Video Startup Funding Tanks in 2009

Venture funding for U.S.-based video-related companies so far in 2009 has dropped more than 60 percent over the same period last year, according to data provided to NewTeeVee by Dow Jones VentureSource. Video firms raised $135.26 million in the first half of 2009, compared to $348.33 million in the first half of 2008. There have been 24 fundings so far this year, down from 52 by the end of the second quarter last year.

NewTeeVeeVideoFunding09
Sample fundings included in the Dow Jones report were Invodo (white-label video), TubeMogul (video distribution and analytics), FreeWheel Media (rights management) and OVGuide.com (video aggregation and search). While Dow Jones didn’t provide a complete list of funded companies, at least part of the tailing off can be attributed to the fact that video portals and content creators are no longer VCs’ gamble of choice.

To be sure, 2008 was a banner year for online video investments, despite the overall market downturn at the end of the year. But the 2009 numbers to date also reflect a pulling back versus years previous to 2008. The first half of 2007 merited $204.32 million in U.S. video investments, and the first half of 2006 had $187.89 million.

Update: For a broader reference point, Dow Jones says overall U.S. VC funding is down 37 percent this year.

We’ve checked in with Dow Jones’ numbers at least once per year, and should note that the company seems to change its methodology over time, redoing historical data. So past numbers for 2006-2008 are not identical to what we reported at the time. Dow Jones spokesperson Adam Wade explained that his analysts update and clean their data as startup change their business models and reveal their focus to be outside of the video space — a company like VideoEgg, which is now an advertising network that focuses on blogs, games and mobile, comes to mind. Wade said via email, “The figures will change every quarter/year … though over time they stabilize.”

For some other recent video funding compilations and takes, check out two recent stories on VideoNuze and Advertising Age.

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