup plans to announce Wednesday that it has acquired SkillSlate, a New York startup similar to TaskRabbit in some respects. The financial terms of the acquisition aren’t being disclosed. SkillSlate, co-founded by former UBS investment banker Bartek Ringwelski and former Yahoo Real Estate product manager Brian Rothenberg, is a services marketplace that closed a $1.2 million round of angel and venture funding in August 2010, according to a regulatory filing.

SkillSlate’s specialty is matching service professionals such as movers, handymen, and programmers with consumers who post service requests. Like TaskRabbit, it does the matching online. But in contrast with TaskRabbit’s workers, many of whom handle less-skilled jobs like grocery pickup or office cleaning, SkillSlate workers focus on “skill-based and artistic tasks,” in the words of a TaskRabbit blog post shared with Xconomy. “By integrating SkillSlate’s platform with TaskRabbit’s, we will be able to provide an even more enhanced service—one where folks can get help with practically anything,” the post says.

TaskRabbit, which was born in Boston in 2009 under the name RunMyErrand, has raised more than $23 million in funding and has expanded to seven regions, including New York City. Ringwelski will become TaskRabbit’s's director of financial planning and analysis and Rothenberg will become director of online marketing, according to the post. SkillsSlate chief technology officer Mike Nelson will join TaskRabbit’s engineering team.

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After building a vast virtual world with a complex internal economy sustained by the labor of more than a million active users, what do you do for an encore?

For Philip Rosedale, the founder and former CEO of Linden Lab, the company behind Second Life, the answer was to try to recreate some of the same dynamics in the real world.

Coffee & Power, the San Francisco crowdsourcing startup that Rosedale founded in 2010 with former Linden Lab colleague Ryan Downe and former Accenture consultant Fred Heiberger, is all about making it easier for people to do small chunks of creative work for one another, and get paid for it. Transactions are initiated online, at a website where people can post small jobs they need done or are willing to do. But most of the actual work happens offline—and there are even two physical Coffee & Power “workclubs,” in San Francisco and Santa Monica, where members can meet to collaborate or deliver services.

Coffee & Power co-founder Philip Rosedale

“At Linden Lab I was the sci-fi, physics-and-atoms guy, a total geek for assembling things out of digital pieces,” says Rosedale. “But the magical thing about Second Life—what changed me more as a person and was more inspiring to me as a leader—was not the digital Legos. It was the way people’s welfare and livelihoods were changed by their interactions with each other. Ryan and I said, ‘We have got to do this for the real world.’”

Coffee & Power, which opened to the public on November 1, is far from the first online marketplace for small jobs. Investors have been paying a lot of attention lately to bigger crowdsourcing players like oDesk and Elance, as well as upstarts such as TaskRabbit, MobileWorks, and Zaarly. But one of the things that makes Coffee & Power interesting is the way it copies three of the elements that, in Rosedale’s view, made Second Life so successful. (In its heyday in the late 2000s, the virtual world had more than 20 million registered users and as many as 88,000 people online at any given time).

The first element is rich communications, in the form of profiles, reviews, status updates, and a live public chat space (sorry, no 3-D avatars this time). The second is radical transparency, meaning the details of every transaction are available for everyone to see. The third is a virtual currency, called C$ in an echo of Second Life’s Linden Dollars or L$.

Those are the “key enabling features” that help sellers and buyers find one another, decide who’s trustworthy, and pay for work completed, Rosedale says. “All you have to do is put the right pieces together so people can very rapidly decide to work with each other or for each other.”

There’s something else that makes Coffee & Power unusual: the fact that the site itself was crowdsourced. It turns out that Coffee & Power is the second thing Rosedale and his co-founders set out to build after the Linden Lab experience. The first was Worklist, a new collaboration system for software developers. It’s a place where entrepreneurs who need help building a program or a website built can farm out the job in small pieces—a half-day’s work is the usual increment.

Downe, Heiberger, and Rosedale assembled the entire Coffee & Power website by posting tasks such as “fix Facebook/LinkedIn login redirects” and “change ‘about us’ copy” on Worklist. As of yesterday, they’d spent a cumulative $289,628 on the project (the figure is visible to everyone, thanks to the aforementioned transparency principle).

It’s no coincidence that Coffee & Power matches up buyers and sellers of small jobs, with all payments handled digitally; the site is simply a broader implementation of the ideas built into Worklist itself. After launching Worklist, “the three of us sat down and said, ‘How can we apply what we have learned and how we do things with Worklist to more generalized forms of work that might be more highly scalable?’” says Rosedale. “That was the birth of Coffee & Power. We said, ‘We have got to be able to use this to let people do anything they want.’”

Now that Coffee & Power is up and running, Rosedale says Worklist is developing into a business of its own, with … Next Page »

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In Silicon Valley, there is no more pejorative term than “lifestyle business.” It’s usually applied to companies that do well enough to earn their founders and employees a living—sometimes a very good living—but that will never make anyone mega-rich. Venture capital partners, who have to weed out all but the fastest-growing companies if they’re to have any hope of making the Forbes Midas List, often dismiss these less meteoric players with a phrase like “It’s probably a nice lifestyle business, but it just won’t move the needle for my fund.” Even many startuppers, who often work insane hours on the assumption that their options will turn to gold when their company is acquired or goes public, seem to reserve special pity for lifestyle entrepreneurs who haven’t won Sand Hill Road money and aren’t perpetually “killing it” or “crushing it” in the way Silicon Valley culture demands.

