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5min Raises $5 Mil

How-to video sites make a lot of sense. Video is often a far better way to demonstrate how to do something than text or audio. And then there’s the business side; viewers seeking out video are expressing interest in a specific topic, meaning they are ripe targets for advertisers.

This is hardly a novel idea; a simple search of our archives brings up more than 10 different startups trying to execute in this fairly narrow space. But it’s a space that’s getting funded. The latest investment announcement comes today from 5min, which says it has raised $5 million in first-round funding from Spark Capital. Along with the funding, the Tel Aviv-based company says it will move its headquarters to New York.

5min CEO Ran Harnevo and his investors are portraying themselves as underdogs compared to competitors like VideoJug and ExpertVillage, which have ample cash reserves. More than ample, actually. VideoJug has at least $30 million in funding, and ExpertVillage was recently bought by Demand Media, which has $320 million in funding. Other competitors include Scripps Howard’s DIY Network, MAKE’s Weekend Projects podcast, SuTree, iAmplify, the pre-launch Howcast and the recently merged Zipidee and TotalVid.

5min, which launched eight months ago, won’t disclose its traffic, but says it had 5 million video views in December and claims its views are growing at a rate of 30 to 40 percent per month. Public traffic estimation sites like Compete and Alexa don’t show much differentiation in the space, or for that matter much traffic to any of the players.

Harnevo said 5min will use its cash infusion to further its soon-to-be-updated video player, which is built specifically for the instructional space with features like slow motion, rewind and fastforward, zoom, printing screens and storyboards. He claimed this is how 5min will compete against the YouTube juggernaut. “If the experience you have on YouTube and on niche vertical web sites is the same, then there’s no point in having a niche,” he said.

Harnevo said the company can get by on less cash than its competitors because it is not looking to produce its own content, the way VideoJug and Howcast are. However, 5min is not soley a user-generated site; partners such as Encyclopedia Britannica and Live to Jam provide professional instruction that blends right in with user submissions.

Spark, a media-focused VC firm, had been looking to get involved with a how-to video site for the last year, according to principal Alex Finkelstein, who now has a seat on the 5min board. He said the firm had tried to create a how-to video startup internally but in the process realized that 5min aligned with its ideas and, better yet, was already having success. Finkelstein and Harnevo said they ultimately hope to compete with general informational sites like Answers.com, About.com and Wikipedia.

9 Responses to “5min Raises $5 Mil”

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  2. Further signs that the how-to format is on the up.

    2008 looks set to consolidate (in a big way) the trend of advertisers and companies producing value-rich video content as a means of gaining attention and brand building.

    This is certainly a good antidote to the pre-rolls everyone wants to see buried. Tim’s (nicely plugged) French maids have incorporated this approach with sponsored editions of the show, and I think we can expect to see a lot more creative merging of genuine use value with a subtle, less invasive mode of marketing in the coming year.

    And no, I don’t mean like QVC infomercials.

    Also, the market for (slightly less glamorous) affiliate sales is huge in this sector. Teach someone how to sign up for website hosting, and get an $85 kickback from the hosting company every time they do. Beats the hell out of lousy CPM rates with sufficient volume.