Human powered search engine, ChaCha, raises more cash

ChaCha, the search engine company that hires people to answer your questions in real-time as you search for things, said it has raised $10 million in private financing.

The controversial company hasn’t said much about traction. A spokeswoman said merely that traffic “doubled” last quarter, but that’s vague. She didn’t elaborate, but said she is checking with the company about what more she can say.

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It’s an odd company, because people powered search is somewhat inefficient. ChaCha offers its services for free. Using humans costs ChaCha much more money to deliver its services than it does for a company like Google. ChaCha lets you use its search engine to find things without a human, but if you get stumped, it provides a human guide who engages with you using a real-time IM chat (see image below)

Although, if it can smart enough people working at sweatshop-labor wages, its conceivable the company may be able to pull it off. However, it its new push to develop a mobile answers application may be what helps it stand apart.

The company is controversial because of it ties with the University of Indiana. The company was founded by two IU alumni, and it was revealed recently that the company used the university’s library and IT staff to work for the search engine for free. University president Michael McRobbie was a board member of ChaCha until May. Moreover, Jack Gill, an investor, was also made a Indiana University trustee without being a full-time resident of the state. The company’s chief executive Scott Jones, has also drawn attention with his high-tech 27,000 sq. ft. house in central Indiana, and with multiple other companies he’s helping run on the side.

We reviewed the company here (scroll down) and the company’s initial round of $6 million in capital here.

The company has now raised a total of $16 million. In the latest round, the Indianapolis company got a $2 million grant from Indiana’s 21st Century Technology Fund. The other $8 million in the second round came from a group of investors including Morton Meyerson, who led the round, and existing investors Bezos Expeditions (Amazon’s Jeff Bezos), Rod Canion, early CEO of Compaq, and Jack Gill, the founder of Vanguard Ventures. It’s not your traditional set of venture investors, and says something about the off-beat nature of the company. Meyerson listed the company’s mobile answers application as one of the reasons he led the investment.