Out of 39 firms that were active investors in British start-ups over the last five years, only thirteen venture firms have £5 million or more left in their coffers to invest, according to NESTA, the UK agency that advocates for start-ups and also sponsored the recent Traveling Geeks blogger tour.

That’s right: All but thirteen firms in the United Kingdom are either completely tapped out or have committed the rest of their funds for follow-on investments in existing portfolio companies. In total, NESTA estimates there’s about £400 million left that’s uncommitted among the thirteen, with only half of that available for brand-new series A deals. To put that into perspective, there’s roughly the same amount of money in the fund Marc Andreessen just closed than there is for new companies in the entire United Kingdom right now.

This is coinciding with a precipitous drop in UK firms closing on new funds thanks to the global credit crunch. In 2008, only seven firms closed new funds, and NESTA expects fundraising to be even weaker in 2009.

As most people know, I’m a pretty big advocate of the idea that many of the next great high-growth companies will be founded outside of the U.S., but these stats starkly demonstrate a undeniable advantage of being Valley-based. Even when fundraising slows and VCs save bigger reserves than usual for current investments, there are still billions sloshing around to fund new deals. Sure, it’s hard during times like these even in the Valley, but raising venture capital should be hard.

As with most research reports on the venture business, it’s the trend line that’s important to note here. It’s probable that NESTA isn’t counting a firm here or there. But it can’t be too far off. Indeed, the stat explains a lot of the anecdotal evidence that hit me in the face as soon as I arrived in London two weeks ago. Many of the entrepreneurs who’d pitched me on my last visit to London in November have already shuttered their companies and were unsure of what to do next. I have exactly one friend in Silicon Valley who has been forced to that point.

Even the good UK early stage names are struggling to close deals. It took AlertMe—a hot energy home monitoring company that won the Europa for best clean tech company last week—a whopping nine months to raise money almost landing the company in bankruptcy. (Index Ventures and others finally snapped up the deal a few months ago.) “I don’t want to go through that again,” the very polite and British CEO Pilgrim Beart demurred.

It’s that kind of bleak desperation that lead the infamous Paul Carr to pronounce the UK Internet scene dead….just before his own column in the Guardian became its own victim of the economy a few days later. (See Mr. Butcher’s TechCrunchEurope rebuttal here.)

Indeed “the scene” may be dead, but there’s an upside here. The companies that are still around have a much greater emphasis than Valley companies on making money. The Traveling Geek contingent went to Accel’s London office to meet with a handful of start-ups, and each one emphasized revenue and profits in their five-minute elevator pitches.

One that caught me by surprise was Michael Smith’s Moshi Monsters, a social network/ virtual game for kids. Cute idea, but sounds like it should be road kill in this environment, right? Nope. Its revenues are growing 35% month-over-month, it has 85% gross margins, and just five months after launching the site is cash flow positive. Nicely done, gents. (BTW, Smith isn’t all business. His house was the setting of those famous Scoble pictures…)

Indeed, there’s always something healthy about startups having to work within constraints. There will be fewer of them, but it’s possible that the companies that make it in this environment could well make up one of the most promising crops of UK companies we’ve ever seen. After all, Skype was laughed out of VCs’ offices when it started in the wake of the dot com bust.

In the coming days, I’ll be writing several more posts about the London companies that impressed me the most. Stay tuned.

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Why? Well, apparently the publisher changed their minds about having digital versions of the books available for the Kindle, reports David Pogue. Okay, that’s up to them — from this point forward. But those who already paid for the books, own them. In a word, this is bullshit.

Seriously, why doesn’t Amazon just come into our houses and burn the print copies as well while they’re at it?

This remote deletion issue is an increasingly interesting one. Last year, Apple CEO Steve Jobs confirmed that the company has a remote “kill switch” to remove apps from your device if it thinks that is necessary. To the best of my knowledge, they have yet to use such functionality, and would only do so if there was a malicious app out there that was actually causing harm to iPhones. They have not even used it to kill some poor taste apps that were quickly removed from the App Store, like Baby Shaker.

