Investors somehow believe that Cuil was worth $200 million when they put money into the company.  Cuil raised about $33 million in funding from several investors.  What possibly drove Cuil’s high valuation is it’s confidence in challenging Google.  Google is the most powerful search engine company on the map today and they are worth $140 billion. 

It seems like that any search engine that believes they can challenge them will get funding and a high valuation.  And Cuil used the same strategy as Powerset to get funding: building the hype.  Cuil claimed that they index more links than Google, but they struggle to find results as accurately.  

Powerset claimed to have better search technology than Google.  So they raised $20.5 million and was acquired by Microsoft for $100 million.  The only product that Powerset launched was a Wikipedia search solution before the acquisition.  Microsoft plans to integrate Powerset into Windows Live down the line.

To shake things up further, Cuil’s VP of Product Louis Monier resigned from the company.  Building the hype usually works against the founders of a start-up because it puts more pressure on them.  More pressure means more stress and more stress leads to less of a desire to stay with a company.

Matt Marshall of VentureBeat wrote an interesting article about how Cuil may have a hard time finding an acquisition with such a high valuation.  Cuil needs to do something drastic to prove that they are a worthy adversary of the big 3 search engines out there.

Cuil is a new search engine that officially launched last night.  Cuil boasts over 120 billion links to websites.  This is very comparable to the size of Google’s index as well.  Cuil was founded by Tom Costello, Anna Patterson, and Russell Power.  Patterson and Power both worked for Google prior to starting up Cuil.

Cuil’s strength is that they can index websites faster and cheaper than Google.  Cuil has raised about $33 million in two rounds of funding from Greylock, Tugboat Ventures, and Madrone Capital Partners [Crunchbase].  Cuil has about 10-15 employees based out of Menlo Park, Calif.

Another strength of Cuil is that there are categories that appear on the right side-bar when common keywords are plugged in.  Below is a screen shot:

If I search for my own name, lots of results appear.  But if I search for “Michigan” or “California,” no results currently appear.  This indicates that Cuil has a while to go before indexing everything correctly.  I can honestly say that I’ve been more impressed with Cuil than any other Google, Yahoo!, MSN, Live, and Ask.com alternative so far.

Update: Here is the official press release

Related Links:
1. TechCrunch
2. L.A. Times
3. Techmeme Discussion