Southern California is now the United State’s 2nd largest Start-up activity center - surpassing New England.

Southern California is now the United State’s 2nd largest Start-up activity center - surpassing New England.

Venture capitalists invested $1.122 billion into Southern California companies during the first quarter, compared to only $984 million into the Northeast companies centered around Boston, according to VentureOne/Ernst & Young. See chart below

Money comes and goes but recently it’s been flowing into souther California and at a very quick pace. Each Quarter the numbers of VC capital are counted and they usally go in spurts, but recently there is a steady flow.

Here’s some of the numbers:

Kleiner Perkins Invests in China with a $360M Fund

Kleiner Perkins, one of the most respected venture capital firms in Silicon Valley, but also one of its most parochial, has finally decided to invest in china.

It has just announced a $360 million China Fund, to invest in “high-growth industries,” including Internet, media, wireless, health and green technologies. To help it make the investments, Kleiner has hired three partners from the Shanghai venture firm, TDF Capital, and another partner from Softbank Asia Infrastructure Fund.

This marks a big turnaround, and is an important and essential move for Kleiner. Until recently, Kleiner had famously resisted opening offices elsewhere, saying it was well-served by staying local. It was hard to argue with: Kleiner has backed a long list of Silicon Valley hits: Sun Microsystems, Netscape, Genentech, Google — the list goes on. For 35 years, the firm remained cocooned in Menlo Park, Calif., where it has worked out of its single leafy office on San Hill Road, but remained among the very best firms.

Google 1Q Profit Rises 69 Percent - Blowing Away Estimates

Google Inc.’s first-quarter profit rose 69 percent, maintaining the online search leader’s penchant for blowing past analyst estimates.

The Mountain View-based company said Thursday that it earned $1 billion, or $3.18 cents per share, during the first three months of the year. That compared with net income of $592.3 million, or $1.95 per share, at the same time last year.

If not for expenses incurred for employee stock compensation, Google said it would have earned $3.68 per share. That figure topped the average estimate of $3.30 per share among analyst surveyed by Thomson Financial.

Quarterly revenue reached a new company high of $3.66 billion, a 63 percent increase from $2.25 billion last year.

After subtracting advertising commissions, Google’s revenue totaled $2.53 billion. That amount was about $40 million above analyst estimates.

Pleasant earnings surprises have become routine as Google has established itself as the most profitable — and perhaps most powerful — business on the Internet. Google has now beat analysts’ estimates in all but one of 11 quarters since its ballyhooed initial public offering in August 2004.

The scintillating performance has helped elevate Google’s market value to nearly $150 billion, despite a 6 percent decline in the stock price since the company’s last earnings report.

As usual, Google’s financial firepower flowed from its ubiquitous search engine, which has become the hub of the Internet’s largest advertising network. Google delivered 225.9 billion advertising links during the first quarter, an 85 percent increase from 122.3 billion at the same time last year, according to data compiled by online research firm Nielsen/NetRatings Inc.

Although Google has been trying to develop other revenue channels beyond the Internet, online advertising continues to produce virtually all of its profits. Google is expected to become an even more dominant force with last year’s $1.76 billion acquisition of online video leader YouTube Inc. and its recently announced $3.1 billion deal to buy Internet ad distributor DoubleClick Inc.

Venture Capital Activity: Technorati Buys Personal Bee, Akami Buys Red Swoosh, LinkedIN, Y Combinator

Technorati Buys Personal Bee

Technorati said Wednesday that it has acquired Berkeley-based Personal Bee, an online service which allows people to create their own personal sites using RSS feeds. Financial terms of the deal were not disclosed. Ted Shelton, founder of Personal Bee, will join Technorati as its VP of Business Development.

Akamai Buys Red Swoosh
Akamai Technologies said today that it is acquiring San Mateo-based Red Swoosh, a developer of client side technology for media distribution, in a deal worth $15M. Akamai said it purchased Red Swoosh in an all-stock merger transaction, and that it will use the acquisition to augment its services. Akamai said that Red Swoosh will be integrated into its existing engineering team in California.