That sounds reasonable. What Amazon is doing, is not. Yes, they credit your account with the money you paid for the book, but I don’t want the money. I want the book, which I legally bought. And this follows its poor choice in making certain app makers remove their apps from the App Store that call their APIs in ways they don’t like — that is to say, on mobile devices. Laughable.

Pogue and our own CrunchGear have it right in pointing out the parallels between a move like this and Orwell’s own novels that are being removed. “And of course the fact that this happened to 1984, of all books, makes this even more surreal,” write Gizmodo.

Big Brother is in your Kindle. Watching.

Update: As commenter Edward Virtually notes, this action is likely within Amazon’s legal rights. I think that’s pretty obvious or there is no way they would have done it. But that doesn’t mean it’s not complete and utter bullshit too. Everyone who hears about this and has a Kindle will now think twice about buying a book on there. Legal BS aside, this is Amazon shooting themselves in the foot here. Big time.

[photo: flickr/pccorreia]

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If you’ve ever watched TV, you’ve undoubtedly seen at least a dozen of the Mastercard “Priceless” ads. You know the ones, “So and so consumer items: $5. Such and such memorable moment paid for with your Mastercard: Priceless.” Yeah, now there’s an app for those.

Well not exactly. It’s not like this app is limited to the priceless moments mentioned in the commercials, that would be kind of pointless. Instead this is a social app that allows consumers to point out their best deals at their favorite local spots for all to see. The app uses the iPhone location services to figure out where you are. It then shows you on a map and shows all the deals others have placed around you.

That may sound bland and obvious, but the app is actually done in a really nice way. You can choose either a bird’s eye view of the deals around you on the map, or get a more street-view like look (though, sadly, it doesn’t use the iPhone 3GS’ new compass to move the map when you move). If you tap on any of the color-coded bubbles, you zoom into that specific deal and can tap to get more info about it.

You can also flag the deal is “improper” or send it to a friend, all without leaving the app. It also tells you when (if ever) the deal expires.

If you want to add you own deal, you simply click the “+” button, and enter the relevant details. It will tag the place at whatever your current location is.

So will anyone actually use this app? Who knows. But if Mastercard starts promoting it on their annoyingly effective commercials, I could certainly see a bunch of tourists picking up this app to find some deals in whatever city they happen to be in.

The best part of this “priceless” app is that it really is price-less, as in, free. Find it here.

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Google made its earnings numbers yesterday, actually coming in above expectations.  Total revenues were $5.5 billion, 3 percent above the same period last year and flat with the first quarter (when sequential revenues actually declined).  Net revenues, which are the revenues which actually go to Google after they pay off AdSense and AdWords partner sites via traffic acquisition costs (TAC), came in at $4.07 billion.  That was slightly above the Street consensus of $4.05 billion (see Citi’s cheat sheet below).  Non-GAAP earnings came in at a respectable $5.36 earnings per share, well above the $5.05 Street consensus.  

Investors should be ecstatic, right?  Yet the stock is down $15 right now from yesterday’s close, to about $428. Some of that is selling on the news that advertising revenues have “stabilized.” But if you take a deeper look at the numbers, it looks like Google’s earnings strength has more to do with cost-cutting than with revenue growth.

Google ended the quarter with 378 fewer employees than in March, 2009 (total headcount was 19,786). Some of those might have included the 200 sales jobs it announced it would cut at the tail end of the first quarter. Google was able to reduce its sales and marketing costs by 3 percent and of its general and administrative costs by 23 percent from last year. The latter translated into $110 million in savings.  All of this cost containment certainly helped operating income rise 19 percent (to $1.9 billion), when net revenues were flat.

Google also put a major squeeze on capital expenditures, which came in at $139 million (80 percent lower than a year ago).  That helped free cash flow increase 37.5 percent to $1.5 billion from a year ago, but that was still down $517 million from the first quarter.  And when you back out the CapEx numbers the actual net cash coming from operations declined 9 percent to $1.6 billion.

Other key metrics:

Paid clicks were up 15 percent year-over-year, but down 2 percent from the first quarter.

