Two further signs of just how far the lure of social networking is prompting venture capitalists to loosen the purse strings:

Ning, Marc Andreessen’s social networking platform, has just raised $44m from mutual fund group Legg Mason and others (are mutual fund companies getting into social networking now?) Andreessen had been following the low-key style favoured by the early Web 2.0 crowd but has now decided the time has come to push the pedal to the metal.

According to this note on his blog, Andreessen had been staying "lean and focused" but now it’s time for phase two: scaling up the platform, investing in new features and "platform evangelism and support programs." Just in case you thought that meant Andreesen is ready to swing for the fences, dotcom-style, he adds that in other respects "we plan on staying as lean and focused as we possibly can." Hm.

Meanwhile Bay Partners, a Silicon Valley venture capital firm, says it wants to invest money in companies that are writing applications to run on the Facebook platform. The social networking site’s platform strategy has been one of the Valley’s favourite talking points since it was officially launched in May. First it was hailed as an end-run around MySpace, a way to draw more innovation, and eventually users, to the underdog network. That was followed by an inevitable, if rather rapid, backlash as the tech blogs started to question whether Facebook’s platform is all it’s cracked up to be (we blogged about what the blogs were saying here.)

In reality, it’s too early to assess the Facebook strategy because (a) it’s not clear what the business model for the apps will be and (b) how big a slice of the cake Facebook will want to keep for itself when/if the dollars start to flow. Interesting, though, that Bay Partners wants to invest $25,000-250,000 in apps to run on the network, no business model required - only "reasonable theories about monetisation."

Not that this gets us back to the Sock Puppet days quite yet. Still, it’s another step along the road.

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Small, loss-making tech companies with under $30m in revenues were not meant to find their way to Wall Street anymore.

Heavy-handed regulation imposed by the Sarbanes-Oxley Act and greater caution on the part of investors who had had their fingers burnt before had supposedly closed off the option of an IPO. Any internet start-up worth its salt could expect instead to find itself swallowed whole by Google, Microsoft or IBM. Silicon Valley has been working on the rule-of-thumb assumption that a company needs at least $100m in revenues, and some experience of operating at a profit, before contemplating a public listing.

Someone seems to have forgotten to tell that to Constant Contact, which just filed for an IPO (registration statement here.) An on-demand email marketing company that hasn’t made a profit in its first 12 years, Constant Contact notched up losses of $11.6m last year on sales of $27.6m. And this in the same week that Netsuite, Larry Ellison’s on-demand software company, also registered to go public. Netsuite lost $23m on sales of $67m last year.

Little by little, tech IPOs have been bouncing back, making this (so far) the best year since the beginning of the decade (though the M&A action has fallen off at the same time - and as the National Venture Capital Association points out, M&A will always be a more likely exit route for most start-ups.) The message: this may be nothing like the tech bubble of the 1990s, but the froth that has been building up in the private tech finance markets is finally spilling over to Wall Street.

Silicon Valley is renowned for the contribution that venture capitalists make to its ecosystem, but it is the larger private equity guys that are currently taking centre stage.

Targeting mature companies rather than promising start-ups, deals worth hundreds of millions of dollars instead of seed funding are taking place.

On a manic Monday, Elevation Partners, the Menlo Park fund starring U2’s Bono, paid $325m for a 25 per cent stake in the handheld maker Palm, based in Sunnyvale.

Blackstone Group and Kohlberg Kravis Roberts also were reported to be in talks to buy the San Jose chip designer Cadence, which has a market value of more than $6bn. KKR had invested $700m in Sun Microsystems earlier this year.

The interest is a reminder that the Valley and Bay Area is not just a place of dot.com innovation, but has its deep roots in mature hardware and software companies. Private equity is attracted more by their strong cashflows and reserves than the prospect of rapid growth on the back of technological advances.

