First of all, please don’t call CustomMade a “mass customization” startup. That phrase refers to the cluster of companies, many of them in the Boston area, that specialize in offering consumers personalized goods online—everything from clothing to jewelry to artwork.

No, CustomMade is different. At least that’s what co-founder and CEO Mike Salguero would have you believe. The Cambridge, MA-based startup runs a website that connects consumers with expert makers of furniture, ceramics, home décor, glassworks, and more. That’s different from sites that let consumers configure products or browse through umpteen permutations of features before ordering them.

“Where we play is the service, not the product,” says Salguero. “There’s no configurator. This is custom on a whole different level.” (As an aside, “The Configurator” sounds like either a great nickname or the next Jason Statham movie.)

Salguero and fellow co-founder Seth Rosen were building their careers in real estate development when they bought CustomMade.com for $140,000 in early 2009. The site had already existed for years as a custom woodworking site and was getting modest traffic, about 500,000 unique visitors a year. Salguero and Rosen raised about $2 million from friends and individual investors, rebuilt the user interface, and have grown the site’s traffic to more than 3 million uniques a year. The company currently uses a subscription model; its 2,500 makers and craftspeople pay an annual or monthly fee, says Salguero.

The company has just raised an additional $2 million from unnamed investors. The new money is being used to continue its growth, Salguero says. But the startup isn’t saying anything more specific about that yet.

Nevertheless, here are a few more reasons why CustomMade is interesting (and about to get more interesting):

—The company is moving to a transaction-based model (it will still make money on subscriptions as well) in which it will take a cut of each purchase made through the site. And just for reference: Etsy, a prominent online marketplace for handmade goods, has an average transaction value of about $25, Salguero says. CustomMade’s average is $2,000.

—As part of the shift, the company will roll out a new interface for consumers and craftspeople to interact. More on that coming down the pike.

—CustomMade has been hiring, and is now up to 22 employees. The firm recently recruited Michele Pearl, a well-known exec from BzzAgent and Monster.com, as its chief product officer.

—Locally-made and handcrafted goods are a multibillion-dollar market that can conceivably compete on price and selection with medium-to-high-end retailers. The question, of course, is how much of that market can be captured if the process is made simple and efficient.

—Perhaps more than mass customization, CustomMade fits into the trend of online communities that connect experts with paying customers who want specific jobs done, through a social interface. See GrabCAD, Kickstarter, IndieGoGo, and Quirky, for instance.

Stay tuned for more on this company…

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Seattle-based travel startup Off & Away has raised a $2 million financing round, led by Madrona Venture Group, according to a report by TechCrunch. The company, which rolled out in May, offers high-end hotel rooms at cheap prices via an online auction bid-based service. Off & Away is headed up by chief executive Doug Aley, a former entrepreneur in resident at Madrona. The firm also led the company’s initital $1.35 million funding round earlier this year. According to the report, Off & Away will use the new financing to expand its team, ink new hotel partnerships, and further develop its products and marketing initiatives.

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The last few weeks have been slow on deals for Seattle-area technology companies, but that doesn’t mean there haven’t been some interesting ones to watch. Take a look at the highlights:

—Just a few days after we ran a story about the business’s strategy moving forward, Bellevue, WA-based mobile software company Motricity (NASDAQ: [[ticker: MOTR]]) inked a new deal with one of India’s largest mobile operators, Reliance Communications. The news caused Motricity’s stock to rise by 34 percent in a single day.

—Bothell, WA-based water purification company Halosource raised $80 million through a public offering on the London Stock Exchange. The company started trading today. Halosource is taking about $50 million in net proceeds from the deal, which gives the company a market valuation of about $158 million, according to Reuters.

—Seattle-based e-commerce company Avelle (formerly known as Bag Borrow or Steal), raised $1 million in debt financing. The company, founded in 2004 and humorously dubbed the “Netflix for handbags,” offers a rent service for high-end bags and jewelry from over 3,000 designer labels for a small monthly fee. The company is now competing with another online marketplace, Bonanza (formerly known as Bonanzle), which launched its new BagsBonanza site on the same day.

