Israeli start-up MetaCafe Inc. has raised $15 million from Accel Partners and Benchmark Capital in its second financing round. The company had developed and manages a video-sharing website for the free exchange of video files.
MetaCafe says 280 million video files are shared on its site every month. The files are first rated and sorted by an engine developed by the company, and then by users. The company focuses on rating, collating, and distributing video clips, using a business model based on advertising banners.
MetaCafe CEO Arik Czerniak told “Globes” today that the financing round was a process the company initiated a long time ago. “We looked for a good deal for a long time. In the end, we found it.”
MetaCafe is a combination of technology and service, which enables users to download the user tool (client) to their computers. The users can call up a video clip, watch it, rate it, or send it to friends. Czerniak said this was a new world of entertainment. “Until now, there was cinema and television. Now we have short films no more than two minutes in length. A new generation of entertainment consumption has arisen, initially on the Internet, and in future, on mobile devices. We will supply the content.”
“Globes”: What’s your business model? Will you collect money from users who do not currently pay for the service?
Czerniak: “We’re formulating our business model. We won’t harass our users. It’s smart to be a media company that knows how to supply content. Every media company has a distribution/commercial leg and a content leg. We’re focusing on content at the moment.
“The funds make it possible for us not to milk money from users, but to develop technology and keep the distribution. There’s competition with large companies that have a strong back, and it’s not easy to compete against them.”
How can a small Tel Aviv company compete against Google Inc. (Nasdaq:GOOG) and YouTube?
“Google and YouTube provide storage services for movies, and lack the capabilities of our engine, which can rate the movies. Google provides services for very small communities. People send the link of a movie clip to their friends, and that’s how it’s distributed. Our users come to our site. We’re the third largest site in the world in terms of traffic.”
You’ll have a business model sometime.
“Yes, and it will come into play when it’s clear that we have the best content. The moment we have massive advertising, users will go to other sites - and there are a lot of other sites.”
Czerniak says MetaCafe will soon launch its website in over ten languages, including Hebrew.
What is the financing round for?
“We’re about to open an office in San Francisco, develop an uncompromising product, and increase our staff to 70.”
Published by Globes [online], Israel business news - www.globes.co.il - on July 3, 2006
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