2008 is the year of the search engine startup. Hot on the heels of Powerset’s partial launch earlier this week, stealth search engine Blekko (no logo, no website, just this and, apparently, some technology) raised a second round of financing.

The company raised $3 million in equity at a $23 million post-money valuation. All previous investors participated, and new investors Marc Andreessen, SoftTech VC and Western Technology Investment also invested. They simultaneously closed a $1 million lease line with Western Technology Investment for server leases.

We don’t know much yet about Blekko, which was founded by former Topix founder/CEO Rich Skrenta. The company says they won’t be launching anything to the public until 2009. See our original post on Blekko for more background information.

See our coverage of Cuill as well, another hot stealth search startup we’re tracking.

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San Francisco based Powerset will be publicly launching a long-awaited beta version of the service in the coming weeks, the company told me yesterday. They are working on a new kind of search engine that will understand natural language searches and compete with keyword matching engines that dominate search today.

An early version of the search engine, which was demo’d to me yesterday at their offices, has been available to some users of their Powerlabs site. But for the most part, it’s been kept very quiet.

The early version of the service will serve as a showcase for the user interface and engine itself, but it will not have a full web index behind it. For now, Powerset will query only Wikipedia and Freebase. But when I tested the service I had something very similar to the “Aha!” feeling that ran through me the first time I ever used Google. In short, it is an evolutionary, and possibly revolutionary, step forward in search.

I’ll temper that statement since the company is not putting anything more than a tiny index of two sites behind the service for now. In particular, the fact that Powerset doesn’t have to bother with spam control and other relevance issues (which is what made Google so great when it launched), means it can’t yet be considered any kind of challenger in the search space. But anyone who uses it will be able to see the potential value of the engine when it is placed in front of a full web index.

For now the company is keeping specific features of the engine confidential, but I can say it has evolved significantly since a screen shot was released in mid-2007.

In preparation for the launch, some of the Powerset team have vowed not to shave until the product is released. They are chronicling their facial hair adventure on a site called Powerstache, which has been covered by Jessica Guynn at the LA Times.

Rumors have also been swirling around the company in general. A number of sources have said that Powerset is pitching for additional capital. And the company also appears to have put plans to hire a new CEO on hold - founder Barney Pell is still firmly in charge at the company.

Powerset is one of three new search engines that we’re keeping a close eye on. The other two, Cuill (pronounced “cool”) and Blekko, are still deep in stealth mode.

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Rich Skrenta, who created the first computer virus (Elk Cloner), co-founded the Open Directory Project, and co-founded online news site Topix, may have bitten off the biggest challenge of his career - taking on Google. In search.

Skrenta left Topix last June. He started his new company, Blekko, almost immediately, along with five others from the Topix core team. They raised $2 million in seed funding in September from Baseline Ventures, two early Googlers (David DesJardins and Jeremy Wenokur), and the founding team.

The company is still deep in stealth and, apparently, working out of a garage in true startup style (see image below). The Blekko website, which today has nothing on it except a picture of a puppet created by Skrenta’s daughter, isn’t even close to having a landing page up, let alone the final product. But eventually Skrenta says they’ll launch a full scale search engine to compete with the big guys.

Skrenta, who’s very media savvy, won’t say much about how he’s going to tackle search (he’s not a fan of PageRank though:“PageRank wrecked the web. Google is the cause of all of this. and Google is going down with it.”). He says they are looking at improvements on the back end (indexing and query serving) as well as the user search experience itself. Beyond that, he says we have to wait. And it might be a long wait at that. The company, Skrenta says, may not have a public prototype available until 2009.

Normally an entrepreneur announcing they’re taking on Google with a six person team and just $2 million in funding would either be laughed at or ignored. In Skrenta’s case, he has proven himself more than once as capable of taking on big challenges and winning. This will be a company to watch, and speculate on, in 2008.

There are other promising search startups out there. Powerset, Cuill (we’ll be hearing more about them soon) and the upcoming Wikia Search Engine are all yet to launch. Mahalo is growing fast (but still tiny). Can anyone unseat Google? Perhaps not any time soon. But you don’t have to get much market share to be a huge winner in this space - every 1%, they say, is worth a cool billion dollars.

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