—This isn’t so much a deal as a lack of one—Bellevue, WA-based online background check and information commerce company Intelius withdrew its IPO last week. The company filed for a $143 million initial public offering in January 2008. In the withdrawl statement, the company said it did not appear that the public offering would be made in the foreseeable future.

—Although this isn’t a deal yet, this could amount to a few. Last week, we did a roundup of the 31 Northwest ideas participating in General Electric’s (NYSE: GE) $200 million open innovation competition, the GE Ecomagination Challenge. Competing against 3,809 ideas from around the world to help create a smarter, cleaner, more efficient, and more economically viable grid, these cleantech concepts are up for up to five $100,000 awards, and the opportunity to work with GE’s Global Research Center.

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Seattle-based Avelle (formerly known as Bag Borrow or Steal), has raised $1 million in debt financing, according to a regulatory filing. Founded in April 2004, Avelle, known as the “Netflix for handbags,” offers members the ability to rent high-end bags and jewelry from over 3,000 designer labels for a small monthly fee. This deal comes on the same day as Seattle-based online marketplace Bonanaza (formerly Bonanzle) rolled out its first specialty store, BagsBonanza, which will features more than 20,000 handbags and custom fashion items for sale.

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There is no arguing that the Internet has made the world smaller. Because of the Internet we can now share information instantly—and virally—from Seattle to Cairo to Bangladesh. One somewhat counterintuitive byproduct of this global information age, at least for me, is the increasing number of hyperlocal services popping up as a result. Internet culture has taken a turn in recent years toward helping the consumer reconnect to the community immediately around them, from neighborhood news sites, to location-based social networking, to the latest locally focused trend—group buying sites.

If you haven’t played around on one of these sites yet, here’s a quick rundown on how they work. One of the most popular deal-a-day sites in terms of traffic is Chicago, IL-based Groupon. This early leader in the deal-a-day scene generated 4.6 million unique visitors a month, as of May, according to web analytics company Compete.com. Founded in November 2008, Groupon has quickly grown into a mega-business by offering a limited number of daily deals to local restaurants, shops, events, entertainment, and services at heavily discounted rates in more than 90 cities in the U.S., Canada, and Europe.

Following in the footsteps of sites like Groupon and its two biggest competitors, Washington D.C.-based LivingSocial, and Boston-based BuyWithMe, smaller deal-a-day companies have popped up all over, competing for who will offer the best daily bargains in any given city. And not surprisingly, the industry has gained a lot of traction as the competition grows fierce. To give you an idea of how fast the market is growing, Living Social rolled out 25 new local sites on Tuesday alone, bringing its total up to 52 markets across three countries. BuyWithMe raised $16 million in Series B venture financing last week. And Seattle-based online superstore Amazon decided to jump into the game, acquiring Carrollton, TX-based deal-a-day site Woot last month.

Here in the Northwest a number of local sites have made an attempt to carve out a piece of the local market for themselves, including Redmond, WA-based Yubit, and the 4-month-old, Tippr. Even Seattle-based business and people search WhitePagesDealPop, which went live yesterday. And I have to say, it’s been hard to figure out who’s who in this new group buying realm, and which daily deal site, if any, is the best on the market—for both consumers and businesses. has jumped in with its own local deal site,

To shine some light on this new trend, and how it’s shaping the local marketplace, I turned to founder of Seattle-based Nology Media Leigh Fatzinger, who also shared his insight into the recent rise in location-based social media platforms, specifically for the mobile industry, earlier this week. Although Leigh acknowledges the obvious appeal of daily deal sites, he says the new group buying fad hasn’t quite found its groove yet. The problem for merchants who work with daily deals sites like Groupon, he says, is that the coupons are sent out to mass e-mail lists, rather than being targeted directly to individual consumers. Plus, there is “the expectation that it’s going to be cheaper every time you go.” If you score a great deal on a group buying site—say a $400 dinner for only $200—will you really go back to that restaurant again and shell out the full price that the merchant needs to make a profit?

