Peanut Labs, social network turned market research company, raises round

Peanut Labs is a great example of how an inexperienced yet scrappy team can scramble toward a new strategy to save themselves. The company, formerly called Xuqa, has just raised a $3.2 million round of capital to bolster it in its new mission.

Xuqa, you’ll recall, was a fast-growing social network when it started in 2005. It got big in Turkey and Iran, but rivals like MySpace and Facebook quickly took over the US and started targeting large swaths of rest of the world.

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Xuqa’s 20-something founders initially raised a small amount of funding, but then realized they were running out of money because they didn’t have a way to monetize their site.

After much experimentation, they discovered that social networks were a great place for doing market research — and making money (see our coverage here). They’d get paid by researching companies to run simple surveys for users, then collect that data and send it back to the researching companies.

This strategy worked so well that San Francisco-based Xuqa completely changed direction nearly a year ago, renaming itself Peanut Labs, and began running surveys across widgets on other social networks. I covered the company’s evolution in some detail last July.

Today, Peanut Labs says it will have “seven-figure revenues” for the 2007 fiscal year, along with 20 percent month-to-month revenue growth. It expects “eight figures” this year.

The company has some promising internal numbers. Its surveys reach some 27 million users, across 70 widgets on social networks like Facebook and MySpace. It has had more than half a million people respond to surveys in the last two months, with a response rate of 29 percent. It is gaining 100,000 new social network users to sample, per month.

The average widget publisher who uses Peanut Labs is making $20,000, the company says.

It has taken on the additional round of $3.2 million in funding from return investor BV Capital and new investor Leapfrog Ventures. It plans to use this money to expand its services for its market research clients, and improve the survey-taking user interface.