$20M Round to Speed ISPs: CacheLogic makes life a little easier for ISPs.

All Ears: CallMiner Scores $10M

Originally backed by In-Q-Tel, the venture arm of the U.S. Central Intelligence Agency, startup CallMiner, which makes phone calls searchable, just picked up another $10 million in second-round funding to build up its sales and marketing side.

CallMiner, based in Fort Myers, Florida, develops products that help contact centers analyze the content of recorded calls. It automates the process of converting calls into searchable text and statistics for gathering intelligence. The concept has applications in both the public and private sectors. While Uncle Sam has its War on Terror to prosecute, call centers want to be able to troubleshoot customer interactions (see CallMiner Digs Up $10M).

According to CallMiner CEO Jeff Gallino, the firm uses pattern recognition to analyze calls and find out what’s being said and how it’s being said, with a vocabulary of around 100,000 words.

The funding was led by Sigma Partners, joined by existing investors Inflexion Partners and Intersouth Partners, which participated in the first round for $2.8 million in 2004, also joined by In-Q-Tel.

Mr. Gallino didn’t say what kind of work his firm was doing for the intelligence sphere, or how intel spooks were using the technology. Whether the NSA is using CallMiner’s stuff is an open question, come to that. But the In-Q-Tel investment is at least an endorsement that the company is developing a technology that has legs in the national security arena.

In the meantime, CallMiner is beta-testing a so-called virtual server room, or VSR, that lets an organization use spare computers to process audio from the phone calls it monitors. Call it a scaled-down version of what the Search for Extraterrestrial Intelligence (SETI) did with all those spare computing cycles on Internet users’ machines back in the 1990s, and continues to do today through its SETI@home program.

“Some customers are producing 350,000 to 400,000 hours of audio each day, and it would take 1,500 to 2,000 servers to process that much,” says Mr. Gallino. “With VSR, we can do it with 40 or 50 servers, use desktops and laptops in the back office, and even agent desktops in the call centers.”

If the NSA starts using that technology, imagine a world where computer owners can do their bit to decrypt all those hours of wiretapped calls. The call they process might well be their own.

Contact the Writer: SWolfe@RedHerring.com

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Cache Money: $20M Round to Speed ISPs

With a commoditizing business, competition from all angles, and increasing pressure to disclose user information, Internet service providers get no love. British startup CacheLogic—which just last week snared $20 million in Series C funding—won’t cure those troubles, but it could make life a little easier for ISPs.

The company sells an appliance that caches files or parts of files to avoid redundant Internet traffic—making large video transfers like those on peer-to-peer networks, for instance, much less costly for access providers.

A 2006 Red Herring 100 North America winner, Cambridge-based CacheLogic currently has 74 deployments, mostly in Asia, Eastern Europe, and Latin America, where bandwidth costs are high. But now it wants to go global, so it hit up investors.

Last week’s funding round was led by Amadeus Capital Partners, joined by 3i, Pentech Ventures, and The Cambridge Gateway Fund. The company, which was founded in 2002, had previously raised $11 million over three rounds.

“For a company at this stage a $20-million round is a fair chunk of money,” says investor Simon Cornwell, a partner at Amadeus. “That is an expression of intent—we intend to become a serious player in the space.”

In addition to its No. 1 priority of expanding into the United States and Western Europe, CEO Pat Chapman-Pincher says CacheLogic needs to build up its basic technology. “In the past there haven’t been many large video objects to deliver,” she says. “The market is very embryonic.”

Ms. Chapman-Pincher (pictured), previously an adviser to the company, was brought in as part of the new investment, while founding CEO Adam Twiss was moved to focus more on engineering and building intellectual property. The new CEO freely admits she’s no technologist, but claims decades of telco management experience at UUNET International, WorldCom, MFS International, IBM, Logica, and BT.

CacheLogic’s most pressing problem, however, may be lack of focus. In a recent interview with Red Herring, it was hard to get Ms. Chapman-Pincher to turn down any of the opportunities before her—among them expanding the company’s partnerships with P2P providers like BitTorrent and Microsoft; partnering with content companies; selling directly to consumers to ease transferring large files among several devices; and even transitioning to be a full competitor to content delivery networks like Akamai.

The one thing she doesn’t expect to do with the new funding, she says, is acquire another company. But Ms. Chapman-Pincher doesn’t completely rule M&A out; if the right opportunity arises, she says, CacheLogic will raise yet another round.

Contact the Writer: LGannes@RedHerring.com