“Brands have got to be cautious when using tools specifically like daily coupons like Groupon, because what brands really want is people to be using their brands all the time. They want people to become regulars,” Fatzinger says. “Coupon sites are very good for the consumer, but I just don’t know if they build brand loyalty.”

Martin Tobias, founder and chairman of Tippr.com.

Tippr founder and chairman Martin Tobias disagrees. The Seattle entrepreneur and investor started up the social discount voucher site back in February out of his online community site Kashless. Within three months, Tobias says Tippr—which has expanded beyond Seattle to branded sites in 10 cities nationwide as well as another 10 offering different Tippr-powered deals through publishing partner brands—had already surpassed BuyWithMe in terms of traffic in the local market, putting it at No. 3 behind Groupon and Living Social.

“We’re the fastest-growing competitor of the big three of all the other competitors,” Tobias says. “That number quadrupled and we … Next Page »

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The motto of Bonanzle is “everything but the ordinary.” That about sums up the latest news from this Seattle-area startup, which has built a fast-growing online marketplace for niche items and collectibles. I learned through the grapevine that Bonanzle founder Bill Harding has closed a $1 million funding round led by angel investor and venture capitalist Geoff Entress, with participation from a long list of well-known angels around town—plus three prominent venture firms.

It’s a small deal, a classic angel investment, but it’s particularly interesting for this reason: Seattle-area venture firms Voyager Capital (led by Entress) and Ignition Partners (Michelle Goldberg), plus Bay Area firm Matrix Partners (Josh Hannah), have all invested in the deal. All together, the venture firms put in less than half of the total funding amount—but presumably they will be watching to see if this is something they want to put more money behind.

“I have not seen it before. It’s something unusual,” says Entress, who has joined Bonanzle’s board. “Probably an example of the experimentation” that VCs are doing around “how do you play at this earliest stage, especially when a lot of these companies don’t take much money.” (Venture firms usually need to put in a few million dollars to make it worth their time.)

And here’s a partial who’s-who list of angels participating in the deal: Dan Shapiro, formerly of Ontela and Photobucket, Andy Liu from BuddyTV, Kelly Smith from Inkd and Curious Office, Kevin Saliba from Imagekind and CafePress, Ben Elowitz from Blue Nile and Wetpaint, and Chris DeVore of Founder’s Co-op. Let’s just say that’s a lot of investor firepower for a $1 million deal; the closest thing we’ve seen might be when all the tech investors in town agreed to back TechStars, which opens in Seattle this fall.

I first wrote about Bonanzle on April Fools’ Day, 2009. But this company is no joke. Founded in 2007, it started out as a Craigslist-like service for local sellers, but shifted to become a national, social online marketplace. Bonanzle rolled out its public site in September 2008 to connect buyers and sellers of collectible items like comic books, posters, and jewelry. Its key advantages over others in the sector are its social features—buyers and sellers can send messages to each other in real-time—and the fact that it focuses on rare, used, and hard-to-find items. The company has been profitable since February 2009, and its sales have quadrupled in the past year. Its site now has more than 3 million items for sale, a quarter-million registered users, and almost 2 million unique monthly visitors. All without taking any outside investment.

So why take the money now? A year ago, Harding told me the company was “waiting for [an investor] to make an offer that shows us they understand the vision of Bonanzle and will work with us to make a plan.” Well, it sounds like he has found the right group of investors and expertise. For example, Matrix Partners has deep experience with companies like eBay and PayPal. And the track record of the Seattle-area investors speaks for itself.

Harding says the new money will allow him to hire two more developers, a designer, and a product manager, to add to the current team of three full-timers and a handful of contractors. “It’ll still be a small company,” he says. The key is to “provide users with a really strong … Next Page »

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When it came to raking in venture dollars, things slowed down in Massachusetts in the month of February. Maybe it was the shorter calendar month, the typically frigid and dreary weather, or the fact New Englanders are just antsy for spring. In February Bay State startups pulled in $203 million across 26 financings in the $1 million-plus range, down from the sizeable $355.2 million raised in 28 deals in the first month of 2010.