Cost per click ($0.42 on average) was down 13 percent from a year ago but up 3 percent from the first quarter.

YouTube close to profitability: On the conference call, Google reported that monetized views on YouTube had tripled and that profitability for the service is in sight.

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In my view, it’s not that ideas are worthless per se, it’s that they’re never more than a starting point, a launchpad.

I’ve been thinking about this all day after I read this blog post by Marjolein Hoekstra (who I consider to be a friend) about the original idea for Tweetmeme, a service that aggregates the most discussed and retweeted stories on Twitter (we use their retweet button at the bottom of blog posts, and you should use it).

I won’t dive deep into the details of the story because I’m trying to make a larger point, but here’s the gist: Hoekstra feels she doesn’t get enough credit publicly about the original idea for Tweetmeme, and calls out the company’s founder Nick Halstead for acknowledging her role and suggest perhaps they should even consider writing her a check. According to her, Halstead has been open about her role in Tweetmeme’s early days but has stopped doing that ever since they’ve raised about $650,000 in seed financing for taking the service to the next level. Halstead’s side of the story boils down to the fact that she was very involved in the (not so great) first version of the product, but they let it languish for 8 months and finally refocused and turned it into a great service without her help.

I tend to lean towards Halstead’s view on all this, despite my respect for Marjolein and knowing how knowledgeable she is about the Web and Twitter in particular. The way I see it, Tweetmeme is what it is in part of what Hoekstra talked about with Halstead et al. in the early days, through direct messages on Twitter and conversations on Skype. But it was a fairly obvious idea in the first place, and there were already others competing for the title “Techmeme for Twitter stories” when it first came out.

I’ve been in similar situations myself, having discussed business ideas with people online or offline and seeing them start a company, add a certain feature or rethink their strategy after these conversations (not that I’m saying I’m always right, quite the contrary). Sometimes I get credited, sometimes I don’t. But usually it’s not something I care much about, because I realize ideas are essentially a dime a dozen and there’s little chance that these people wouldn’t have made these moves without my help. Furthermore, most of the time it pleases me to see something happen because of something I told someone, whether it gets publicly credited or not.

I understand Hoekstra’s sentiment, but in general, I also think if your role is that significant from the get-go you should become a partner or somehow try to get compensated for your work early on. Complaining about not getting enough credit this late in the game comes off as envy rather than a call for sympathy, even if I know in Hoekstra’s case it’s most certainly the latter. To her credit, she blogs she just wants to get stuff settled between them and then move on.

Question is: what should one expect for helping shape an idea that turned into a business after many meetings, a lot of trial and error and some risk taking which did not involve her?

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Here’s the basic idea behind FlyChat: Social networks often limit you to interacting with people that you already know, either from the online world or the real world. But FlyChat wants to connect you with people that you don’t already know, based on location and interests. Okay, it’s not quite that creepy. It’s a little more innocent than that.

Basically, you write a note and attach it to a fly. You then select a region you want that fly to travel to. A person in that area can see your note and your profile which includes your picture and a few things about you, and can decide if they want to respond or not. Each of these flychats also has a category which you put it into to let potential readers know what it will be about. The more FlyChats you send out, the more you can receive in return. The company considers these messages to be like “high-tech messages in a bottle.”

So why on Earth would you want to use a service like this? Well as I said, while most social networks focus on establishing your existing connections, FlyChat wants to help you make new ones. Some people are into that. Second, imagine you’re planning a trip somewhere that you don’t know anyone. With FlyChat, you can potentially make some contacts before you go. Though, obviously, that could potentially be a bit dangerous.

It reminds me a bit of the app PhotoSwap, which some friends of mine have long been addicted to. With that, you send photos from your iPhone to other random users throughout the world. You then get sent a random photo back. FlyChat is a bit like that but with text. But there’s also a game element to it, where you earn points and medal based on how many connections you make.

FlyChat was developed by Project1010, it is available in the App Store for $1.99 today [iTunes Link]. Learn more about it in the video below.

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Apparently, a federal judge has dismissed the case.

According to a MarketWatch report, the AP says U.S. District Judge Sidney Fitzwater granted Cuban’s motion and gave the SEC 30 days to file an amended complaint.

