Digitalsmiths Closes $12M Funding Round

Written by Ryan Lawler

Thursday, November 13. 2008 at 11:30 AM EST Post a comment

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Who says funding has completely dried up for online video? Digitalsmiths just closed a $12 million financing round that should help it to compete against Brightcove Inc. and others in the video publishing space.

The funding round was led by new investor .406 Ventures LLC and includes existing investors Aurora Funds and Chrysalis Ventures. This is Digitalsmith's second round of financing, following up on a $6 million round it raised last summer.

Digitasmiths competes in the increasingly crowded market for video management and publishing platforms. Brightcove Inc. , The FeedRoom , Delve Networks, and Twistage are just a few of the companies providing white-label video platforms.

Despite all the competition, Digitalsmiths has been in the news lately due to big wins at TMZ.com (which it grabbed from Brightcove) and the recently relaunched TheWB.com, both of which are Time Warner Inc. (NYSE: TWX) properties.

Unlike some other video publishing firms, the Digitalsmith platform uses technology to analyze audio and video content and automagically index videos appropriately. It then takes that contextual information to match ads against the video content.

The key to the company's success has been its ability to use technology to automate the indexing process. Ben Weinberger, CEO of Digitalsmiths, says another driver has been its revenue model, which is based on taking a share of advertising dollars that publishers make from using its technology.

"Now more than ever, Digitalsmiths products create a value proposition that is understood, because we're performance based," Weinberger says. "We're only getting paid when they're getting paid."

Weinberger says the company will use the funding to continue investing in technology leadership. The firm is also expanding its West Coast presence, with an office opening up in Los Angeles sometime in the near future.

"We're completely focused on the major Hollywood studios, media companies, and advertisers. They're all located in L.A. and New York. We want to be close to our customers," Weinberger says.