New England’s under-$1 million deals—which like the larger deals we track with the help of data from our partner, CB Insights, a New York-based private company intelligence platform—chugged along at about the same pace in February as in January. In February, the region saw nine of these “under-the-radar” financings, each worth from $125,0000 to $850,000, with funding based in equity, debt, and other types of securities. January saw 10 sub-$1 million deals (though to confuse matters we included a couple of additional, $1 million financings on the month’s list).

February’s list shows that equity-based funding is still outweighing debt deals in the under-the-radar transactions. Five of the financings were based in equity, three were debt-related, and one involved a security to be acquired through the exercise of options and warrants. Investors went after a diverse array of companies, too. The February under-the-radar pack included startups working on hybrid technology, medical devices, health IT, industrial products, the semantic Web, audio transcription software, and e-commerce.

Companies based in Massachusetts took in all but one of the deals on the list; the exception being the $150,000 in equity-based funding that went to Norwalk, CT’s HealthPrize Technologies, another company crafting technology for reminding patients to take their meds. (Ryan wrote about this trend … Next Page »

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It was a lighter deals week for us, but we still saw headlines of funding rounds, partnerships, and stock offerings for companies in Internet, software, and life sciences.

—Boston-based Swaptree, an online marketplace for trading books, CDs, DVDs, and video games, grabbed $4.8 million of a planned $6 million offering based in equity, options, and warrants. The company didn’t reveal the investors in the financing.

—Novell (NASDAQ:NOVL), a network software maker, rejected a $2 billion buyout offer from private equity firm Elliott Associates. The Waltham, MA-based company’s board said the $5.75-per-share bid undervalued Novell’s growth prospects, and said that it would pursue other possible strategies for enhancing shareholder value, such as cash dividends or stock repurchases.

—Alnylam Pharmaceuticals (NASDAQ:ALNY), the Cambridge, MA-based drugmaker, received a $20 million payment from Takeda Pharmaceuticals, as part of a partnership deal established between the two companies in 2008 that could ultimately be worth more than $1 billion. This week’s payment was related to Alnylam sharing its RNA interference material and information, but the company stands to pull in more milestone payments and royalties if Japan-based Takeda uses the technology to create RNAi products.

—Another developer of RNA interference-based treatments, RXi Pharmaceuticals (NASDAQ: RXII) of Worcester, MA, announced it had raised $16.2 million through a stock offering. Investors agreed to pay $6 per share for 2.7 million shares, a 26 percent discount over the stock’s $8.11 closing share price on Monday. They’ll also purchase warrants for another 540,000 shares.

—SmartCells, a developer of a once-a-day, self-regulating, injectable treatment for diabetes, has pulled in $1.75 million in an equity-based offering, a regulatory filing revealed. The Beverly, MA-based company did not indicate what round of financing the planned $4 million round represents.

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Bruce D’Ambrosio wants to change the way content and services are distributed on the Web—and how people make money from them. His new startup, Seattle-based DigitalScirocco, is emerging from pseudo-stealth mode today at the semi-annual DEMO conference in Palm Desert, CA. The company’s service has been live for a couple of months, but has been kept pretty quiet.

It’s a big vision, and here’s how it works. Right now, if you’re a publisher or website owner and you want to post outside content on your site—an article, photo, or song, say—you have to go to a source like Getty Images, or a media organization, and either buy the content manually, arrange to pay them through a business development process, or agree on some other deal. DigitalScirocco has set up an automated marketplace for connecting these website owners with content owners. Through an online auction process, websites can pay for the kinds of content they want—and discover the kinds of prices they want—while DigitalScirocco gets a piece of each sale.

A dress designer, for example, might want to automatically post some relevant articles from Vogue on its site to make it stickier and help drive traffic. The idea is that DigitalScirocco would help the designer get a good price on fresh content, and also would help Vogue make more money from its articles—all by connecting Web publishers with content owners in a new way.

