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When Hooman Radfar and Austin Fath began developing the idea for Clearspring Technologies Inc. while still in graduate school at Carnegie Mellon in Pittsburgh five years ago, it took some guts to place a guess on the direction of the Internet. It also took a fair amount of luck to choose the right route at each bend in the road. In the end, the Internet entrepreneurs seem to have gotten it right, as exhibited most recently in a new $18 million round of funding led by veteran VC firm New Enterprise Associates. "We were seeing the Web transform from a digital magazine to more services, and when we started we built a platform that was a start page with widgets," says Radfar, now Clearspring's CEO. "The vision we settled on for how the Web was going to disaggregate turned out to be correct. But what we learned was that the devil is in the details, and while at the high level we were on the ball, we had to be agile so that anything Google or Facebook did changed what we did." The key was recognizing from the get-go that so-called widgets would be integral to how the Web was changing, although it took awhile to realize that the company's market would be in the widgets themselves. By 2006, Clearspring had landed $2 million in funding from Novak Biddle Partners and ZG Ventures and launched a beta version of a product that it believes offered the first tracking and posting tools for sharing services over the Web using widgets. Clearspring now claims to be the world's largest widget syndication and tracking service. Despite a nearly impenetrable description on Wikipedia, widgets are simply graphical user interface icons or buttons that, when inserted into third-party Web pages, kick users over to a provider's servers, where Web applications consisting of video, social networking and other media features reside in a format designed to appear seamless to the customers' site. The so-called "applets" can include embedded advertising or can be posted as enticements to attract viewers to sites with other business models for monetization. If that last line strikes you as a little vague, that's where Clearspring's third round of funding comes in. The company raised $5.5 million in a Series B round from its original backers in March 2007 that Radfar says allowed it to develop a variety of flexible models for building revenues on widgets, including selling tools to advertisers, publishing to third-party galleries, distributing through established advertising networks, and partnering with advertisers and publishers. Some early revenue models allowed Clearspring to raise its new round to help refine its revenue strategy and begin to reap the rewards. One of these--partnering--has especially paid off. The startup has partnerships with consumer brands such as Aquafina, Honda, Snapple, Snickers, Sprint and Virgin Mobile; entertainment companies including Blockbuster, Disney, Fox Broadcasting, Lionsgate and Sony Pictures; sports leagues including the NBA, NFL and NHL; advertising agencies including 360i, Digitas, JWT, Mediacom, MindShare and Universal McCann; and media firms including as ESPN, National Geographic, NBC Universal, Newsweek, Time-Warner and Washingtonpost.com. While these factors contributed to Clearspring landing the largest funding yet for a widget company, other recent fundings in the sector include a $12 million round for Israel-based WorkLight Inc. in April and a $5 million round recently revealed by Sprout. Radfar would not predict when Clearspring expects to turn a profit, but he says the company's emerging revenue model and existing traction in established advertising models leaves him confident that this round will be sufficient to position the company for growth. -- Clifford Carlsen See May 21 press release from Clearspring See May 1 brief from TheDea.com See May 13 story from Tech Confidential For more see Furrier.org, PaidContent and SocialTimes
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