Well, I visited a Web company recently that occupies a lovely cottage near downtown Palo Alto, has grown to 12 employees without raising a dime in outside funding, and attracts 30 million unique visitors a month to its website. For comparison’s sake, that’s more traffic than Groupon, the New York Times, Match.com, Zynga, or Yelp can boast. If that’s a lifestyle business, then I’ll have what they’re having.

WikiHow founder and CEO Jack Herrick

The company is wikiHow, which, as the name implies, is a crowdsourced encyclopedia of instructional articles on everything from how to kiss to how to perform CPR on a dog. (As it turns out, those are pretty much the same thing.) It was founded in 2005 by a former management consultant, serial entrepreneur, and rock climber named Jack Herrick. If I were making a list of unsung heroes around Silicon Valley, I’d nominate Herrick for his success building a huge media property without help from the venture industry, and for assembling an amazing online resource for readers without polluting it with acres of advertising. One hundred percent of the company’s revenue comes from unobtrusive Google AdSense text ads, which makes wikiHow one of the many companies that owe their existence to the search and advertising giant; more on that below.

“I hate the term, but yeah, that’s what we are, a lifestyle company,” Herrick confessed to me in a recent interview. “Somebody needs to create a better word. I think it should be ‘awesome company.’ One of the reasons I have the best job in the world is that we are not venture financed. It just gives us so many more degrees of freedom. We can decide not to have a sales force, we can decide we don’t need to grow revenue 100 percent this year. We can figure out what is the most important thing in our mission, and focus on that.”

The mission at wikiHow is simple, and as breathtaking in its ambition as Google’s: “We want to cover everything and have it be universally good,” Herrick says. And the site has made impressive progress in that direction. It features more than 129,000 user-contributed articles in seven languages. Obviously, it’s not nearly as comprehensive as Wikipedia, which has 3.8 million articles in 282 languages. But you won’t find Wikipedia articles on such indisputably helpful subjects as How to Deliver a Baby, How to Remove Odors from Your Car, and How to Accept Criticism with Grace and Appreciation. If there’s anything Web audiences seem to love more than seeking advice, it’s giving it—and wikiHow taps both impulses with more sincerity, and far less junk, than any other how-to site I’ve seen.

Back in July, just days before its acquisition by Autodesk, I profiled a maker-focused how-to site called Instructables. I called it “the rare crowdsourced site that actually turns a profit,” which brought an e-mail rejoinder from Josh Hannah, a friend and former business partner of Herrick’s who now works at venture firm Matrix Partners. Hannah called wikiHow “the even more rare profitable crowdsourced site that has 5x the traffic.” That might be a bit of an exaggeration: WikiHow’s U.S.-only traffic is only … Next Page »

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UTest, a Southborough, MA-based startup that crowdsources testing for software applications, said today that it has raised a $17 million Series D financing, at a company valuation that more than doubled since uTest’s last funding round 15 months ago.

Baltimore, MD-based QuestMark Partners led the investment, which also included all existing uTest investors: Scale Venture Partners, Longworth Venture Partners, Egan-Managed Capital, and Mesco. UTest declined to reveal the exact valuation the company raised its last two venture rounds at.

The company got its start offering quality assurance testing services to enterprise customers, and has since rolled out services for smaller software startups, as well as platforms for testing software security, usability, load, and localization. It’s seen a surge of customers using its service for mobile app testing, said uTest chief marketing officer Matt Johnston. “Mobile is growing the fastest, growing faster than desktop and Web,” he says. “It’s absolutely white hot. And it’s not just for startups.”

He says the uTest model works well for mobile applications because it “enables you to test across locations, jumping tower to tower.”

“Even big companies can’t do that in house,” he says.

The company plans to use the new cash to staff up in its Boston-area, Silicon Valley, and New York offices, as well as expand to other tech hubs, like Seattle, where it will open an office later this month. It is also creating a suite of tools that it hopes will help developers as they are building their applications, rather than testing them after the fact.

Johnston’s says uTest’s growth and ability to raise private money could make it a good candidate for an initial public offering down the line. But the company’s not worried about that just yet, he says. “We’re focused on serving customers—that’s ultimately the way you create delighted, evangelical customers that are telling the world about you.”

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Last year I had a chance to visit Washington D.C. and tour the Washington Monument. I later learned that this magnificent national icon was, in fact, an early example of crowd funding. Crowd funding is the process of aggregating small amounts of money from a large number of people in order to accomplish great things.

It turns out that the construction of Washington Monument was crowd funded by small contributions from individuals across the country. Fund-raisers even placed donation boxes (like the one in the photo) next to ballot boxes on election day in 1860, when voters chose Illinois congressman Abraham Lincoln as president.

Leveraging the power of crowds is not a new concept. The quest to find a vaccine for polio was a “march of dimes,” and we’re all familiar with the fundraising “thermometer” technique used by many nonprofits to raise money for a particular cause or goal.