LinkedIn Claims 10M Users
Palo Alto-based LinkedIn, the online social networking web site focused on business professionals, said today that it has reached 10 million users for the site. The company said that it is currently growing at the rate of over 130,000 members a week. LinkedIn provides social networking tools targeted at business users, and has received funding from Sequoia Capital, Grelock, Bessemer Venture Partners, and the European Founders Fund.

Y Combinator is Breaking VC Ground!

The Mercury News has a good description of how Y Combinator works:

Here’s how it works: twice a year, Y Combinator invites “hackers,” or programmers, to fill out an online application, outlining who they are and a business idea. One winning batch of teams is funded in winter and the other in summer. With Y Combinator’s help, each becomes a real company - one that is expected to create its product within three months. The amount of money Y Combinator gives each group - $5,000, plus an additional $5,000 per founder - is a pittance for what it asks in return, which is, on average, a 6 percent stake in their start-up. That money has to really stretch. Beyond their living and working expenses, it must also cover relocation costs, as the winter winners must relocate to the Bay Area and the summer winners to the Boston area.

Google to acquire DoubleClick for $3.1B

Seeking to expand its already well-honed ability to sell targeted Internet advertisements, online search leader Google Inc. said it has agreed to pay $3.1 billion in cash to acquire ad-management technology company DoubleClick Inc.

The two companies announced the deal after the markets closed Friday. The boards of both companies have approved the takeover, which is expected to close by the end of the year.

New York-based DoubleClick helps its customers place and track online advertising, including search ads, which Google — more than its nearest search competitors Yahoo Inc. (Nasdaq:YHOO - news) and Microsoft Corp. — has turned into an extremely lucrative business.

Shares of Mountain View-based Google rose 3 cents to $466.32 in after-hours trading. DoubleClick has been privately held since 2005.

The sellers are San Francisco-based private equity firm Hellman & Friedman, along with JMI Equity and DoubleClick management.

Commentary:
From DoubleClick’s announcement of the exchange:

Using the new platform, publishers and other sellers make specific inventory available for purchase. Sellers define a minimum bid value - or “reserve price” - for the inventory and specify rules to restrict certain advertisers, formats and content. In parallel, buyers specify the inventory they wish to purchase, and the associated bid value for that inventory. They can also specify a rule to dynamically control the bid so that the bid price is automatically adjusted in line with inventory performance.

From the New York Times:

DoubleClick, which was founded in 1996, provides display ads on Web sites like MySpace, The Wall Street Journal and America Online as well as software to help those sites maximize ad revenue. The company also helps ad buyers — advertisers and ad agencies — manage and measure the effectiveness of their rich media, search and other online ads.

DoubleClick has also recently introduced a Nasdaq-like exchange for online ads that analysts say could be lucrative for Google.

“Google really wants to get into the display advertising business in a big way, and they don’t have the relationships they need to make it happen,” said Dave Morgan, the chairman of Tacoda, an online advertising network. “But DoubleClick does. It gives them immediate access to those relationships.”

From Bloomberg

`Deep Pockets’

Google declined to give financial details for DoubleClick, whose headquarters are in the same building as its own New York offices. The purchase eclipses the $1.65 billion Google spent to buy video-sharing Web site YouTube in November and was 50 percent more than Hellman & Friedman had wanted. A person with knowledge of the talks said last month the firm may seek about $2 billion.

“The amount is mind-blowing,” said Richard Fetyko, an analyst at Merriman, Curhan and Ford in New York. Fetyko follows DoubleClick rival AQuantive Inc., which he rates buy and doesn’t own. “Apparently there was very competitive bidding. Microsoft has deep pockets, but apparently everything has its limits.”

Friday’s Trip Around the Blogosphere

Kathy Sierra’s - Creating Passionate Users
You really ought to check out Kathy Sierra’s recent post about “outspending vs. outteaching”.

Is Google Acquiring G.CN ?

The China Search Engine View blog writes:

[W]hen you search the whois here, you may find there is one item more, “Registrant Organization: 北京刘元和君咨询有限公司” (Jan Liu & Associates), the attorney for Google’s case of googel.com.cn and googel.cn. Has Google really got g.cn?
This looks pretty realistic to me – and I must say that it’s an interesting branding play for Google China!

Speaking of Google – Aaron Wall has a great discussion about Google being and invisible hand in online marketing .

Aaron takes a look at the perception of trusted advertisers and how that affects your marketing spend and budget.

