VoloMedia at a Crossroads; Ditches Sales to Focus on Ad Serving

VoloMedia laid off its sales team last week and plans to focus on its ad serving technology for downloaded media. The move came at nearly exactly the same time as competitor Kiptronic was bought by Limelight Networks last Wednesday and Thursday.

Sunnyvale, Calif.-based VoloMedia reached a crossroads when it failed to raise a new round of funding (though that could still happen), and Silicon Valley Bank called in a bridge loan, say multiple sources. “We are open to M&A,” VoloMedia founder Murgesh Navar told us today. He also said venture capital term sheets are “imminent” and disputed the fact that there ever was a bridge loan.

Former employees spoke of mismanagement and problems with execution. Their accounts of how many employees would stay with the company differ from Navar’s, but according to everyone involved an engineering team of somewhere between eight and 16 will remain, led by Navar.

VoloMedia, which had previously been called Podbridge, had raised at least $22 million in funding from investors including Sutter Hill Ventures, Mayfield Fund, Worldview Technology Partners and Leader Ventures.

Competitor Kiptronic made a similar decision to drop ad sales, subsequently integrated with DoubleClick’s DART, something VoloMedia has yet to do. Limelight did not disclose the price of Kiptronic, but it’s not said to be much more than the $9 million the startup had raised.

Dynamically served advertising into downloaded media is a tough nut to crack, and with the changes in store for these two companies it’s not clear who will be around to monetize podcasts. From early on we had been skeptical that VoloMedia’s approach to measuring offline media use via plug-ins would be effective, given it didn’t give consumers much of an incentive to download additional software just to listen or watch their content. Later an enhanced version of the VoloMedia plug-in added social features to iTunes. Meanwhile, the market for premium streaming video has only grown, while podcasting has gone out of fashion.

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