VentureWire

Mayfield XII Bets On Teens, China, And Enterprise

By Michelle Tsai, 2/8/2006

Mayfield Fund is going back to high school for its latest market: teenagers. The venture firm just invested in Tagged LLC, a social networking site for the 12 to 18-year-old set, one of the four investments Mayfield is announcing today from its twelfth fund.

Mayfield's first investments from Fund XII show the venture firm sticking to three investment themes: consumer, wireless, and enterprise.

Tagged, co-founded by two classmates from Harvard's class of 2001, raised $7 million in a first round of venture capital from sole investor Mayfield.

In addition to the profiles, photos and blogs that are now de rigueur for social networking sites, Tagged also allows members to play an interactive game of adding people to "tag teams," designating certain friends as "A-list" and accumulating points along the way. The ultimate prize for accruing points: the chance to appear on a reality show.

"This is like friendship bracelets for the Internet. Teens go crazy over this," said Chief Executive and co-founder Greg Tseng, who co-founded comparison shopping site flyingchickens.com with childhood friend Johann Schleier-Smith, now chief technology officer of Tagged. The site also runs interactive features such as an online celebrity look-alike contest for members.

The start-up has signed on more than two million members and expects to hit at least 10 million members by year's end, said Tseng. Monthly revenue, now at six-figures, should exceed $1 million by the end of the year to bring Tagged to profitability, he added.

Mayfield's Raj Kapoor, who joins Tagged's board along with managing director Allen Morgan, said the company would generate revenue from advertising and perhaps corporate sponsorships. Tagged is already talking with Mayfield portfolio companies Revenue Science Inc., a behavioral advertising company, and Serious Magic Inc., a video blogging start-up, for potential collaboration.

Elsewhere in its portfolio, Mayfield is wading farther into the waters of Chinese technology, adding PingCo.com Inc. to its existing portfolio of online dating service HeiYou Inc., Mobert Semiconductor Inc. and Shenzhen State Microelectronics Co.

PingCo, an SMS service provider in Beijing, raised $1 million in Series A capital from Mayfield. The start-up, which launched in December, has developed an application that is embedded into wireless networks and allows consumers to get free SMS messages over Internet data services - circumventing normal per-message charges.

But the free text messaging is just bait to reach a critical mass of end users.

"They've built what we believe is a first killer application to get their client software installed," said Vasan. "They're using free SMS messaging as the way to get on people's phones. Since those messages travel over the data channel, there are a number of other services they could provide."

PingCo's next step would be to provide value-added services such as horoscopes, sports updates or chats, likely on a revenue share basis with wireless service providers. Alex Pan and James Ding of GSR Ventures, Mayfield's partner for China, join the board.

The VC also led an $8 million Series B round for Alfresco, a company that makes open source Web content management software. Robin Vasan, the Mayfield managing director who joins the board, described Alfreco as the only open-source pureplay company with both document and content management capabilities to compete with existing proprietary vendors.

Accel Partners, which had provided $2 million in seed capital in 2005, also re-invested in the Series B. Alfresco should break even in 2007, said Vasan.

In another deal in the enterprise sector, Akimbi Systems, which makes code-testing software, raised $8 million in a Series B up-round that closed last year. Mayfield led the round, which also included existing investors Hummer Winblad Venture Partners and Partech International.

Since raising the B round, Akimbi has succeeded in adding new customers and in partnering with other companies in the virtualization and infrastructure management sector.