[Updated Aug 27, 11pm PT, with clarification about the list marketing and lead-gen process (see below)]

A stealthy Seattle startup in online marketing is starting to generate some buzz around town. Marketfish, which recently moved into new offices in Pioneer Square, has raised an undisclosed sum from private investors, led by Seattle-based Alliance of Angels and including Bellevue, WA-based Atlas Accelerator. Now it is aggressively putting the money to work, scoring a lot of new customers and hiring staff as it gears up for a beta launch of its Web service early next month.

Marketfish is led by founder and CEO Dave Scott, who was previously chief marketing officer at Seattle-based Entellium, the company that imploded last year in an accounting scandal (which was blamed on executives who were above Scott’s pay grade). Before that, Scott was head of marketing at Intermec and PeopleSoft. In his first media interview about Marketfish, he declined to say how much funding the startup has received, but said, “We think we’ve raised enough to get to break-even.”

Scott founded the company in July of last year. He initially tried to raise money in October, but was unsuccessful. “I liquidated my 401(k), sold my car, and buckled down for six to nine months,” he says.

Here’s the problem Marketfish is solving. Say you’re a big company like Dell, and you want to market yourself to small business owners. Today, as the head of marketing, you’d go out and rent a list of potential customers from Forbes, Fortune, or Inc., say, and get a list broker to represent you. They call all the list managers, at firms like Worldata or InfoUSA, and negotiate a deal. It’s all part of list marketing—using a third-party permission-based list to launch lead-generation campaigns. “The process today is extremely painful,” Scott says. “It’s really hard to measure, and it’s all manual.” He adds that the whole process can take something like 24 days, and is done over the phone. [See Scott's clarification of the process in comments section below---Eds.]

Marketfish is trying to automate all that by creating a Web platform, similar to Google AdWords, that could potentially cut the time down from 24 days to 30 minutes—and make it much easier to measure the performance of an ad campaign. It does this by providing a patent-pending Web interface where marketing agencies can work directly with list owners. “We’re trying to create a marketplace,” Scott says. “We want to create trust between the two.”

Using the Marketfish site, a marketer can directly find the lists he or she wants online, add them to a shopping cart, and be done with it. Marketfish takes a percentage cut of the revenue from each transaction (which Scott didn’t disclose). Scott says the company already has 30 customers—with 20 more on the waiting list—including 19 of the top 20 marketing agencies in the Seattle area.

Previous companies like NextMark and min (Marketing Information Network) tried various approaches in the pre-Google days, Scott says, but they largely failed to solve the list marketing problem. “They wanted to play nice with all the middlemen. We’re going to cut them out,” he says. “It’s a bold strategy.”

The company has some heavy hitters on its board of advisors, including Clark Kokich, chairman of Seattle-based Razorfish (recently sold to Publicis), startup advisor Janis Machala of UW TechTransfer, and Mike Crill of Atlas Accelerator. Scott says Marketfish is looking to form a partnership with a big company like Google, Microsoft, or Yahoo—none of which has developed a platform to solve this particular online marketing problem (at least not yet).

Scott says Marketfish currently has seven employees, and is looking to hire five more in the next six months or so—everyone from Java software developers to experts in direct marketing and lead-generation marketing. Even while planning to ramp up spending, he notes, “We’re on our path to break-even.”

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Xconomy has learned that three venture partners from Bellevue, WA-based Ignition Partners have formed a separate management company called Ignition Capital, and are working from new offices in downtown Seattle on private equity and late-stage investments. Jon Anderson, Rich Tong, and John Zagula are managing directors of Ignition Capital, whose fund is “focused on profitable mid to late stage companies,” according to the new firm’s website.

The move appears to be part of a reorganization at Ignition, according to a source familiar with the situation. The nine-year-old company, which collectively has more than $2 billion under management, has split into Ignition Venture Partners (Bellevue), Ignition Capital (Seattle), and Qiming Venture Partners (Shanghai). Qiming was formed in 2006 and focuses on companies in China. Ignition Capital’s fund itself is not new either: Ignition Partners announced the formation of a $275 million “growth capital” fund in October 2007. But the separate downtown office and management firm is a more recent development. Xconomy has not yet been able to speak with Ignition about its overall strategy, but multiple e-mail messages have been sent to partners at Ignition Capital and Ignition Venture.

In recent months, Ignition Partners has been rocked by developments at a couple of its portfolio companies— most notably Seattle-based Entellium’s fraud court case and bankruptcy, and the closing of Bellevue-based Sotto Wireless. But in the past month, the venture firm has also announced investments in software startups Skytap (Seattle), Enclarity (Aliso Viejo, CA), and Zenprise (Fremont, CA).

Anderson, Tong, and Zagula are former senior Microsoft employees and Ignition co-founders who have been with the firm since its inception. They are best known for making early-stage investments, but now seem to be focusing on growth-stage tech deals as well as non-tech buyouts. They are joined at Ignition Capital by managing director Robert Headley, a former Starbucks vice president who is also an Ignition Venture partner and acting managing director of Qiming Venture Partners. The Ignition Capital website lists six other employees in Seattle, including operating partners Shawn Bohnert, Rennie Coit, and Ty Graham, bringing its total headcount to at least 10.

