London VCs invest $8m in Daylife(3)

New York-based news aggregation site Daylife has raised $8 million from two UK venture capital firms, in the latest example of US start-ups taking funding from VCs based in London rather than Silicon Valley.

Daylife, a US online news aggregation site, has attracted $8 million (€6 million) of venture capital funding from London-based firms Balderton Capital, formerly the European arm of US group Benchmark Capital, and Arts Alliance.

Daylife operates its own website, and also provides services for other news aggregation sites like The Huffington Post and environment site TreeHugger. It also operates some of The Daily Telegraph’s website.

The company raised more than $3 million in 2005 and 2006 from US investors including The New York Times Company, and US investor Craig Newmark, best known as the founder of the San Francisco-based website Craigslist, journalist Jeff Jarvis, until recently the president of publishing group Advance.net, and online entrepreneur Azeem Azhar, the current head of innovation at Reuters Group.

Daylife’s chief executive, Upendra Shardanand, was one of the founders of Firefly, an online personalisation site that was bought by Microsoft in 1998 for a reported $40 million, and went on to develop the first version of Microsoft Passport.

London has become a more popular hunting ground for US start-ups seeking funding because of its increased expertise in online media and the availability of exits through London’s alternative investment market, according to a market source. US open source software MySQL recently received venture capital funding from Benchmark Capital’s European team, before it became Balderton, in 2006.

It is the second time that Balderton and Arts Alliance have invested together. The two groups previously joined forces to back LOVEFiLM, a UK DVD rental company, in 2004.