However, the Securities Act of 1933 and the Exchange Act of 1934 introduced significant regulation to large scale collective fundraising activities. While donations were excluded from regulation, investments in debt and equity securities became subject to the purview of the Securities and Exchange Commission (SEC).

I have worked on numerous public company audits and can attest to the extensive SEC compliance requirements. While these regulations provide significant safeguards to prevent fraud and increase marketplace integrity, they also have the unintended consequence of limiting capital formation options for smaller companies, including startups developing innovative technologies. In other words, you’re not going to spend $2 million dollars on legal and accounting fees if your startup is trying to raise $1 million for an equity offering.

The SEC does have several safe harbors that provide exemptions from securities registration. However, most of these exemptions become invalid once “general solicitation” (i.e. public advertising) occurs. Of course, the dawn of social media and massive connectivity tools was never anticipated in the early 1930′s when the SEC rules were established.

On November 3rd, the House of Representatives passed the “Entrepreneur Access to Capital Act” (HR 2930). The bill, authored by Representative Patrick McHenry (R-N.C.), enjoyed widespread bipartisan support, along with backing from the White House (a .pdf file declaring the President’s support is here.) It passed easily by a vote of 407 – 17. HR 2930 provides a crowd funding exemption from SEC registration with a few caveats:

—A $10,000 limit per investor (or 10 percent of annual income, whichever is less).

—A cap on the amount a company can raise of $1 million per offering (and up to $2 million if audited financial statements are provided).

—No limit on the number of accredited or unaccredited investors.

With startup companies struggling to raise funds and the capital markets still reeling from the banking crisis of 2008, the advent of crowd funding may well find a welcome home in business plans throughout the U.S. This new capital formation pathway needs to be balanced with safeguards to prevent fraud and protect the investing public. Thankfully, newer (and crowd-based) tools to monitor online reputations are emerging. Either way, the potential to unleash untold numbers of new ventures is certainly exciting for would-be entrepreneurs. Up next for crowd funding—the U.S. Senate.

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Jobs are the single biggest political issue of the day in the U.S., and rightly so. As of August, the official unemployment rate in the United States stood at 9.1 percent. That was down one point from the October 2009 peak of 10.1 percent, but still higher than at any time since the 1930s, with the exception of the worst months of the 1982-83 recession. And today’s real unemployment rate, if you include discouraged workers who have stopped searching for jobs and people who have settled for part-time positions, is much higher, at around 16 percent. That translates into 25 million Americans who need work.

That’s a terrifying number, because no one knows how the country might create that many new jobs. Let’s say President Obama’s $447 billion jobs bill were enacted in its current form (an unlikely prospect, given the levels of partisan obstructionism in Congress). The most optimistic estimates from economists are that the new spending in the bill would add only 2 million jobs to the economy in 2012. That’s nothing to sneeze at, but it’s a tenth of what’s really needed.

On top of that, technology-driven productivity gains are allowing American corporations to rack up big profits despite their trimmed-down workforces. So even if consumer demand were to magically return to pre-recession levels, companies probably wouldn’t hire back all the people they’ve laid off since 2008.

Could there a technological cure for unemployment? Ever since the 2005 introduction of Amazon Mechanical Turk, a Web service that pays users small amounts for completing tasks such as transcribing short audio recordings or recognizing an object in a picture, tech pundits have been talking about the benefits of digital crowdsourcing. It’s been portrayed both as a way for companies to get work done cheaply and as a source of supplemental income for casual Internet users with a little time to kill. But with the joblessness picture looking so dire, observers are now starting to ask if crowdsourcing technology could play a more central role in economic recovery. Could Internet-mediated “microwork,” as this kind of employment is being called, give millions of people a way to earn meaningful amounts of income?

Mechanical Turk, by itself, certainly isn’t a panacea. As a service, it’s not terribly inviting or easy to use, and Amazon itself has never expressed much ambition to improve or expand it. And by definition, Mechanical Turk workers need a computer to complete tasks, which leaves out a big slice of the unemployed population.

Here in San Francisco, though, there are at least four organizations taking Amazon’s idea and tweaking it to make microwork more feasible for broader populations. One is Samasource, a non-profit that distributes computer-based tasks such as data verification and audio and text transcription to workers in Haiti, India, Kenya, Pakistan, South Africa, and Uganda. Another is Servio, which creates crowdsourced editorial content for clients using a platform called CloudCrowd. Then there’s CrowdFlower, a kind of meta-platform that helps big, Fortune 500 companies with data management tasks by farming out the work to Mechanical Turk, Samasource, and other crowdsourcing engines. Finally, there’s a new player called MobileWorks; it’s a Y Combinator-backed startup that offers digital work to underemployed people in India and Pakistan, but with an emphasis on tasks that don’t require a computer and can be completed using only an Internet-connected mobile phone.