Their newest ad unit is an unmarked text link ad, which only displays any ad notification AFTER people hover over the link. Publishers who refuse to sell links directly will publish the ads, and if they spread anything like AdSense does, what happens to links to commercial sites? What happens when virtually nobody is willing to link to a commercial site unless it is through Google? What happens when their affiliate payouts are not high enough to solicit a review? And what happens to those businesses when Googlers decide they want that market for themselves, like real estate?

Zanox Puts CPA on the Forefornt: Completes Swedish Acquisition

Zanox which is a really cool Germany-based startup company that plays in the multi-channel marketing business has announced that they acquired a company called Free Network. This Swedish company is only a few years old but they offer CPA advertising - which is an area of huge growth for online adverting in the next few years.

ScanScout Backed By $2 Million In Funding; Launching Tool That Monitors Video Topics For Advertisers

ScanScout, a Cambridge, MA-based startup that has developed a tool that lets online video publishers target the topic of a video, has received $2 million in angel investments, according to Mass High Tech. One of the participants in this first funding round was angel investor Ron Conway, who said he generally invests about $50K in tech companies, but decided to invest $150K in ScanScout, citing growing demand for online video and its ability to attract advertising.

Two former MIT classmates, ScanScout’s president Waikit Lau and CTO Steven Lee, developed the technology, which launches publicly next month. ScanScout monitors the content’s spoken text, audio and images and then select related advertisements that run just below the video screen.

Russia’s Largest eCommerce Site Raises $18m

OZON.ru has raised $18M led by Index Ventures with Holtztbrinck and Cisco. Baring Vostok, a private equity investor, did a $3M acquisition in 2000 of a controlling stake in OZON.ru. OZON.ru claims to be Russia’s largest eCommerce site. It sell books, CDs, DVDs, software, games, electronic products, etc. It says that it delivers more than 3K orders per day. OZON plans to use the capital to build out more distribution centers in Russia.

If you think the Russian eCommerce market is new, take a glance at CISCO’s announcement from Tuesday that they would focus on Russian Venture Capitalism opportunities.

Russia’s Yandex Acquires Biz Social Networking Site

Yandex, the Russian portal and WiFi network operator, has acquired Moikrug.ru, which claims to be the country’s largest social networking site for professionals. This is much like Linkedin, but in the Russian business space. Moikrug roughly translates to MyCircle.
Regular and active a:c euro reader Yakov Sadchikov, co- founder of Russia-based search company Quintura, uses the term ‘acq-hired’ to describe the deal, suggesting the know-how and experience of the team at Moikrug was the attraction. Moikrug is said to have some 100k registered users.
No disclosure on price but rumors range from $1.5M to up to $5M including cash and Yandex stock options.

Read the full story - Yandex buys social network MoiKrug.ru

Korean Video Site PandoraTV Closes $10 Million Financing

Sometimes billed as “the Korean YouTube,” PandoraTV has completed a second funding round of $10 million led by Silicon Valley-based DCM. Previous investors Altos Ventures, STIC International and Saehan Ventures also participated in the round. The funding will be used to support the company’s growth, expand its service offerings and finance the further build-out of its network infrastructure. PandoraTV also reported that David Chao, co-founder and general partner of DCM, has joined its board of directors.
The Seoul-based video sharing site was founded in October 2004. PandoraTV claims to have 12 million monthly uniques.

One aspect that differentiates PandoraTV from other video sharing sites is its concept of “personal TV stations” that allows users to post video clips, run their own TV shows, and even advertise products or services in each personal TV channel. Samsung Electronics and SK Telecom recently launched programming on PandoraTV’s viral service. Release
– The financing comes at an interesting moment for Korea’s entertainment industry. The Hollywood Reporter notes that one aspect of a Free Trade Agreement signed with the U.S. lifts restrictions on the programming of foreign content, while another steps up pressure on South Korean internet service providers to protect intellectual property.

Venture Hacks Guides You Through The VC Process

Started by 2 entrepreneurs, Venture Hacks is worth taking a look at!
I spent some time checking out their site last night and found it to be a great start for anyone that’s looking to learn more and attract some VCs.

