Another Huge Video Funding: Dailymotion Gets $34M

Paris-based Dailymotion has raised $34 million in a second venture capital round, the company just told us, confirming a report by The Wall Street Journal’s online edition (behind paywall). The funding comes on the heels of close competitor Metacafe announcing it had secured $30 million less than two weeks ago.

It appears that investors think this will be a war of attrition. Hulu, the new name for “NewCo,” the joint venture between News Corp. (NWS) and NBC, recently raised an astonishing $100 million, and it hasn’t even entered the market yet. We’re somewhat surprised that investors in all three companies think this is a war they can win.

Indeed, the stakes are getting higher and higher for independently operated general audience video sites. Both Dailymotion and Metacafe are fighting market leader YouTube and media and Internet portals around the world. Earlier this summer, comScore noted that the two sites are jockeying for position just outside of the top 10 video sites in the U.S. (where Google, Fox Interactive, and Yahoo sites lead). In April, Dailymotion had 4.7 million unique video streamers in the U.S., while Metacafe had 3.7 million. By contrast, Google sites (including YouTube) had 131.9 million unique video streamers in May (read here for more on comScore’s new video measurements; also note that these numbers are comparing April to May).

The new Dailymotion funding comes from Advent Venture Partners and AGF Private Equity, based in London and Paris, respectively. It appears from the WSJ article that prior investors Atlas Venture and Partech International may not have participated in the round; update: Dailymotion tells us they did participate in the round. The two VC firms had previously put $9.5 million into the company. (Metacafe has raised $45 million in total, if you want to go dollar-for-dollar.)

Around the time YouTube was bought by Google last year, Dailymotion acquired a reputation for being a site that tended to be lenient towards unauthorized uploads. The company has since cracked down on copyright infringement, earlier this summer deploying fingerprinting technology from Audible Magic (this is the same stuff NewTeeVee tested and found lacking). Dailymotion is also diversifying its strategy to include original programming, contests, and licensing Hollywood-style content.

While until recently individual companies enjoyed relatively unchallenged dominance in certain countries, they are now stepping onto each other’s turf, as evidenced, for example, with YouTube going to France and Dailymotion coming to the U.S..