17 Comments

Summary:

As readers know, the venture dollars are flying thick and fast into the online video space. Today, Veoh Networks, announced that it had raised $12.5 million in a Series B venture capital financing from Michael Eisner, former chairman and CEO of The Walt Disney Company, Todd […]

As readers know, the venture dollars are flying thick and fast into the online video space. Today, Veoh Networks, announced that it had raised $12.5 million in a Series B venture capital financing from Michael Eisner, former chairman and CEO of The Walt Disney Company, Todd Dagres, managing partner of Spark Capital, and Time Warner. Previous investor in the company, Shelter Capital Partners also participated in this round of financing. (The New York Times has details on Michael Eisner’s new investment company, Tornante, and life after Disney.)

We had heard rumors of this funding couple of weeks ago, though could not lock down the names of the investors. Dmitry Shapiro, chief executive of the company says that the new money will be used to scale the business, hire more people and increase the marketing message. He would have to focus on marketing especially since the market is getting a tad crowded. Also, he would have to work hard to get over the damage done to it reputation by its recent fracas with the video blogging community.

Update: Erick has more details on the funding at Business 2 Blog

Here is a short list of some of the recent online video fundings:

* Veoh raised $12.5 million to bring the total to $14.75 million
* You Tube raised $8 million to bring the total to $11.5 million.
* Revver raised $8.7 million in a recent round.

You’re subscribed! If you like, you can update your settings

  1. So Youtube, which is clearly kicking Veoh’s butt, and not going away any time soon, has raised less money?

    Which begs the question, why would Eisner and company invest in Veoh? They don’t have EVEN CLOSE to the amount of traffic Youtube has… Do they believe they can compete with Youtube?

  2. Yeah, that is weird. I’d think YouTube would probably raise another round pretty soon, with their bandwidth costs and all.

  3. I think it makes more competitive sense to raise less money as far as keeping control, focus and ownership of one’s business.

  4. All these companies are going to need a lot of money to scale up and market themselves to the consumers. I am not sure how many of these will survive but man it is going to be a very very expensive business to be in.

  5. But not nearly as expensive as launching a new traditional media company in a space dominated by a handful of 800 ton dinosaurs.

  6. Wasn’t that the rationale in the priot dot.com period: Raise a lot of capital and scale up quickly. That method often failed. I wonder how much google raised in relation to Webvan?

  7. Veoh’s site looks pretty good, and it seems to run well, too. I can see using the money for marketing the site, but hiring more people seems like it might be just a waste of money. I think there’s too much emphasis on hiring people when VC’s come on board. Just my opinion.

  8. good point enric. i think this is the same path many of the companies are going to take. the funny thing is no one is talking exit. since google video is already out there, not a chance for an exit there.

    that leaves yahoo and microsoft. okay throw in aol and ask.com. but given that there are 100 of these companies, there is a good chance 96 will flame out, and four will be sold, and that is the best case scenario.

    yikes… right!

  9. My gut on YouTube is they raised less money so they could keep more equity with the founders, or they weren’t getting the valuation they wanted. This is my mind at least would point to a relatively short term exist strategy as they don’t seem to be socking away money to build for the long haul.

  10. A company that is doing well may not want to raise too much capital, this way they can keep more equity. Maybe subdebt would be better, especially if they don’t have a high burn rate? I hope someone with real business experience will correct me if I am wrong.

    I was thinking it would make sense for MTV to enter into a strategic partnership with one of these sites (YouTube is the only one I am familiar with). MTV gets a lot of static for not having enough music video programming. If they put all the videos on the web with a good UI, they would probably get less complaints and more revenue. And given that music videos are promotional materials anyway, I can’t see recording studios complaining (okay, I can, they can be braindead sometimes).

    Thanks,

    Jacob

Comments have been disabled for this post