“The issue right now is, those connections are broken, in part because everyone has lost their way in the illusions that [website] locations are content and monetization is about advertising,” says D’Ambrosio, the company’s founder and CEO.

He stresses that DigitalScirocco is not directly interested in the advertising part of the equation. It’s not an ad network. Rather, the company is trying to help enhance websites so they can give consumers a better experience, while helping content producers—media organizations, entertainment sites, finance sites—make more money. From a consumer’s point of view, it’s an alternative to … Next Page »

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I caught up yesterday with noted entrepreneur and investor Martin Tobias, after his latest startup, Seattle-based Kashless, announced a partnership with RecycleBank to reward people for recycling items at Kashless.org. The basic idea is a rewards program—redeemable for merchandise at hundreds of retailers—for people who give away things like old clothes, food, bikes, electronics, or other equipment online.

Since I last reported on Kashless last winter, the “recommerce” firm has rolled out its free online marketplace and community website in 122 cities around the U.S. The partnership with RecycleBank, a New York-based firm and fellow RRE Ventures portfolio company, should help Kashless acquire new members. Kashless currently has tens of thousands of members, while RecycleBank has hundreds of thousands. “They’ll promote their members to join Kashless,” Tobias says. “They’re rewarding people for separating their trash, and we’re rewarding people for extending the life of products they’re no longer using.”

Tobias says the deal puts his company “over the top” and should help convince more people to give away their stuff on Kashless.org instead of Craigslist, Freecycle, or Goodwill stores. “We’ve been working hard to make Kashless.org the best place for people to find and give away free things,” he says. The rewards program “adds to the things we’ve already been doing, like driving directions [to available items] and tax deductions. It further differentiates us and makes it more valuable to give things away through us.”

Kashless is now staffed by five full-time employees and a couple of contractors. That’s down from about a dozen earlier this year, during the bulk of the company’s product development work. Tobias says there are more than 500,000 active listings on the website.

The company’s revenue model is a combination of advertising on the consumer site and licensing of the software platform to brands and communities that want to boost their recycling. The latter “private label” portion of the business makes up the majority of Kashless’s revenues, Tobias says.

I asked Tobias for the weirdest thing anyone has given away on the site. He named a couple items off the top of his head: a live monkey in a cage, and a tugboat up on blocks in someone’s yard. “An interesting thing for us is that everything posted on Kashless has been taken by somebody,” he says.

Tobias then remembered that he had once advertised a broken urinal from his old house. (I didn’t ask.) “Some guy said, ‘I’ve been looking for that.’ He thought he could fix it.”

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Seattle-area startup Findood, an online marketplace for specialty foods, took first prize at the Northwest Entrepreneur Network’s First Look Forum on Wednesday. The other four finalists were Dibspace, DigitalScirocco, Geedra, and HeatFlow Technologies. Also presenting to investors were Aurumis, CoCollage, Glue, Greenbridge International, PodCurry, Re:Source Fitness, and Serra Media. Findood won a package from Swift HR, office furniture, and a year of free office space from WRF Capital.

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Heading into the summer months, deals in the Northwest show no signs of slowing down. Neither does Xconomy, which debuted the reporting of our Seattle intern, Eric Hal Schwartz, last Tuesday. In the past week, Eric, Luke, and I have had our hands full with deals in biotech, materials, software, and energy.

—Microsoft (NASDAQ: MSFT) is acquiring the Seattle-based assets of Rosetta Biosoftware from Merck, the drug giant based in Whitehouse Station, NJ, as Luke reported. Financial terms were not given, but Merck has agreed to become a customer of Microsoft’s new Amalga Life Sciences platform, which is designed to help researchers analyze vast pools of genomic data. Merck will also help the Redmond, WA-based software powerhouse better understand the life sciences market. The deal is expected to close by the end of June, and Rosetta is supposed to be integrated into Amalga Life Sciences by early next year.