Some people tiptoe around controversy. Others embrace it wholeheartedly. That certainly seems to be the case with iYogi, an Indian startup specialising in providing remote tech support for US computer users. Rather than downplay the fact that its computer brainiacs are sitting in New Delhi rather than New York iYogi has based its business model on it.

On Wednesday, iYogi closed a $3m investment round with partners including Canaan Partners and Silcon Valley Bank. The round was the second Indian investment for Canaan, which opened an office an India last year. Their other Indian investment is BharatMatrimony, a ‘dating site’ for Indian couples looking for arranged marriages. It seems Canaan may be onto something here.

eBay and Yahoo! face remarkably similar problems - which should make eBay’s positive earnings news today mildly encouraging for Yahoo shareholders, who just got hammered (only "mildly encouraging", because Yahoo has shown a dependable ability in the past to shoot itself in the foot.)

You could think of it under these three headings:

1. Improvements in monetisation. At eBay they call it RPL (revenue per listing), at Yahoo it’s RPS (revenue per search.) eBay didn’t focus enough on the constant, incremental enhancements needed to keep improving the rate at which listings turn into actual sales, then compounded the error by flooding its site with low-value store listings. Reversing that core mistake has been the work of the last 12 months: better monetisation, in the former of higher RPL, is behind its rebound last quarter.

Yahoo, by contrast, did nothing in the two years after it bought Overture to enhance its search marketing product, then spent two years belatedly overhauling the system. The results of that may come later this year. Now, though, another monetisation brushfire has broken out: advertisers pay less for display ads connected to booming user-generated content sites, since they aren’t as convinced of the value. Yahoo claims to have the tools and the expertise to enhance the value of this advertising - and hence the rates - but it has a lot to prove.

2. Better user experiences. Monetisation is one thing, but attracting the audience in the first place also needs more work. This is the one dark spot in eBay’s latest figures. Listings in its mature US and German markets are hardly growing at all. The solution, according to Meg Whitman: better products. That means more innovation to make it easier to search on eBay’s sites, defeat fraudsters, and so on.

Something similar is underway at Yahoo. After the sclerosis of recent years, which saw little improvement in some of the core services, Yahoo is trying to ramp up the innovation again. That’s encouraging, but it  would be nice if the company had more successes to point to than Flickr and Answers.

3. Changes at the top. eBay’s improved execution follows a quiet shake-up in its top ranks. It brought in outsiders as head of its core marketplace business and chief financial officer.

Yahoo, coincidentally, is looking for outsiders to fill exactly the same core jobs: head of the new "audiences" division, and CFO. Terry Semel’s credibility, and that of his senior management team, has been badly dented. The quality of the new hires will provide one clue as to whether Yahoo can follow eBay in starting to raise its game again.

Talk about a clash of cultures. Google (buyer) and Hellman & Friedman (seller) each had a very different take on today’s $3.1bn DoubleClick deal.

Eric Schmidt of Google was in Argentina this afternoon, but I got the chance to ask him over the phone how he could justify paying so much for a company which, according to one person knowledgeable about it, had revenues last year of only $300-400m. He acknowledged that "the criticism will be, how do we get the money back?", but added that Google had run its sliderule over the business. His assurance:

This is a math problem. We’re good at math problems.

When I spoke to Philip Hammarskjold at Hellman & Friedman, on the other hand, he was marvelling over the very unscientific nature of valuations in the financial markest. The 2005 leveraged buy-out that took DoubleClick private looks like a steal. Hammarskjold:

It’s amazing to look at it now, but there really was little interest in this company.

Fair enough. Hellman & Friedman is a buyer and seller of companies: it’s all about the timing. Google is a strategic buyer: it’s all about the synergies. But there’s a lot more to making a deal of this size work than crunching the numbers. The jury’s still out on last year’s purchase of dMarc for up to $1.1bn and the $1.65bn acquistion of YouTube. Google is surely right to use the gusher of cash from its core business to place some big bets in adjacent markets, but it has yet to prove it can make them work.

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Talk about a clash of cultures. Google (buyer) and Hellman & Friedman (seller) each had a very different take on today’s $3.1bn DoubleClick deal.