Yesterday I called up MobileWorks co-founder and CEO Anand Kulkarni to find out how people are using his platform, and whether the technology might offer hope for unemployed people here in the United States. As you might expect, he’s bullish on … Next Page »

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New York’s Opinionaided, a mobile question-and-answer startup, said in a blog post Friday it raised $4.3 million in a Series A round led by SoftBank Capital and BlueRun Ventures. Other investors in the round include General Catalyst, Draper Fisher Jurvetson, ENIAC Ventures, as well as Mark Wachen, managing partner with DreamIt Ventures; Jonah Goodhart, co-founder of Point Ventures Group; Karl Jacob, CEO of Coveroo; and Vince Monical, founder of GroupPulse. Opinionaided, whose app lets consumers get opinions on topics they pose to other users of the app, said it will use the funding to expand its service. In conjunction with the funding, Opinionaided formed a board of directors which comprises Jacob; Jay Jamison, venture partner with BlueRun; and Joe Medved, partner with SoftBank.

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New York’s Crowdtap said in a press release today that it has raised $7 million in a Series A funding round led by Foundry Group. Crowdtap is an online network that lets marketers of brands—including Old Navy, Adidas, Pepperidge Farm, Pinkberry, and Bing—reach out to targeted groups of consumers for word-of-mouth marketing. The consumers who participate receive incentives like gift cards or donations to their charity of choice. Other investors participating in the funding round include GSA Venture Partners and Mr Youth, a marketing agency which previously provided Crowdtap with $3 million in seed funding. Crowdtap says the new funding will go towards hiring in sales, engineering, and other jobs.

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The Web giveth and the Web taketh away. On the giveth side, the Web is a great medium for publishers because of its low distribution costs, and because of all the free traffic that results when search engines and other sites create links to a publisher’s pages. On the taketh side, the Web’s abundance and the very ease of following an outgoing link or starting a new search means that readers sometimes don’t hang around very long—they’re in and out as fast as you can say Tim Berners-Lee. So publishers are always searching for better ways to get readers to sit and rest a spell.

For more than three years, San Francisco-based Apture has been working on tools that help with this, essentially by grabbing parts of the outside Web and bringing them inside. At sites that use Apture, such as Scientific American, highlighting any phrase will generate a popup box with relevant material from Wikipedia, YouTube, Google Maps, Flickr, Twitter, and other sources. Publishers can also craft pre-built Apture links that activate popups with specific material vetted by authors or editors. The idea is to help a site’s visitors satisfy their urge to follow great links around the Web without actually leaving the original site. (You can give Apture a try right in this article—just highlight any word or phrase.)

Investors such as Clearstone Ventures, VMware CEO Paul Maritz, and former Boston Globe vice president Steve Taylor have found Apture’s idea compelling enough to pony up $4.6 million in seed and Series A financing, and in 2009 Inc. magazine featured Apture co-founders Tristan Harris, Can Sar, and Jesse Young in its “30 under 30″ list of the “coolest young entrepreneurs.”

But there are at least a couple of limitations in Apture’s system—and the startup is now moving to fix them. One problem, CEO Harris explained to me a few weeks ago, is that it takes authors a bit of extra work to create an Apture link—a particular barrier for writers who aren’t already in the habit of filling up their copy with outgoing hyperlinks. Another is that it’s hard for publishers to know in advance what topics readers will be curious about. A sports site might spend all its time creating links for soccer teams, for example, when readers are actually more interested in individual players.

Today Apture is unveiling a feature that uses a crowdsourcing approach to correct both problems at once. From now on, Apture will track the phrases that users highlight, and if enough people highlight the same phrase, that text will automatically be converted into a pre-built link—what the company calls a HotSpot. With the new feature, publishers won’t have to do any extra work to create Apture links, and they won’t have to try to anticipate which topics will be most popular. The amount of time readers spend on a site should go up, as visitors who might have surfed off to another site or a search engine are instead offered more opportunities to peruse related information inline.

“We are trying to leverage signals about what users care about to decide what are the right things to offer within a page,” says Harris. “It’s a really hard problem because it’s basically mind-reading. So we are trying to track readers who do declare what’s on their mind by highlighting, and turning their behavior into these social links.”

In a blog post today, Harris explains Apture’s HotSpots using an extended analogy about neural networks in the brain. Every existing link on the Web is like a synapse connecting two neurons, he writes, and the Web gets smarter as people make and follow links. But there are lots of “missing” synapses—cases where a reader wants to know more about something, but there isn’t … Next Page »

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What do you get when you cross a Jewish guy from Argentina with a Turkish Muslim from London, and a female entrepreneur from New York who, by all accounts, shouldn’t even be alive?

Answer: You get Krush.

The Cambridge, MA-based Internet startup is unveiling its new site today. The company has an intriguing vision for helping clothing and lifestyle brands tap into the 16-to-24-year-old consumer demographic. It doesn’t seem to matter that the company’s founders—Alexis Kopikis, Alan Osman, and Gina Ashe—are all well past that stage in their own lives. They have hired a growing staff that reflects the diversity of their target demographic, and they have done a year and a half of research to understand how young people find and share products that they choose to identify with.

In short, traditional ads don’t work with the younger set, Krush says. High-school to college-age kids decide what to buy by watching what products their friends like on Facebook; they watch what people they admire are wearing on YouTube; they share their brand likes and dislikes broadly via social media; and they decide together what’s cool and what to buy based on all of the above. It’s a far cry from checking out the local mall or watching TV ads, though there is surely some of that going on too.

