Blekko is taking their own sweet time to launch, so don’t expect much more from them until they are good and ready. In the meantime, they’re hiring like crazy.

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This is a hard space to find a niche in, but the money at stake if you succeed is staggering.

Blekko, the stealth search engine we’ve been covering since early 2008, has raised a third round of financing – $11.5 million from USVP and CMEA. That brings the total amount of capital raised to $17.5 million, including a $1 million credit line. Their last round was in March 2008.

We took a look at Blekko in late May. The company wants absolutely no press at all while they continue to bake the product, but we think there is something interesting under the hood. And apparently a few investors agree.

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Life is not easy for search engine startups. FIrst, it’s hard to create something that doesn’t fall flat against Google. Too much hype (Google Killer!), whether the company drives it or not, inevitably leads to disappointment.

Cuil is walking dead, for example, and Wikia Search is just dead. Other ambitious projects like SearchMe are dealing with tepid user enthusiasm, and Wolfram Alpha’s over-hype has cost it credibility.

Any search engine startup with a shred of common sense wouldn’t want to create a lot of hype about itself before launching. There are too many dead bodies lying around to prove how badly that strategy works.

But on the other hand: ambitious startups need to hire talented engineers, and they need lots of money. Crawling and indexing the web is expensive and requires thousands of servers. Those servers aren’t free. So there needs to be at least a little awareness of the startup out there for hiring and fundraising purposes.

New search engine startup Blekko has been trying to figure out exactly where pre-launch press should begin and end. They’ve said very little up to now and haven’t made any big promises at all. We first covered them in early 2008, and have subsequently noted some high profile investors that have put money into the project.

But that’s it. The company has said clearly that they don’t want press, and most bloggers and other journalists have respected that. Not only that, all their website has on it is a cute paper bag puppet. No ridiculous promises of anything at all. We had to beg them just to get a logo (the puppet looked absurd as their logo in CrunchBase).

So why the slight buzz yesterday and today? They’re preparing to launch later this year and they are raising more money to ramp up. They’re starting to show people a little more of the product. We’re impressed. As are others.

Is Blekko a Google killer? I don’t think so. And the company isn’t claiming that, either. But I do think they have a really cool search product that a lot of people are going to love. I look forward to writing about it when they prepare to launch.

But until then we’re going to give them the privacy they’ve requested to fully bake the product. Because the last thing we need is another over-hyped pre-launch search engine that’s called a failure just because they aren’t a Google slayer a week after launch.

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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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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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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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