The SEC had filed suit against Cuban in November 2008, alleging he sold shares of Internet company Mamma.com based on non-public info, sparing himself hundreds of thousands of dollars in losses (an estimated $750,000 to be exact). Cuban publicly fought the case through blog posts and Twitter messages, and that strategy seems to have paid off. Or maybe his lawyers just did a good job defending him.

We’ll know soon enough, I reckon.

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Here’s the gist of what happened: Inner Four, the developer behind the insanely popular (and inane) iPhone / iPod Touch application Mirror Free (iTunes link) - a gratis tool that turns your device’s screen into a mirror - was using a sample key instead of the key provided by AdWhirl that was supposed to power real display advertising units in the app interface.

The ad network enabler found out that the developer was missing out on revenue from the app, which has consistently been topping the charts across the entire App Store, when someone from the team downloaded it to their iPhone and noticed test ad units were being run that were attached to the sample AdWhirl application key. As the company was still able to see what kind of traffic the application was getting, the developer was losing out on an estimated $2000 a day, although that number is evidently hard to verify.

Update: here’s the evidence from AdWhirl. Yam explains:

AdWhirl allows you to set percentages for the ad networks you run. On our sample app, we had only a quarter of the inventory dedicated to AdMob, with the remaining 3/4 (maybe even more, b/c of our rollover feature, but I won’t get into all the nitty gritty) of the inventory used to demo how our custom ads work (custom ads don’t pay the developer any money when run, but allow them to cross-promote their other apps or promote a website, for example). Thus 3/4 of the ads weren’t generating money, and the quarter of ads that were generating money exceeded $500/day (and growing even more quickly on the most recent day) - doing the 4X multiplier on revenue generated gets to the $2000/day figure (you’ll notice the early days didn’t generate any revenue - this app rose to #1 VERY quickly).

AdWhirl contacted the unknowing developer and dynamically pushed out new keys on the platform from their side, claiming that otherwise the developer would have been forced to submit an updated application to the App Store that could take days or even weeks to get cleared.

Most iPhone app developers will never see their app(s) top the charts, let alone be able to effectively monetize them. That’s why it’s so baffling to see the developer of such a top ranked application - out of 65,000 free and paid apps in total - stumble over such a minor coding tweak.

In software, it’s impossible to over-test anything.

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Socialseek has released a desktop application that lets you search for a topic, item, brand or company across news sites, blogs, Twitter, YouTube, Flickr, and events. You can also track mentions of a particular search query by city and receive charts that show trends on popularity of a topic across websites, or Twitter.

The ability to crawl social media sites and websites for a brand can be valuable, but what I find useful about Socialseek is the ability to track an item over image sites like Flickr and even event sites. And it’s also interesting to be able to limit chatter over the web about a particular topic to a geographical region or city.

Socialseek could be popular in the enterprise space, especially as Twitter has become an essential marketing tool for brands and companies. The app runs on Adobe Air, which I find to have some strange UI quirks and bugs and ends up using good amount of resources on computers. Competitors to Socialseek include Viralheat and Peoplebrowsr, which both help marketers track the buzz around a certain individual or brand on social media sites and web sites.

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Montgomery points developers to Microsoft’s Web Platform and Xbox development program as all projects that were created using Popfly will effectively be discontinued completely.

TechCrunch got an early look at the Silverlight-powered application when it debuted in private beta mode over 2 years ago. At the time, mash-up and widget creation tools were all the rage, with Yahoo introducing its Pipes web app just a few months prior. Google got in the game with its Mashup Editor a bit later, but that service never left private beta and the company ultimately announced it would be axing the product last January. Two days ago, the team even reminded developers that it would soon be shutting down.

ProgrammableWeb in its coverage of the discontinuation of Microsoft Popfly points back to a February 2008 article in the NY Times, in which the newspaper talks about Montgomery and Popfly in a positive light, with the product manager being lauded as “an example of how it just might be possible for someone to teach dinosaurs to dance”.

