Online Video Startup Wins Cash
Venture firm August Capital picks San Francisco-based VideoEgg for its portfolio.
January 18, 2006
Joining the burgeoning mix of well-funded online video startups, VideoEgg said Wednesday it had secured a second round of funding of an undisclosed amount from August Capital.
The 15-month-old company, which moved from New Haven, Connecticut, to the San Francisco Bay Area last month, makes a small application that helps transfer video from cameras to the web. It had previously taken about $500,000 from West Conshohocken, Pennsylvania-based First Round Capital.
VideoEgg’s target users are home video makers, amateur filmmakers, and video bloggers (see Vlog: Meet Your Next Buzzword). Though nontechnical users produce hours upon hours of video, the difficulties of incompatible camera formats are a serious roadblock to putting the videos on web pages—what First Round Capital’s Josh Kopelman called “an urgent and pervasive problem.”
Even so, transcoding is not a particularly sexy task, but VideoEgg is neatly placed in one of the hottest sectors out there. Menlo Park, California-based August Capital is the latest private equity firm to get an online consumer video startup under its belt, following recent funding for Grouper, Revver, YouTube, and Brightcove, among others (see Video-Sharing Firm Adds Cash, YouTube Scores $3.5 Million, Brightcove Web TV Gets $16.2M).
“When I look at the trends on the web, self-publishing—user-created content—is crucial, and I think that VideoEgg has the potential to be at the center of video on the web,” said August Capital’s David Hornik, who has joined the VideoEgg board.
VideoEgg co-founder and CEO Matt Sanchez said the company and the VC firm had agreed not to release the amount of the funding for two reasons: to fend off comparison to other video startups and to avoid scaring off potential acquirers.
Indeed, in today’s market, acquisition is the likely exit for many of these video startups. AOL’s purchase of video search startup Truveo in a deal said to be worth $50 million could herald a coming flood of M&A (see AOL Buys Video Search Startup).
For further coverage of VideoEgg, see “First Time Around” in next week’s Red Herring print edition.
