May 1, 2007
Video sites spark fears of bubble
An investment boom is underway in consumer video websites, drawing warnings of a new bubble in the venture capital business, reports the FT.
"Video has become the hottest corner of a broader financing boom tied to so-called “Web 2.0” internet companies. The amount of US venture capital flowing into video-related start-ups of all types jumped by 95 per cent last year to $682m, according to figures compiled by Dow Jones/Venture One.
... Like other financiers and entrepreneurs caught up in this wave, Todd Dagres, a partner at Spark Capital, predicted an eventual round of failures that would see most investors lose money. With many of the start-ups in their early stages and drawing in money, though, the shake-out is unlikely to come this year, he added.
... With internet users gravitating to a handful of the most popular sites and big media companies starting to call the shots over how their copyrighted content is viewed online, many start-up sites are likely to struggle to find an audience, said Mr McInerney, founder of Guba one of the first consumer video sites to strike a deal to distribute professional content from an established media company.
Despite that, venture capitalists report a continuing flood of proposals for new start-ups trying to cash in on the video boom."
The Permanent Link to this page is: http://www.textually.org/picturephoning/archives/2007/05/015746.htm