As Krush would tell it, marketing-tech and customer-research firms like BzzAgent and Communispace are great for 25-to-40 year olds (and older consumers), who tend to be more traditional in how they find new products and make purchasing decisions. Their tastes also don’t change as fast. But with the younger set, “this is a really different market,” says Ashe, who is Krush’s CEO.

The startup chose to target action sports—snowboarding, skateboarding, surfing, BMX—and streetwear brands first, because consumers are particularly passionate and social about how these brands reflect their own lifestyles. You’ll see kids posting items from big brands like Nike SB, Oakley, and Quiksilver, and emerging brands like Skullcandy, 10Deep, and Obey.

Krush plans to make money by playing matchmaker and connecting young people with these brands. Its software platform lets brands tap into consumers and fans to predict demand for their upcoming lines. The approach is a mix of crowdsourcing, social networking, game mechanics, and e-commerce—but I’m showing my age with those descriptions. The idea is that users browse future styles and gear and vote for their favorite items online—which could potentially help brands make decisions about what to produce and how to capture the biggest market.

For instance, Krush wants brands to use its platform to see which particular model of sneaker, or color of watch or headphones, gets the best (or worst) response. Brands can then drill down into Krush’s database and see detailed breakouts of consumer preferences by product type, features, geography, and so forth.

A key component: Users compete to see who has the most influence among their peers in terms of starting fashion trends. The top performers in this lovefest between brands and their fans will get recognition—and free merchandise. (Indeed, according to Krush, “kids respond to two things: stuff and fame.”)

The overarching goal here is to own the “product graph,” which is analogous to … Next Page »

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After several weeks of hype-building, name-your-price crowd-commerce startup Zaarly began publicly operating today. The company came together when co-founders Bo Fishback, Eric Koester and Ian Hunter won a Startup Weekend competition in Los Angeles. Here’s how it works: A consumer posts an offer to Zaarly, either through its website or a mobile app, naming a price for something they want. So, for instance, you could say you’d pay $5 for a Top Pot doughnut—and see if someone else monitoring the site will fulfill the request. According to this YouTube video, that deal apparently actually went down today in Seattle. Zaarly has financing from investors including actor Ashton Kutcher, Felicis Ventures, and Lightbank.

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The Startup America Partnership wants to make sure the little guy doesn’t get forgotten. That’s why San Francisco-based IndieGoGo turned up on a new list of companies contributing to the high-profile national job creation initiative last week. One of the first “crowdfunding” platforms, IndieGoGo helps individuals and organizations raise non-equity funding for their projects online. The company said it would contribute to the cause by cutting its fees in half to help these fledgling businesses get off the ground.

It’s an interesting tactic, given that when companies raise money through crowdfunding, they don’t usually think first about hiring people. Most crowdfunded organizations rarely collect more than $30,000 through this method—which makes it hard to hire people for anything other than occasional part-time work. I was curious about the jobs connection—so I contacted IndieGoGo CEO Slava Rubin and Startup America Partnership CEO Scott Case last week to get their perspective on crowdfunding’s role in creating jobs.

Slava Rubin

“It’s just a matter of time” before the first Facebook-scale company emerges from a crowdfunding platform, Rubin argues. “Three years ago, people used to say ‘No one will ever fund a small, for-profit business this way.’ Now, not only are they raising funding but you’re seeing it across every part of America, in many different industries.”

Building on the buzz over President Obama’s town hall meeting last week at Facebook headquarters in Palo Alto, the Startup America Partnership held a livestreamed panel at Facebook to announce it has obtained commitments from U.S. companies to provide an additional $400 million in services to American entrepreneurs. That’s on top of the roughly $360 million in commitments announced when the White House, the Kauffman Foundation, and the Case Foundation first unveiled the partnership in late January.

Case says the point of assembling these resources—which range from training programs to venture investments—is to increase the number of entrepreneurs who are able to take their businesses from the idea stage to the startup stage to the exponential growth stage, with the ultimate goal of creating more jobs. But when you look at the list of services being offered, most are geared toward established companies. Intuit (NASDAQ: INTU), for example, said it would pitch in $37 million in discounts on its financial software, while Microsoft (NASDAQ: MSFT) offered free access to its cloud computing platform, and Silicon Valley Bank said it would hold an “exclusive event” designed to bring the “America’s most promising entrepreneurs” together with venture capitalists and business mentors.

That’s why IndieGoGo stood out on last week’s list. Anybody can join IndieGoGo to raise cash for an idea. It could be an attempt to commercialize an invention (like the AlphaSphere, a futuristic musical instrument with 48 tactile pads) or realize a dream (like a concert tour for the Bucky Walters String Band from rural Humbold County, CA) or sustain a small business (e.g., Atlantis Books, a bibliophile’s haven on the island of Santorini in economically distressed Greece).

