The Silicon Valley venture capital fund that helped to propel Google and Amazon into the mainstream has seized on Shazam, the music recognition service, for its first investment in Britain.

The move by Kleiner Perkins Caufield & Byers (KPCB) is a vote of confidence in Shazam’s innovative technology, which allows users to identify songs by holding their mobile phone up to a speaker. Use of the service, which was launched in 2002, has exploded because of its popularity on Apple’s iPhone and other smartphones.

More than 50 million people have now used the Shazam service, up from only 15 million in February. Regular users tend to use it eight times a month and 8 per cent that ask Shazam to identify a song go on to buy it, according to the company.

It is rare for Silicon Valley funds to look for growth opportunities in Britain. Of KPCB’s 520 investments, only three have been in Europe. The investment has been made through the iFund, a $100 million initiative aimed at stimulating development around the iPhone platform.

Matt Murphy, who led the investment in Shazam and manages the iFund, said that the company had the potential to be positioned at the forefront of the evolution of the “massive” mobile entertainment market. “We’re looking for the next generation of breakout opportunities. We’ve met hundreds of companies but Shazam was the only company we saw with breakout traction,” he said.

Though KPCB has not detailed its investment in Shazam, “it’s a healthy sum of money”, Mr Murphy said.

Shazam raised £11.5 million from Acacia Capital and DN Capital, its initial investors.

Mr Murphy said that Shazam was profitable and did not need the capital, but he convinced the technology upstart that it would benefit from the venture capital company’s experience in developing digital consumer businesses, including household names such as Google, Amazon, Electronic Arts, the games giant, and Compaq, the computer manufacturer.

Shazam makes money through several methods, including taking a cut on advertising revenue, earning a fee when customers buy a song using the application and by people paying to subscribe to a premium service. Many non-smartphone users still use the one-off tagging service that identifies a song at a cost of 50p.

Andrew Fisher, chief executive of Shazam, said that the company would try to enrich its service beyond the ability to identify and buy songs, by enabling users to buy concert tickets and access reviews and other information about the music they have queried.

Mark Mulligan, an analyst with Forrester Research, argued that the company still had a long way to go before it became a viable product rather than a nifty feature.

“The technology is clearly very good, but I am still not convinced they have hit the nail on the head in terms of its business model. It hasn’t shown its full potential yet,” he said.

* O2 will launch the Palm Pre smartphone on Friday, but network problems that have frustrated its iPhone users look set to continue. Matthew Key, its chief executive, said the demands that smartphones had placed on its network had caused “growing pains”, with the amount of data traffic handled doubling every three months. The problem was limited to isolated areas, especially in London, he said.

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