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Brightcove Adds Another $12M to Its Coffers

Brightcove has raised a Series D round of financing amounting to $12 million, according to a report from the Wall Street Journal. The financing of the Cambridge, Mass.-based video platform provider was led by existing investors Accel Partners and General Catalyst Partners, with AOL (s AOL), Hearst, AllianceBernstein, Maverick, and Brookside Capital shipping in as well. The new round will bring the total amount Brightcove has raised since 2004 to a whopping $99 million.

Brightcove has officially confirmed the financing on its web site, but the Journal had a few more interesting tidbits to add:

“Brightcove sales are expected at about $50 million this year, according to a person familiar with the matter. With the new financing, it will have approximately $36 million in cash on its balance sheet, the person familiar with the matter said.”

Brightcove has been able to secure a number of high-profile deals recently, including signing up EMI and the New York Times. However, competition in the video platform space is heating up, and Brightcove could soon face competition from Google (s GOOG), which announced the acquisition of video platform provider Episodic last Friday.

Another sign for the gloves coming off in this space was last week’s squabble between Ooyala and Brightcove. Ooyala had approached a number of Brightcove customers with claims about security vulnerabilities in Brightcove’s solution. Brightcove refuted these claims and called Ooyalas approach of using these alleged vulnerabilities for is own gains “unethical.”

Related content on GigaOm Pro: Report: Monetizing Digital Content (subscription required)

5 Responses to “Brightcove Adds Another $12M to Its Coffers”

  1. Am I the only person who sees right through this announcement? The reality is that very few “profitable” companies raise capital from EXISTING investors when they have tens of millions in the bank. Most pre-IPO companies let in outside investors when they’re months and not years away from going public. This seems to me like Brightcove is seeing some softness in their business, their cash reserves are getting dangerously low and investors are concerned that the existing team can’t pull off an exit without additional capital.

    Most people don’t remember, but Jeremy took the “Portfolio” approach at starting a video company. This is the excuse he uses for burning through tens of millions of dollars in VC money trying to find a
    business model that worked. ( From folks who seem to know a little bit about the company, they’ve said that Brightcove was nearly out of cash when they raised their $59.5M round in 2007. So assuming they started from square one with the $59.5M raise, they should’ve had about $77M (Including the Japanese JV investment and the $12M they just raised) dollars to try to win in the video platform space.

    Now, let’s do some basic math. In 2009, they had an average of 200 employees (including contractors) throughout the year. In 2008, they were at around 120 and in 2007 they were somewhere around 60. If we assume that each employee has had a fully loaded annual comp package (Benefits, bonuses, commission) of about $130k, and salaries only accounted for about 50% of total expenses, they would’ve burned through ~$16M in cash in 2007, $31M in 2008 and $52M in 2009. Now, let’s assume that they did $10M, $30M and $40M in revenue in 2007, 2008 and 2009 with 50% gross margins they would have about $6M in cash at the start of 2010. Now, let’s give BC the benefit of the doubt and assume that they are truly running their business at break-even now, the additional capital would put them at $18M total cash in the bank at the start of Q2. With 200+ employees and increased competitive pressure from Google and Ooyala, even $18M seems like a precarious postion to be in for a company that has raised over $100M dollars.

    Only time will tell what happens with Brightcove, but the introduction of Mendels as the COO in Q4 was probably the first sign that the board is not confident that Jeremy has what it takes to lead the company.