Powerset's search raises $12.5 million
A developer of natural-language search engine raises $12.5 million from VCs and angels; the company said its search engine will incorporate a deeper linguistic component than existing search engines so that a user’s intent correlates more accurately with search results
Search engines are good business, as Google has shown. Search engines are also becoming an ever more popular tool in the hands of intelligence agencies and law enforcement authorities. We have noted the insatiable hunger governments have for information — mountains of information — which would help detect early potential terrorist plots and other nefarious schemes. Searching through these mountains of information for the few relevant nuggets and making meaningful connections among disparate information points are daunting tasks, so companies which offer clever and effective search solutions stand to benefit handsomely. One such company is Palo Alto, California-based natural-language search engine developer Powerset. Investors agree, and have invested in the small company $12.5 million in first round of funding.
Menlo Park, California-based Foundation Capital led the round with a $7 million contribution, and it was joined by San Francisco-based Founders Fund LP which contributed an additional $3 million. Both firms also placed representatives on Powerset’s board of directors. The year-old start-up had raised $2 million back in May in angel funding. The company said that that was in the form of a bridge loan which was converted to Series A shares upon completion of a first institutional round. A final $500,000 has been set aside for strategic investors to be determined.
CEO Barney Pell said the deal comes at a pre-money valuation of more than $30 million. The three founders — Pell, Steve Newcomb, and Lorenzo Thione — have experience in Silicon Valley entrepeneurship and venture funding, a fact which they say helped them select which individuals and firms they wanted as investors, rather than shopping the deal as most start-ups would do.
Among the nineteen named angel investors is Peter Thiel, a partner at Founders Fund who took a Powerset board seat. Thiel made a name for himself as cofounder and CEO of PayPal, a company acquired by eBay in 2002 for more than $1 billion. Other angel investors came from the CommerceNet consortium, a group of investors led by Jay Tenenbaum. Individuals contributing money included Luke Nosek, another PayPal co-founder; newsletter publisher and former Icann chairman Esther Dyson; Sean Parker, co-founder of Facebook Inc. and Plaxo Inc.; eGroups founder Carl Page; and Rustic Canyon Ventures partner Alex Lloyd.
On its Web site Powerset says it is still operating in a semi-stealth mode, and the company is yet to offer details of its natural-language search engine. Thione, the product’s architect, says the search engine
