Riya to Change Name, Looking to Sell Its Tech

Earlier this week, I got a tip from one of my reliable sources that Riya, a San Mateo, Calif.-based startup, was looking to either sell or license its core technology and instead focus solely on Like.com, its visual shopping search business. The money raised from the sale could then be put towards new business efforts without having to raise fresh VC capital. The company has raised over $15 million thus far from the likes of Blue Run Ventures, Leapfrog Ventures and Bay Partners. It raised an undisclosed amount of debt in November 2007.

It seemed like a radical idea for a company that debuted back in May 2006 to much fanfare and, at one point, was close to being acquired by Google. That deal fell through, however, and Google settled for Neven Vision.

But Riya’s story line then took a notable turn. In November 2006, Riya launched Like.com, a visual search engine that focused on goods such as fashion accessories, clothing and shoes.

I followed up on my tip, and spoke with CEO & founder Munjal Shah earlier today. He confirmed that indeed, they are shopping their technology around, but he didn’t offer any further details on the sale or who might be interested. My source says that there are some parties sniffing around. When asked if Like.com would license the technology from the buyer of the “tech”, Shah said. Like.com is only using bits of the Riya technology, and the company won’t sell those bits. He said that many of the issues will be resolved, when and if a sale does happen.

During the course of our conversation Shah also said that the company will officially change its name to Like.com and focus entirely on its visual shopping service. “We have fully transformed to Like.com,” he said. When I asked Shah about the sale of Riya’s technology, he pointed out that Riya was a different company and didn’t really have a need for what it had developed. “We spent money on it, so why not try and recoup some of that money,” he said.

Matt Marshall reported on the state of Riya back in February, pointing out good growth. In our chat, Shah claimed his company will breakeven sometime in the second half of 2008. Looking beyond Riya, I wonder if licensing or selling your IP following a shift in your business model is really a good idea. And if it is, do you guys think other startups should follow Riya’s lead? [Update: I had incorrectly indicated that they were already breaking even. That is not the case, and the company will be breaking even in the second half of 2008.]