Get Caught up on Search Marketing & VC

Kontrib Offers a Digg Alternative for Non-English Speakers

One thing that Digg lacks is foreign involvement due to the interface being in purely English. Kontribb offers the solution!

To submit and vote on articles at Kontrib, you first register. After you submit an article, Kontrib’s linguistic machines immediately translate articles into supported languages. These are Arabic, English, French, and Spanish, with more to come later. Kontrib is slick because it translates both the article summary hosted at Kontrib’s site, and the original article linked to. Comments are also translated.

Until now, language translation has remained clumsy. There are text translation sites such as BabelFish, or Google’s language tool. The coming Worldwide Lexicon Project promises to help bloggers translate their sites by mobilizing interested readers. Human volunteers will translate sites with higher quality, argues Brian McConnell, the project’s leader, and they’ll translate into any language. Though, we’d argue that human efforts will vary in quality.

What is FaceBook up to?

Recent traffic statistics at social networking site Facebook are impressive and we’re wondering if there’s a wider story here.

Facebook tells us the site is seeing about 1.5 billion page views a day, up from about 1 billion daily views last month — statistics that haven’t been released until now. That’s a huge jump.
Read more over at VentureBeat

So How Did you Learn SEO?
Here’s part of Rand Fishkin’s Story about SEOmoz:

“In 2001, the company that would become SEOmoz (at the time just Gillian, Matt & myself) began taking on some e-commerce development projects. Previously, we had designed static websites in Flash & HTML and done some consulting in usability, but with the addition of Matt to the team, we were ready to take on some beefier projects. We designed and developed several sites for clients and”

Rand over at SEOmoz would like to know how you got your start!

ZoomInfo - The HeadHunter’s Best Friend Expands

ZoomInfo today launched its Business Information Search Engine, a service that offers information on more than 3.5 million companies. Although the company profiles are similar to those offered by Hoovers.com and other subscription-based providers, ZoomInfo business profiles are free. More about Zoominfo at Search Engine Land

Ultra-Mobile PCs: The Next Step

Have you ever heard of OQO?

This small company was started way back in 2000 in San Francisco, and they were the first to load a full Microsoft Operating system onto a handheld device.

The Guinness World Records cites the OQO’s first commercial version of their handheld product as the smallest, fully loaded computer.

Cool Stuff!

OQO is still around today and pushing forward with their goal of ultra-mobile PC platforms, one that the recently released the second generation of. Demand for these type of PCs is still low and really unknown, but its an emerging market that will surely need a sector leader. OQO is definitely up to the challenge!

These ultra-mobile PCs are smaller than laptops and even tinnier than tablet computers that many computer makers are currently pushing as a mobile solution. The difference is that these small and moble PCs are smaller than laptops and more powerful than your mobile phone.

They also include a wide range of nifty features. The Asus R2H, for instance, features a 7-in. touch screen, fingerprint scanner, 1.3-megapixel camera, and embedded GPS, all on a machine that weighs just 1.8 lb. Samsung’s NP-Q1 includes built-in Wi-Fi, Bluetooth 2.0, and a flash-based memory drive. Sony and Samsung each outfitted their most recent ultra-mobile PCs with a flash-memory drive which lets programs boot and run faster, while conserving battery life.

This will be a very interesting market to follow!

A Trip Around the Blogosphere

Fasten your seatbelts - we’re going for a trip around the blogosphere!
Jeremy Shoemaker is interviewing Melissa Harrington next week, whom is going to be on the Howard Stern show next week. Melissa Harrington apparently is a Top Web Porn Star.
Some of the questions that Jeremy will be asking are:

-How do you acquire subscriptions?
-How do you get new customers?

Crave shows us a $1 million laptop by a company called Luxury Launches that supposedly is “believed to integrate real diamonds and other precious jewelry into the chassis of the system.”

Google has launched their latest version of Google Spreadsheets while one of Google’s First investors and board member, Michael Moritz is stepping down.

SES New York is coming up and if you’re on the fence about whether or not to attend, Lee Odden has 5 reasons to attend SES NY.

And lastly but most important!
Sir Paul McCartney has broken a 43-year relationship with EMI to sign with a new music label set up by Starbucks, the coffeehouse chain. Starbucks is launching their own label to coincide with their HearMusic offerings. This is a pretty smart brand extension for Starbucks if you ask me!