Crowdfunding is a model that dozens of organizations, such as new New York-based Kickstarter, are now pursuing. But IndieGoGo, backed by New York-based Penny Black and a number of individual investors, says it is still the world’s largest open funding platform. And the startup says that for the next three years, it will … Next Page »

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San Francisco-based CrowdFlower, which helps big companies crowdsource tasks such as correcting business listings and categorizing e-commerce products to a globally distributed workforce, has collected $7 million in new venture financing, according to an announcement today. Harmony Partners led the Series B round, which was joined by existing investors Trinity Ventures and Bessemer Venture Partners and brings the four-year-old startup’s total venture pot to $13 million.

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Some more activity is bubbling up in social software for businesses. Mzinga, a social software firm based in Waltham, MA, is announcing today it has hired a prominent techie, Alan Nugent, as its new CEO. He succeeds former chief executive Barry Libert, Mzinga’s co-founder and chairman. (Former co-CEO Rick Faulk left the company in 2009 and is now CEO of Landslide Technologies.)

Nugent has a distinguished record as the former chief technology officer of business-software giants CA (Computer Associates) and Novell. Before that, he worked at Hewlett-Packard, Xerox, and BellSouth, and also co-founded three tech startups back in the 1980s. For good measure, he has played competitive poker for more than two decades.

Which is all to say there’s a good chance he knows social, and he knows business software. It’s clear the company wants him to put it all together and transform Mzinga from a small to mid-size player into a big player.

“Having been there, done that, I can be extremely helpful in shaping what we do strategically,” says Nugent (see photo below). “But you can’t bring any of the big company bad habits.” On the plus side, he says, being at a smaller company means “things move fast—it’s great. I’m not having to sit around in endless meetings. It’s hit and run.”

Mzinga (Swahili for “beehive”) has a bit of an unusual history. The company, which has 180-odd employees, originally came together in 2007 as a merger between Shared Insights and Knowledge Planet, with a leadership team imported from Intranets.com. In early 2008, the company acquired Prospero, a fellow online-community software firm in Massachusetts. Mzinga’s venture investors include W Capital Partners, Shared Capital Partners, Acadia Woods Partners, and BlueCrest Venture Finance Master Fund.

Early on, Mzinga did a lot of “crowdsourcing” work—helping companies create and manage online communities of customers. But it also developed ways to manage workplace communities where employees could share their expertise, and online software for employee training. All of that has been rebranded as social business software. That’s a buzzphrase that refers to social media tools being used by companies to reach and support customers, manage sales relationships, build online communities, and help employees communicate with each other.

“We are capable of becoming one of the leading companies in this space for enterprises,” Nugent says. “Social technologies will be at the core of how companies work.”

But Mzinga faces competition in a crowded field that includes Jive Software, KickApps, Lithium Technologies, Ning, Offerpop, oneforty, and many other players. The company says its differentiators include being able to provide social business software at a large scale, and on all types of mobile devices and future platforms. “Design for change, don’t change the design,” Nugent says.

He declined to discuss revenues or growth stats, but his company has some 300 corporate customers, including large media broadcasting networks, retailers, and automotive companies. “We’re at an inflection point, right where we have all of the right pieces in place,” Nugent says. The biggest challenge now, he adds, is “prioritizing and focusing on things that will yield us the most benefit in the short term and long term.”

“It’s about focus and balance,” he says.

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It was no secret that stealthy Web startup Krush had raised some money—but now we know how much. The Cambridge, MA-based company, led by co-founder and CEO Gina Ashe, has closed $2 million in Series A equity financing, according to a regulatory filing. News of Krush’s financing round (but not the amount) was first reported by Mass High Tech earlier this month.

The investors weren’t disclosed, but the SEC form lists Nashville, TN-based investor Eric Satz as a director of the company alongside the co-founders, and says there are a total of 16 investors. Ashe has said that Boston angel investors and outside institutional investors participated in the round. She pitched the company at the Open Angel Forum in Cambridge in October—and apparently that’s all she needed to start the ball rolling and get some Boston-area buy-in.

I argued last week that sometimes it doesn’t matter how much money you raise, or even what you’re building, so long as you’re alive. That’s because Ashe survived a horrific car accident back in August that killed one person and injured four. She is lucky to be alive. After surgery and months of rehab, she has been walking without crutches for a couple of weeks, and stands as an inspiration to many entrepreneurs in the community.

Now $2 million in financing is a good start, but early next year we’ll see what Krush is really about. From what I understand, it is an online platform that mixes elements of social shopping, recommendations, crowdsourcing, and gaming. The broad idea seems to be that young people who’ve grown up on the Web can change the way products are designed, manufactured, shared, and sold—all through their own social influence.

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As an entrepreneur, sometimes it doesn’t matter how much money you raised, from whom, or even what your company is building. Sometimes it just matters that you’re alive.

Meet Gina Ashe, the co-founder and CEO of stealthy Internet startup Krush, based in Cambridge, MA. She isn’t talking much about her new business yet, but a report in Mass High Tech said the company recently raised a Series A round from Boston-area angel investors and outside institutions, and it put the firm’s pre-funding valuation at more than $6 million. Previously, Ashe was part of the founding team at Sermo, the online physician community, and she has senior executive experience in marketing and finance at a number of firms.

