The Top 50 Venture-Backed Companies

Venture capitalists are betting that the next Google Inc. or Facebook Inc. will have a name like Xactly, Chegg or Zoosk.

In what may be a sign of a re-inflating Web bubble, The Wall Street Journal’s second annual ranking of 50 venture-capital-backed companies shows investors are chasing after Internet firms, many with a consumer focus.

Makers of Web-based software like Xactly Corp., e-commerce sites like Chegg Inc. and social services like Zoosk Inc. pepper the list. It also features four online publishers and two makers of social-networking tools for businesses.

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Chegg Inc., a textbook-rental service, moved up one notch on the list to No. 31.

Even those firms in fields without a particular tech focus, such as health care or business services, have incorporated social-networking or mobile technology into their offerings or business models.

To be eligible for the ranking—compiled by research firm VentureSource, a unit of Wall Street Journal owner News Corp.—companies must have received an equity round of financing in the past three years and be valued at less than $1 billion, as the aim is to identify lesser-known contenders. That excludes a number of prominent companies, including Facebook, Twitter and Groupon Inc. Some 5,743 candidates were considered.

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For the second straight year, a health-care company tops the list: Castlight Health Inc., a San Francisco firm whose technology allows consumers to run side-by-side comparisons of out-of-pocket medical expenses. The three-year-old company, formerly known as Ventana Health Services Inc., was No. 14 on last year’s list. It takes the top spot from Pacific Biosciences Inc., a genetic-sequencing technology firm that went public in October.

Start-ups with potential for technological breakthroughs in health care, mobile communications and business software topped The Wall Street Journal’s second annual Next Big Thing list.

Castlight, like others on the list, is trying to modernize various aspects of health care, an area that is benefiting from federal stimulus spending. No. 18 PatientSafe Solutions Inc. has designed a patient-safety system for Apple Inc.’s iPod Touch, while No. 32 Everyday Health Inc. runs a network of health websites. Castlight scored high marks for raising $80 million from some big-name investors, including Oak Investment Partners and U.S. Venture Partners.and Venrock

Many companies on the list are in the long-established IT category that venture capitalists have traditionally put their money into. For instance, the top 10 include companies that provide wireless infrastructure or data-management services.

Xirrus Inc. earned the No. 2 spot. The provider of Wi-Fi technology made the cut in part because founder Dirk Gates previously took another high-tech start-up, Xircom Inc., public and then sold it to Intel Corp.

No. 3 on the list, Xactly, a software-as-a-service company that provides sales-compensation tools, has partnered with heavyweights Microsoft Corp., Oracle Corp. and Inc., which invested in the company last June.

Several consumer Internet start-ups moved up the list, or joined it for the first time, showing the surge in valuations for anything dot-com. Among those moving higher: No. 8 Glam Media Inc., a publisher of lifestyle websites; No. 12 Etsy Inc., an online crafts market; No. 29 Zoosk, a social-dating site; and No. 31 Chegg, a textbook-rental service.

Two firms that make social-networking tools for businesses made the list. No. 26 Jive Software Inc. is backed in part by Kleiner Perkins Caufield & Byers, which invested in Facebook and Twitter. No. 46 Yammer Inc.’s investors include Founders Fund, which bet early on Facebook, and Charles River Ventures, one of Twitter’s first backers.

Some companies on last year’s list performed well enough to make the cut again this year, but lost ground in the rankings relative to their peers, highlighting the competitive nature of the survey.

Solar-cell producer Suniva Inc. received better scores than last year but fell to No. 38 from No. 15. Silver Peak Systems Inc., a maker of data-center appliances, hasn’t announced new equity funding since a $21 million round in early 2008, and slid to No. 44 from No. 20 partly as a result.

Another company, Fusion-io Inc., a Salt Lake City-based maker of flash-memory drives, raised $45 million in new funding shortly after ranking at No. 2 last year, but it’s now at No. 20 because its valuation grew more slowly than others on the list. On Wednesday, Fusion-io filed for a $150 million IPO.