AFI BLOG: Media and Technology

NewTeeVee

Profits may not have arrived for online video, but venture capitalists are still happy to pick up the bill. More and more U.S.-based, venture-backed online video companies are attracting more and more financing each year, according to Dow Jones VentureSource. Some $460.5 million was invested in such startups in 2007, up from $266.9 million in 2006. And already, in the first quarter of 2008, another $217.3 million rained down on the category.

In 2007, the money was spread among 68 startups for an average investment of $6.8 million each. That’s compared to 51 startups in 2006 and $5.2 million each, on average. This year, 29 startups have already received funding, and the average amount is on the upswing, too, to $7.5 million. That’s the opposite of broader trends; in the first quarter of 2008, venture funding was down 8 percent year-over-year and 9 percent quarter-over-quarter.

Based on previous years’ data, the first quarter is one of the smaller investment periods in the sector, but then again a troubled economy could slow investment in this economically risky category as 2008 wears on.

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