But the most important thing about Ashe is that she is a survivor. On the afternoon of August 19, 2010, she had just left an investor meeting and was driving home on Route 2 west of Boston, when an oncoming car crossed the median and smashed into her head-on at 85 mph. The driver of that car, Shannon Gwiazda, died in the crash. Four other people including Ashe were injured in the four-car pileup, which closed the highway for several hours.

Ashe survived—in part because she was driving a Cadillac CTS 4, a car that people had teased her about (who drives a Cadillac?); the mid-size luxury sedan had a huge engine up front and extensive airbags. “It truly saved my life,” she says.

But she sustained serious injuries, including a smashed heel and ankle, four broken ribs, and cuts and burns over much of her body. She spent weeks in the hospital and was told she wouldn’t walk again. But with help from Daniel Palestrant, Sermo’s CEO, she found a surgeon at Brigham & Women’s Hospital who performed a new procedure that she says accelerated her recovery by six months. The surgery involved putting a plate and seven screws in her leg.

Ashe was bedridden for weeks, but progressed to using a wheelchair and then crutches—on which she delivered her financing pitch at the Open Angel Forum in Cambridge in October (which won her some Boston-area investors). Meanwhile, her Krush co-founders, Alexis Kopikis and Alan Osman from Propel Consulting, stood by her and kept the project moving. The site was two weeks away from launching beta trials when the accident happened. “There were days I thought I couldn’t go on, but they said, ‘No you have to think about this [or that],’” she says.

The local business community also provided a lot of support. “Women CEOs rallied … Next Page »

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The Connect Innovation Report that was released last week shows that San Diego’s innovation economy is a mix of contrary signals. We also saw a number of tech sector deals, and we’ve got it all wrapped up for you here.

—San Diego’s Entropic Communications (NASDAQ: ENTR, which makes semiconductors for home entertainment networks, raised $99.1 million after fees and other costs in a public offering of 10.75 million shares last week. The company filed for the offering on Tuesday, and priced its shares at $9.70 each on Thursday. Underwriters have the option of buying an additional 1.6 million shares. Entropic recently raised its revenue outlook for the third quarter of 2010, as major cable and satellite TV providers expand their rollout of multi-room DVR set-tops that use the company’s chips.

—The VizLab, officially known as the Immersive Visualization Center at San Diego State University, is working to make it easier to incorporate “crowdsourcing” in the Web-based, geographic information system-referenced maps it creates about natural disasters. Eric Frost, an associate professor of geological sciences who co-directs the VizLab, tells me a smartphone app available at the CrisisCommons wiki network enables ordinary folks to send pictures that include the date, time, location, and text information.

—The Connect Innovation Report shows that 64 technology startups were founded in San Diego during the second quarter of 2010, almost a 37 percent decline from the 101 startups formed during the second quarter of 2009. Mergers and Acquisitions were up from the previous quarter, and federal patent filings were up 22 percent over the previous quarter, the most issued in more than two years. But venture capital funding dropped, with the total VC investment of $171 million representing a 33 percent drop from the $257 million that flowed into San Diego during the second quarter of 2009. VC funding was down nearly 70 percent from 2007 pre-recession levels.

—San Diego-based Avalon Ventures has raised $161 million for its ninth venture fund, exceeding its minimum fund-raising goal of $150 million. Avalon is one of the few local VC firms that’s still actively investing in new startups.

—Verve Wireless, which just moved into a new headquarters in Encinitas, CA, has raised $7 million in venture funding led by BlueRun Ventures of Menlo Park, CA. Verve’s technology lets newspapers and other media companies publish their content and serve ads across a variety of mobile devices.

—Leading medical and wireless industry technologists are gathering in San Diego this week for the first annual Wireless Health 2010 conference, which begins Tuesday at the Hilton La Jolla Torrey Pines. Scheduled speakers include Qualcomm founder Irwin Jacobs, Dean Kamen of DEKA Research, Dr. Chris Toumazou of Imperial College London, Dr. Patrick Soon-Shiong of Abraxis Health, and Col. Ron Poropatich of the U.S. Army’s Telemedicine and Technology Research Group.

—Thailand’s Cal-Comp Electronics said it is acquiring Spectragraphics, a San Diego holding company that operates Total Electronics and SMS Technologies, which are both electronics manufacturing service companies. Terms of the deal were not disclosed.

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Octobers have been cruel to San Diego.

The infamous Cedar Fire started on a Saturday evening, Oct. 25, 2003, and raced more than 30 miles from the Cleveland National Forest into the San Diego suburbs by the next morning. The firestorm destroyed 2,232 homes and killed 15 people before it was contained nine days later. Then there was the Witch fire of 2007, part of a cluster of wildfires that erupted on October 21, killed seven, and destroyed 1,500 homes and forced the evacuation of 500,000 residents throughout San Diego County. That was a bigger evacuation than in New Orleans in 2005, when Hurricane Katrina attained its dubious distinction as the costliest natural disaster in U.S. history.

Still, we’re getting better at dealing with firestorms in San Diego—and natural disasters in general—as innovations in sensor technologies, wireless networks, and predictive analytics have helped provide more accurate forecasts and better warnings. And much of the technology is being developed in San Diego.

