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Bright Lights, Big Bucks, Brightcove

With the launch of its service and video network, Cambridge, MA-based broadband video startup Brightcove is looking to raise a substantial round of capital, sources within the investment community say.

According to our sources, the company is looking to raise just over $55 million in fresh capital, give or take a few million. That kind of money would give the company a post-money valuation well north of $225 million range, sources say.

This would be the Series C round of funding for the company that has already raised over $21 million in two rounds. General Catalyst Partners and Accel Partners invested $5.5 million in the first round of funding. In November 2005, several other investors including IAC, AOL, Hearst Corporation and Allen & Company invested $16.2 million in the second round. It also counts Barry Diller, the media powerhouse as one of its board members.
Morgan Stanley and Allen & Company are acting as bankers for the company. We contacted Jeremy Allaire, chairman and chief executive of Brightcove, but he declined to comment.

The sale of YouTube to Google for $1.65 billion has energized the investor interest in the broadband video space. The deal has also made large media companies including the New York Times, CBS and several others take online video market very seriously, and at the same time defend their turf.

Brightcove, often misunderstood, is the perfect answer for most of the large media companies. After various conversations with Allaire over a period of time, I have come to view Brightcove as a broadband-equivalent of a cable system, which allows anyone to publish, and monetize their video content. It is a publishing platform, a network, and a distribution channel, all at the same time.
Allaire outlines the company and its strategic vision on the company blog. It is an excellent even if long winded primer on the company, which had done a good job of balancing the arcane demands of large media owners, small content creators and users, though it is not as widely known as some of the other online video services.

Those familiar with company plans say that the new cash will be used for marketing and increasing the heft of the Brightcove network, both from sales and talent perspective.

12 Responses to “Bright Lights, Big Bucks, Brightcove”

  1. HI Om,

    There is a distinct thing I see in your website. That is to provide insight and not just cover new startups like a lot of the other popular blogs do. Techcruch, venturebeat et al. Its like creating a blue ocean for yourselves. Just read robert young’s post on Google -the advertising OS. This summary of the big picture of popular trends is commendable.

    Keep up the good work


  2. After Brightcove made its beta announcement last week, it seemed to have some growing pains – especially in the area of uploading videos, and its XP-based client, PublishPod.

    Overall, it’s an excellent way to publish groups of videos, and being able to play all videos with one or more tags helps cut down on administration.

    The big question is Brightcove’s pricing. They still haven’t announced the pricing for smaller companies, only saying that it will be ‘affordable.’ Unfortunately, that may end up being a disincentive to start uploading lots of videos to Brightcove, only to possibly find out you can’t afford the rates.

  3. Whilst I do feel there is a little too much hype over Internet video, I also am intrigued by Om Malik’s comments that there is something more to Brightcove than just another Youtube.

    I took a moment to read the materials on their website and I slowly got very interested indeed. Yes, they could do a better job selling their major proposition.

    For me they promote primarily professionally produced “Internet” or a new media video (which is very different production, length, cotent, etc from other entertainment or documentary video or cable content or even user generated content). This type of content is made by a new genre of small and large media companies looking for new ways to syndicate and distribute this content.

    Often when service providers talk about getting into the triple play or quad play space, they talk about taking the same traditional content that cable and TV companies offer and offer it on the Web or cellphones. Or cable TV and TV companies wanting to offer Internet services on TVs etc.

    To me the success is based on clear differentiation and meeting clear needs. You TUbe was the user generated content, for the web and used by web users. Different audience, and different use, leading to a different type of success which a company such as Google can monetise.

    So if Brightcove fills the gap for professional “Internet” video companies to model how traditional content is syndicated, sold using the power of the Internet web 1 and web 2.0, then they may be onto something here. Since there are not too many of such companies around, it is no wonder Brightcove also has its eye on being the “Internet” syndicator for traditional content as well.

    Meanwhile, as telcos and ISPs offer IPTV, Brightcove could be their key content partner offering relevant content and as more cellphone providers also look into the video space, Brightcove should definitely look into offering a mobile interface to access their content thus potentially filling yet another gap.

    (side Notes: I feel that users on the Net, or on a cellphone look for very different type of content than traditional TV or cable users. Some studies have shown that users on the Net or cellphones will only watch anything between 5-7 minutes and no more.

    Brightcove seems to offers an interesting suite of services allowing for upload, encoding, distribution, syndication, joint marketing, etc which this group of content creators can benefit from. This is probably where they will be spending most of their monies- to create a buzz and becoming the site of syndication for these players)

  4. While I agree with previous posters that the money being invested seems over the top, I believe that the technology is not currently all in place. That said, I don’t think this money is for technology.

  5. There still seems to be confusion about Brightcove’s positioning. After having read their statement, my interpretation is that they aspire to:

    1. Win in the TV-to-web play, bringing the hundreds of cable television channels to a web site near you.

    2. Win in giving indie production studios direct access to their audiences (undermining their existing distribution partners?).

    3. And win in the consumer markets, both on the amateur video production side and on the consumer web / blog publishing side.

    Lofty goals. Diverse goals.

    We at Splashcast wish Brightcove the best of luck with goals 1 and 2. However, we question goal 3. Why risk diluting focus, R&D resources, money, and marketing message on such a very different market & product (especially as players like SplashCast, which are exclusively focused on the consumer media syndication market, begin cropping up)?

    As it is, there is already some confusion about their vision and I’m not sure their recent positioning statement will help clarify. That said, I respect Jeremy Allaire very much and look forward to the road ahead!

  6. funny, this is starting to really feel like the dotcom boom in one big way: companies that can not be understood…remember the throngs of startup folks who couldn’t communicate with industry outsiders (“we’re a value add digitization intermediary that monetizes the blah blah blah)

  7. How much revenues have they generated with the $20 million invested so far ?

    I agree with previous commenter, their technology is already in place. Then it is obvious that online video will quickly become effortless as websites, so they must have a very good story to tell investors on the the sales side, like strong positive returns from network building which justify so much money in one place.

    Or maybe they need a few million bucks to produce shows ? Is that what it means the “talent side” in “increasing the heft of the Brightcove network, both from sales and talent perspective.” ???

  8. The market was stirred by the Google YouTube acquisition, but $55 Million? What For? Marketing? Traffic and bandwidth? Because technology is already there so R&D is off the question, and manpower isn’t worth that much.