Eric Schmidt of Google was in Argentina this afternoon, but I got the chance to ask him over the phone how he could justify paying so much for a company which, according to one person knowledgeable about it, had revenues last year of only $300-400m. He acknowledged that "the criticism will be, how do we get the money back?", but added that Google had run its sliderule over the business. His assurance:

This is a math problem. We’re good at math problems.

When I spoke to Philip Hammarskjold at Hellman & Friedman, on the other hand, he was marvelling over the very unscientific nature of valuations in the financial markest. The 2005 leveraged buy-out that took DoubleClick private looks like a steal. Hammarskjold:

It’s amazing to look at it now, but there really was little interest in this company.

Fair enough. Hellman & Friedman is a buyer and seller of companies: it’s all about the timing. Google is a strategic buyer: it’s all about the synergies. But there’s a lot more to making a deal of this size work than crunching the numbers. The jury’s still out on last year’s purchase of dMarc for up to $1.1bn and the $1.65bn acquistion of YouTube. Google is surely right to use the gusher of cash from its core business to place some big bets in adjacent markets, but it has yet to prove it can make them work.

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More bad news for the "Tech is Different" crowd. Seems that the typical small tech company has been less vulnerable to default than other companies with similar financial profiles - until now.

In a report today, credit rating agency S&P puts the favourable historic pattern down to a couple of things. Small (junk-rated) tech companies tended to get acquired more than those in other sectors. They also benefitted from cheap finance in the form of convertible debt (a function of the sky-high expectations often built into share prices.)

Both those factors have been going away since the end of the bubble, says S&P - a result of what it calls the "maturing" of the industry. Bank loans and other forms of straight debt are becoming more common, and leveraged buy-out firms are competing for acquisitions. Higher default rates will be a natural result.

Of course, you could turn this on its head. As leverage rises, equity investors should see higher returns. It’s not all bad news - but it’s another sign of how the pressures on tech companies to drop their traditional financial conservatism are making them more similar to those in other industries.

John Doerr may recently have lost the fight to get California voters to back a $4bn tax on Big Oil to fund green technologies, but he still has his eyes fixed on the bigger prize. This morning in Berkeley, the top venture capitalist was closeted with once (and possibly future) Presidential hopeful Al Gore.

Gore’s message to the small invited audience at a Kleiner Perkins conference on "greentech": venture capital and private equity investors still haven’t realised how much money there is to be made in this field (though the amount of cash heading into these technologies suggests that’s changing. Kleiner partner John Denniston reckons that more than 10 per cent of VC investment in the US this year will be in green technologies.)

Doerr and other Valley VCs have been learning to play state and national politics as they dive into an area where big policy issues hold such sway. Unfortunately, just as Doerr delicately broached the question with Gore about how he plans to advance his global warming agenda over the next nine months (by which time the next Presidential race will be looming,) a Kleiner heavy turned up to escort this correspondent from the room. Seems Doerr - the man who once famously called the internet "the greatest ever legal creation of wealth in the history of the world" - still prefers to pull the strings behind the scenes.

Right now, US venture capitalists are raising as much new cash in a month as the entire European VC industry is attracting in a year.

That’s partly because, as these latest figures suggest, the amount of new money finding its way into VC coffers in Europe has dropped by more than 40 per cent so far this year. On the other side of the Atlantic investment is up nearly 20 per cent (figures here.)

Much of the money flowing into the US is coming from European investors. Some of it is even finding its way back into business ideas that were hatched in the Old World. Only, American VCs like to keep their promising young companies near to hand, and many budding European entrepreneurs seem only too happy to up sticks and head to greener pastures.

Case in point: Nicky Morris, whose 3B was the only British company to be showcased at the Web 2.0 conference in San Francisco earlier this month. She used the trip to sound out local investors, and found they were keen to draw her company over to California. Shifting part of 3B’s operations to the US was certainly a possibility, she said.