Earlier this month, for example, San Diego Gas & Electric officials held a press briefing to explain that the utility had spent $1.1 million over the past year to add 93 anemometers (for measuring wind speed) to an existing network of 16 radio-automated weather stations throughout San Diego County. As a result, San Diego County now has the densest network of weather instrumentation in the country, according to Brian D’Agostino, a full-time weather forecaster hired by SDG&E last year.

The increased instrumentation gives SDG&E’s operations center more detailed information about wind conditions in specific locales. Utility regulators allow SDG&E to shut off power to specific transmission lines when local wind speeds exceed 56 mph, according to Dave Geier, SDG&E’s vice president of electric transmission and distribution. Wind speeds above 56 mph increase the odds that blowing debris or swaying trees will bring down a power line, according to utility officials.

A more sophisticated wireless sensor network, such as the High Performance Wireless Research and Education Network developed by researchers at UC San Diego, serves as a model of the type of network that could provide even more data, including imagery, that could help in the prediction of and response to disasters, according to Hans-Werner Braun of the San Diego Supercomputer Center. With funding from the National Science Foundation, Braun says the network demonstrates how a remote sensing systems can be effectively networked throughout remote areas of San Diego, Riverside, and Imperial Counties. Braun, who is overseeing the project, has described it as a wireless backbone that uses Internet routers on mountaintops, interconnected via wireless links.

Braun, who was the chief network architect for the satellite network conceived by Bellevue, WA-based Teledesic in the 1990s, uses the system for … Next Page »

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UTest, which helps big companies crowdsource their software quality assurance (QA) testing to a community of 30,000 freelance testers, said today that it has raised $13 million in Series C financing. It’s one of the largest venture funding rounds ever collected by a crowdsourcing company, and from the size of the round, “you should take it as a validation that their business model is working,” say Sharon Wienbar, managing director at San Mateo, CA-based Scale Venture Partners, which led the round. “These guys have more business than they can handle, and it’s all about scaling now.”

The Southborough, MA-based company, which recently opened a Silicon Valley office, has built a software-as-a-service platform where companies submit their code and say what kind of testing they need, then wait for bug reports from uTest’s global community of testers. Wienbar and uTest CEO Doron Reuveni say demand for the service is exploding, in light of the growing number of companies that have software to test.

“The whole ‘appification’ of software platforms, whether it’s for social platforms like Facebook or mobile platforms like the iPhone or Android or Palm, or even just Web apps, creates a dramatically more complex user-testing matrix for software publishers, which could mean media companies, retailers, enterprise software companies,” says Wienbar. “Anybody who has to interact with consumers needs a service to help with that testing. You can’t cover that whole matrix with your in-house test team.”

UTest’s customers include big names like Google, Microsoft, Intuit, Myspace, and Thomson Reuters, and Reuveni says the startup’s revenues have grown by a factor of 40 over the past two years. But that could be just the beginning—outsourced software testing, after all, is a $10 billion market in the United States alone.

“We want to go faster, we want to go broader, we want to capture more market share, and we want to substantially increase our presence on the West Coast,” Reuveni says. “What we are trying to do is become the hub of all software quality testing worldwide. That is how big we want to take it—into all verticals and all horizontals.

Which takes cash. Reuveni says uTest—which previously raised $2.2 million in a March 2008 Series A round and $5 million in a Series B round just six months later—went to see five different Silicon Valley venture firms about the latest round. “The guys I liked the most were Scale, and we had a term sheet relatively quickly,” he says. Both of the company’s … Next Page »

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Thanks to sites like YouTube and online fitness publications, it seems like tutorials on virtually any form of exercise—from yoga to barefoot running—are at your fingertips. But personally, I’ve found that it’s difficult to manage the slew of content on the often-exotic exercise styles, and make sense of it with my everyday fitness routines.

Boston-based FitVirtual is trying to fix this with an online platform that allows you to manage and design customized fitness plans, and stay motivated by your social network. It’s first taking this approach to small- and medium-sized businesses, to power customized employer wellness programs, a service it is rolling out this September.

That’s the “bread and butter” of the business as far as revenue goes, says founder and CEO Nabil Aidoud. But don’t fret if your company doesn’t adopt the Fit Virtual technology. You can log into a free version of the site, at FiVi.com. There’s also an iPhone and Facebook app for the site, with an Android version on its way.

The online portal enables you to manually enter your workouts on a personalized calendar, as well as attach videos showing proper exercise form to a personalized workout calendar. It also offers built-in calculators that can track how much you burned in a particular workout, based on your weight and gender. Users can change their workout logs each week through drag and drop functions, as well as view the activity of other users in their network via news feeds.

“We’re tapping into the power of social media to allow wellness program administrators to develop highly customized wellness plans for their targeted population,” he says.

Aidoud, who previously worked as an IBM consultant, says he got the inspiration for his startup, which launched in 2009 and has been bootstrap funded to date, after staring at a company fitness poster while pulling overtime hours on a Saturday. He says while traveling heavily as a consultant, his health lagged due to lack of sleep and poor eating on the road.

“I thought so many people must be just as miserable as me,” he says. So he decided to develop a platform where consumers could engage with fitness plans regardless of their location or expertise level.

At the corporate wellness level, FitVirtual is interested in … Next Page »

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