Last fall, his team introduced an intriguing software Web service called Popfly that is intended to make it possible for nonprogrammers to plug together Web components and data sources quickly to create useful new Web services. For example, news feeds could be added to digital images, or data lists to maps.

Introduced at the Web 2.0 conference last year by Steven A. Ballmer, Microsoft’s chief executive, Popfly was picked by PC World magazine as one of the most innovative computing and consumer electronics products of 2007. It has garnered more than 100,000 users — the company says the exact number is confidential — and now has a library of more than 50,000 “mashups”: new components or Web pages that have been created in a visual snap-together fashion, like Lego blocks.

Web 2.0 Conference organizer Tim O’Reilly also gets quoted in the article, and he apparently expressed skepticism early on:

“Popfly shows me that Microsoft still thinks this is all about software, rather than about accumulating data via network effects, which to me is the core of Web 2.0,” said Tim O’Reilly, the founder and chief executive of O’Reilly Media, a print and online publisher. “They are using Popfly to push Silverlight, rather than really trying to get into the mashup game.”

Seattle-based tech blog TechFlash got a bit more information out of Microsoft regarding Popfly’s sudden death. In an e-mail to editor Todd Bishop, Redmond says Popfly was simply no longer part of its refocused strategy, which was outlined in light of the dismal economic situation.

(Thanks to everyone who sent this in as a tip)

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Multiple users have received the following letter:

It has recently come to our attention that certain Elance user information was accessed without authorization, including potentially yours. The data accessed was contact information — specifically name, email address, telephone number, city location and Elance login information. This incident did not involve any credit card, bank account, social security or tax ID numbers.

We have remedied the cause of the breach, and are working with appropriate authorities. In the meantime, please take extra precautions in protecting your Elance account. For example, do not provide your login information on any site that is not http://www.elance.com, and NEVER give out passwords by email, over the telephone or on websites that are not the Elance site.

We sincerely regret any inconvenience or disruption this may cause.

For more details and ongoing information about this, please visit this page in our Trust & Safety center: http://www.elance.com/p/trust/account_security.html

Michael Culver
Vice President
Elance

Elance’s security alert site reveals that the data was taken by hackers who discovered a security hole on the site:

The hackers discovered a security hole on an unprotected page that enabled them to access a data table that contained contact information including name, email address, telephone number, city location, and username, and that contained protected versions of user passwords, in an unreadable format called a one-way hash. Their attack did not access personal financial information such as credit card, bank account, social security or tax ID numbers.

In a bizarre twist Elance’s security site says that some of the stolen user data is now appearing on OutsourcingRoom.com, a competing service. Elance writes that it is working to have the data removed.

This is only the latest in a recent string of security breaches on major web services. It’s obviously nearly impossible to guard against every kind of online threat, but if we’re going to become comfortable having our entire computing experience in the cloud, things need to change.

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But while Yammer as a service is great, its popular desktop client (from which most messages are sent) has left something to be desired: It’s been a fairly basic AIR app that lacks some of Yammer’s core functionality, like search and filtering through replies, and also looked a little clunky. But tonight, that changes. Yammer is releasing a new client that offers a slew of much-needed improvements, and looks much nicer to boot.

The new client retain’s Yammer’s key features, updating with new posts from your colleagues as they come in. But it’s much sleeker, sporting an interface that reminds me of Tweetie, the slick Twitter client for Mac. The app now features integrated search, the ability to jump between Yammer accounts on the fly, improved notifications, spell-check, and support for viewing different threads in multiple windows. In short, if you use Yammer, you’re going to want to grab this ASAP.

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Building a game is fairly straightforward — you upload the art assets you’d like to have printed on your game board and cards, pick out which accessories should be included in the box (dice, pawns, etc.) and write out the game’s documentation laying down the rules. Of course, that’s all a bit easier said than done if you don’t have a bunch of art assets sitting around. Still, once you have your images and text in hand, actually putting the game together is painless. Unsurprisingly there are still some limitations (you can’t currently design custom pawns), but the company is planning to add more customization options shortly.