The site also lists seven portfolio companies: SeaMobile (wireless for ships, based in Miramar, FL); wireless and satellite communications firms MTN (South Africa), WMS (Florida), and Geolink (Australia); clinic developer Liberty Dialysis (Mercer Island, WA); and Chinese firms Oriental Cambridge Education Group (Beijing) and eHi Car Rental (Shanghai). Ignition Partners originally invested in SeaMobile in 2005 and Liberty Dialysis in 2007, while the two Chinese companies are also in Qiming’s portfolio.

In terms of its investment philosophy, Ignition Capital’s website says, “These are very challenging times for any investor and any business, where sources of capital are limited, growth is uncertain and where the ruling dynamics of many industries are undergoing massive change. At Ignition Capital we believe that with an unwavering focus on business fundamentals, the few companies forged and tempered under these most demanding circumstances can take advantage of these shifts and earn both exceptional ongoing returns and the dominant positions in their markets.”

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Seattle-based Entellium’s former CFO, Parrish Jones, pled guilty to one count of wire fraud in U.S. District Court today, as reported by the Seattle Times and TechFlash. Jones faces 33 to 41 months in prison for his alleged role in falsifying company revenues. Last week, Entellium’s former CEO Paul Johnston also pled guilty to fraud, and could face four to five years in prison. Both men will be sentenced on March 13.

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Seattle-based Entellium said it has filed for bankruptcy protection today, as it prepares to sell off its assets. In October, the software company’s top two executives, Paul Johnston and Parrish Jones, resigned and were charged with fraud. The filing says Entellium has $37.7 million in assets and $12.7 million in liabilities. Its creditors are listed as Ignition Partners, WestRiver Capital, Malaysia Venture Capital Management, Middlefield Ventures, Sigma Partners, and Silicon Valley Bank. Financial software firm Intuit, based in California, has made an offer to buy Entellium’s assets.

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Despite the Thanksgiving holiday, it was a fairly busy week for deals in the Northwest. Some big companies reared their heads (or at least were reported to) in software, wireless, and biotech, and other deals are in the works, so stay tuned.

—The Times of London reported that Microsoft (NASDAQ: MSFT) is looking to acquire Yahoo’s (NASDAQ: YHOO) search business for $20 billion. The veracity of the report has been seriously disputed, but it raises some interesting questions about the near-term future of the two companies.

—Kirkland, WA-based Clearwire (NASDAQ: CLWRD) closed its deal with Overland Park, KS-based Sprint Nextel (NASDAQ: S) to merge the two companies’ next-generation wireless Internet access businesses, as Wade Roush reported. With $3.2 billion in venture investment from Comcast, Intel, Time Warner Cable, Google, and Bright House Networks, the new company (which retains the name Clearwire) will upgrade its wireless data services to WiMax-based systems in 46 markets.

—Entellium, the troubled Seattle startup whose top two executives were arrested in October for fraud, is reportedly being bought by Intuit, a financial software firm based in Mountain View, CA, for about $8 million, according to TechFlash. The deal has not yet been finalized.

—Seattle-based DotNetNuke closed a Series A financing round from Silicon Valley venture firms August Capital and Sierra Ventures. Financial terms were not announced. DotNetNuke makes software for creating and managing interactive Web and intranet sites using a Microsoft platform.

—Cell Therapeutics (NASDAQ: CTIC) of Seattle teamed up with Spectrum Pharmaceuticals (NASDAQ: SPPI) of Irvine, CA, to create a joint venture, called RIT Oncology, to commercialize and develop the cancer drug Zevalin. The drug for non-Hodgkin’s lymphoma, which Xconomy has covered extensively, will be marketed in the U.S.

—Values of n, a collaborative-software startup in Portland, OR, was acquired by San Francisco-based Twitter for an undisclosed sum. The founder of Values of n, Rael Dornfest, has been hired by Twitter, the micro-messaging company, which also gets the startup’s assets and intellectual property, including software for personal online assistance and smart sticky notes.

—Not exactly a deal, but a story of several deals: Xconomy got the rundown on the finer points of bootstrapping a tech business versus raising venture or angel financing, from the co-founders of the Seattle-based startups CultureMob, Tableau Software, and Robot Co-op (creators of 43 Things and other social websites).

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Intuit, a financial software firm based in Mountain View, CA, has made an offer to buy the assets of Seattle startup Entellium, according to TechFlash. The report cites an interview with Entellium spokesperson Diane Carlini, as well as an anonymous source who puts the purchase price at about $8 million. Entellium, which was backed by Ignition Partners, Intel Capital, and other venture firms, has been rocked in the past two months by the arrests of two of its top executives on wire fraud charges.

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Entellium’s former CEO, Paul Thomas Johnston, and former CFO Parrish L. Jones, have been arrested and charged with wire fraud, according to this story in the Associated Press. The fraud was uncovered late last month when an employee found evidence that Entellium, a Seattle software company, inflated its revenues to attract investors, according to the U.S. Attorney’s Office. Both Johnson and Jones were scheduled to make appearances in U.S. District Court this afternoon, the AP said. Venture capital reporter John Cook notes on a blog that Seattle-based Ignition Partners, Sigma Partners (which has offices in Boston and California), and others invested $50 million in the company.

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