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PixelFish Finds A Local Deal In Backyard — Eric Schmidt's Second Venture Exit In As Many Weeks

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It was only this past December that local business guide Backyard launched, backed by a few big-name early-stage investors. Now, less than five months later, they’re exiting and providing a nice, quick return for those investors.

PixelFish, a creator of local video marketing solutions for businesses, has snapped up Backyard in a deal that is roughly half stock and half cash, we’ve learned. The deal is for between $3 to $5 million — and again, is a nice exit since the service had raised just $150,000 in seed money from 500 Startups, Jason Calacanis, and Eric Schmidt’s Tomorrow Ventures. Notably, this marks the second exit for Schmidt’s venture wing in as many weeks (after MindJolt acquired SGN last week).

So what does this deal mean for the young Backyard? Hopefully not much beyond helping PixelFish with their technology. The plan is to keep Backyard (and Citysquares, which Backyard acquired at launch in December) open, CEO Steve Espinosa says. “We are going to use our technology to bridge the gap between advertising on video sites like YouTube and the social graph utilizing our knowledge of what personalities and interests match up best to certain type of businesses,” he says.

“Since we know what type of personalities are compatible with which businesses, we know which videos those potential customers are most likely on YouTube. Since most YouTube views are either TV shows, music videos, or movie trailers. we can pull out those interests which happen to be the most common things put into a Facebook profile and now all of sudden advertising on music videos on YouTube makes sense,” he continues.

Espinosa will become PixelFish’s CTO as part of the deal.

Backyard was actually part of the first startup hackathon at Facebook (500 Startups’ Dave McClure got them into that program). And it relies heavily on using Facebook data.

“The majority of our technology was built to recommend places based on pricing (which we collect from venues via a call center) and your demographic data (which we got from Facebook Connect). We then would crawl fan pages of businesses that had pages, analyze the demographics of the fans of that page, then try to match you up with the best price and the one that closets matched your personality,” Espinosa explains.

“To put it simply we gave businesses a personality based upon their fans on Facebook and then played the match.com game knowing the type of people that went to the business and how their prices compared to other businesses,” he notes.

PixelFish raised a new Series B of funding just this past December. The entire Backyard team will be moving over with the deal.