As you put your game together, the site will give you an idea of how much it will cost to build based on how many cards, pieces, and boards it requires. From there, you can either order it at cost for yourself or set a sale price and sell it on the site’s integrated store. The store is pretty empty at this point with only a handful of games available, but it’s a start.

The best part of this for novice game builders is that there’s no up-front cost to get started —  the site handles all distribution and printing costs, taking a 50% cut of the profits from each sale. A 50% cut sounds like a lot, but the company defends the price-point by explaining out how much you’d get if you managed to get your game in stores — according to the site, you’d typically have to give the game’s distributor 30% of the the proceeds, with the retailer taking another 40%, leaving you with only 30% of the sale price. You also retain all rights to the game, so you’re free to take it off and sell it elsewhere should a better opportunity come along.

It sounds great, but there are still a few caveats. The site’s production page notes that while cards are full color and printed on hefty card stock, they’re printed with wax instead of ink, which is less exact. Likewise, card printing isn’t exactly perfect, and there’s a chance some parts of the card’s far edges will be cut off. Still, it sounds easy to compensate for these issues, and the technology is only going to get better.

We think this is such a cool idea that we’ve currently got an intern hard at work at creating a TechCrunch board game. It’s still early in the planning stages (feel free to leave ideas in the comments), and we’ll let you know once it’s ready.

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Update to last weekend’s breaking news about the creepy 23andMe zeppelin that’s been floating around my house. It was back again today. For all I know it’s been circling my house all week. What do you want, 23andMe zeppelin? I already bought a DNA kit. Go away.

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Hmmm. I wonder why. Obviously, earlier this week Microsoft laid out its plans for Office 2010, which includes a web-based component meant to take on Google Docs. But once again, there is nothing to actually see right now from Google, instead this is a pre-announcement to let users know that they may be seeing wonky elements over the next few weeks as they tweak things on the fly.

Not surprisingly, the sharing of documents will be a key element to this redesign. Despite it being perhaps the key element of Google Docs, sharing items with others is simply not that intuitive right now. Here’s what Google has in mind for the future:

One thing you’ll probably notice in the next few days is that the “Shared with…” list in the left hand pane will go away. But don’t worry, you can still use Search to do the same thing. Just click on “Search Options” and type the user’s name into the “Shared with:” box. If this is a search you’ll do over and over again, you can click “Save this search” so it will be easily accessible in “Saved Searches”.

Another thing you’ll see is the new Sharing Menu. We feel this is a big improvement over the old one; we’ve moved all the sharing functionality into this one dialog, so now you can completely manage sharing without having to leave the Docs list.

Other than that, Google is adding a bunch of new search operators (which only the hardcore users will care about). And it concludes the post with “They [the new features] will be followed shortly by the new interface and a number of pretty exciting features we have in the pipe.”

Google. Such a tease.

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The integration should be launched at some point today, co-founder Chris Abad tells us. But the key is that this will not be playable on Facebook’s site like many of the gaming apps built for that platform are, instead this will use Facebook Connect to pipe updates into the social network, just as it works with sending updates to Twitter.

And users on Twitter and Facebook will be able to play at the same time against one another. Players on the different networks will be distinguished by the different icons. And you can link up accounts on both Twitter and Facebook at the same time.

Spymaster caused quite a bit of controversy shortly after its launch as some followers of players on Twitter felt they were being spammed by the game. Since then, Spymaster and others have taken a few steps to make it easier to blunt some of the more viral-like elements of the game. But really, we felt the game just showed the need for Twitter to add at least some basic forms of filters on its core offering.

And despite this blunting, Spymaster says it is already monetizing its product. “We started monetizing about a week ago. So far we’re seeing very high numbers in terms of revenue per user, as well as conversion rates. I can’t share specific numbers with you just yet, but Super Rewards (our partner for our virtual goods store) says we’re knocking it out of the park against comparables,” Abad tells us.

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Apparently the general public wasn’t alone in liking the ad. Hulu has just been nominated for an Emmy Award in the category “Outstanding Commercial” — a feat that few other consumer websites have ever accomplished (I believe the only other startup to get a nod was Snap.com in 1999, when that site was home to a search engine).