—Luke reported that Bothell, WA-based Seattle Genetics, a maker of targeted antibody drugs, raised $11.5 million in a stock sale. The company received approval from existing shareholders to sell more shares to Baker Brothers Life Sciences, an investment firm led by Felix Baker. The sale comes on the heels of a $55 million offering the company pulled together in January.

—Seattle-based Modumetal, a nanotech and advanced materials startup, is closing a new round of equity funding worth between $1.5 million and $2 million. The round’s investors include Seattle-based Alliance of Angels and Second Avenue Partners, who co-led a previous seed round, as well as new investor WRF Capital. The money will be used to help the company’s anti-corrosion and heat-resistant material products reach the market. Modumetal is led by co-founder and CEO Christina Lomasney, a former Boeing employee.

—Eric reported that Mediquest Therapeutics, a Bothell, WA-based developer of topical treatments for inflammatory diseases, sold $2.3 million out of a $15 million equity offering. Mediquest was founded in 1994 and is working on a treatment for Raynaud’s disease, a condition that causes numbness in the fingers and toes when they are exposed to the cold.

—Response Biomedical, a Vancouver, BC-based maker of fast diagnostic tools … Next Page »

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The best description of the San Diego Web-based business that Jan Anton and Brendan Boyd have developed may be a symbolic cloud that includes the corporate logos for eBay, Amazon, Craigslist, and other online markets.

For the time being, that image also happens to be the current logo for their startup, which was known until last week as iSelfStore.com. Now the two Internet entrepreneurs are searching for a new name because iSelfStore really only exemplifies half of the online business they have conceived.

The website they created is both an online hub that helps users to keep an inventory of their belongings—and enables them to list items for sale on multiple online markets at the same time. “The real value of our application is not in the self-storage, or the inventory part of it,” Boyd says. “The value is in having the ability to sell your stuff across multiple market places.”

Their beta-stage software makes it easy for users to create a home page where they can easily upload images of their favorite surfboard, a wedding dress, gas barbecue, and other items—and to share those images with friends and relatives. It also enables users to simultaneously list items for sale with online classifieds, auction sites, and social networking sites. Using the website to inventory items would be free, but the yet-to-be-named website would charge a premium fee to those who want to use it as a sales platform.

“Users are provided one-click access to sell items across eBay, Amazon, Craigslist, Oodle, iList, Facebook, MySpace, AOL, and more,” Boyd told me. “Users are provided with marketplace and pricing recommendation tools, the ability to maintain a personal online inventory, full functionality from mobile devices, and even the ability to share, trade or give away items to their personal network of family and friends. We maximize your exposure to the marketplace, decrease the sales cycle time, and improve profit margins for online selling—all while saving you time.”

Anton and Boyd explained the concept originated as a Web-based inventory service for their third partner, Eric Jacobson, a former pharmaceutical executive who acquired a San Diego moving and storage business four years ago.

“What he wanted was something he could use to help keep track of the stuff that goes into the storage warehouse,” Boyd said. “He was saying, ‘Wouldn’t it be neat if … Next Page »

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Seattle entrepreneur Kelly Smith and his team at Pressplane have announced the launch of their new site, Inkd. Billed as the world’s first market for original print design, Inkd takes the basics of a user-generated community and applies it to the business print marketplace, connecting business owners with print designers. The startup raised $1.7 million in angel funding last September.

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Seattle-based Amazon announced it has completed its acquisition of Victoria, BC-based AbeBooks, an online marketplace for used, rare, and out-of-print books. The deal was originally announced on August 1. With the purchase, Amazon (NASDAQ: AMZN) also owns 40 percent of LibraryThing, a literary social site based in Cambridge, MA, which competes with Seattle-based Shelfari, another recent Amazon acquisition.

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Imagekind, a Seattle-based online marketplace for user-generated art, announced that it has agreed to be acquired by CafePress, best known for its customized T-shirts. The deal is worth $15-20 million, according to VentureBeat, the Seattle P-I, and others.

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