Conduit, a service that enables web publishers to easily create their own toolbars for Internet Explorer and Firefox, has raised $8M in a Series B round with Benchmark Capital.

We covered Conduit a couple of times early last year when the company had 25,000 partners and 5M toolbar installs. The company now has 140,000 partners with 12M+ installs. The company is cash-flow positive and describes its “web community toolbar” offering as a superior alternative to personalized homepages like Netvibes or Pageflakes, which it says require too much time to set up.

I’m not a big fan of browser toolbars myself; all the major browsers have search functionality and pop-up blockers built into them these days, bookmarks work just fine for me, and RSS readers do a better job aggregating the content I want to read anyway. But I can see publishers loving toolbars since they effectively market their brands by showing their logos to users every time they surf the net. And they are probably quite appealing to users who are loyal fans of very few sites, and who don’t care about giving up a little browser real estate space.

Conduit (Disclosure: They are a current TechCrunch sponsor), which has created a white label browser toolbar, released a new product tonight called myConduit. I’m writing about it because it’s a good solution to the problem of toolbar overload.

Instead of having each toolbar you’ve downloaded appear in the browser window, which takes up a lot of screen realestate, Conduit now lets users switch toolbars via a drop down menu. This only works for Conduit-powered toolbars, but it would be a nice browser feature in general in my opinion.

Given the advertising relationship I won’t go into more detail. But this is something that publishers might want to look into. Our Toolbar, linked in the navigation bar above, has been really useful particularly around getting event updates to attendees. The company now has 130,000 unique toolbars and 12 million toolbars installed (Major League Baseball has one for every team).

Israel and California based Conduit is announcing a deal today with Google to provide search for their customizable toolbar product. The news itself isn’t all that interesting, although it will help Conduit with revenue. But the Conduit service itself is really taking off.

Conduit is a white-label, customizable toolbar for other web services. Like the Google and Yahoo, Conduit’s partners can offer users a branded toolbar with customizable functionality, such as a company logo, live chat, broadcasts to all users, etc. The problem, of course, is that most companies don’t have the resources or knowledge to create their own toolbar, and they are completely focused on their core business. Conduit is a good option for those companies.

The company now has 125,000 partners and 5,000,000 toolbar installs. Users can actually create a customized toolbar in a few steps (we’ve done it), for free, and offer it to users for download at a customized domain name ([example].ourtoolbar.com). If you register you can also qualify for revenue sharing from searches conducted on the toolbar.

We created a conduit toolbar for our New York party last November, and used it to update people on the details of the event. We had a few hundred downloads (most people still have it installed), and based on our experience we’re considering creating a permanent one that will include the most recent TechCrunch headlines and other functionality. If you have a community, this is a tool you may want to offer.

The company has raised $2 million in funding from Yozma, an Israeli venture firm.