Web Video Darling Boxee Gets Another $6 Million: Are Zero Revenue and Big Plans Worth $25 Million?
by Peter Kafka
Posted on August 12, 2009 at 8:46 AM PT
Yet another sign that revenue-free start-ups can still attract investors, given the right pitch: Boxee, the software company that makes it easy to get Web video onto your TV, has raised a $6 million B round led by General Catalyst. I’m told the new round pegs the company’s value in the $25 million to $30 million range.
Boxee has a small but passionate following of some 600,000 users, and it’s gotten a lot of attention this year, much of it via a fight with Hulu, which doesn’t want its video showing up on Boxee browsers.
But Boxee doesn’t have any revenue, or much of a concrete plan to generate any in the near term: The software is free for consumers, and while CEO Avner Ronen thinks there could be some rev-share possibilities with Web video providers down the road, they’re…down the road.
So what’s the appeal for company’s backers, which also include Union Square Ventures and Spark Capital, which put $4 million into the company eight months ago and participated in this round as well? It’s pretty straightforward: The $70 billion TV business is in the first steps of a massive reordering, and perhaps Boxee can play a role in it.
The chief appeal is that Boxee can function as an “over the top” alternative to cable TV, giving users the ability to get their favorite programs on a big screen without having to pony up to the likes of Comcast (CMCSA). Ronen wants to use some of his money to ramp up efforts to strike deals with consumer electronics companies like Sony (SNE) and LG, which are pushing Internet-connected TVs, and Microsoft (MSFT), whose Xbox game console is increasingly functioning as an entertainment hub.
But there are plenty of other players jockeying for similar positions, from services like ZillionTV to device makers like Roku, and even Apple (AAPL). And Boxee’s status as a potential disruptor has a downside as well: It’s the reason that Hulu, backed at the time by News Corp.’s (NWS) Fox and GE’s (GE) NBC, sought to prevent the service from accessing its shows earlier this year.
That said, there hasn’t been much saber-rattling from either side in recent months. Perhaps this has to do with Disney’s (DIS) ABC, which had previously enjoyed friendly relations with Boxee, coming aboard the joint venture.
Here are a couple interviews I’ve conducted with Ronen this year: The first one was taped at the Consumer Electronics Show show in January, when his start-up was soaking up the first wave of attention from the TV industry; the second was taped in March, after Boxee had attracted Hulu’s ire.
Comments
Someone will want to own this part of the stack–doubt they’ll really ever need to generate revs… They’ll just need to make enough noise where Comcast or Tivo or someone thinks Boxee is a square they need to get their X in. Should be an easy 2-3x for GenCat.
PS It’s really archaic that you guys still use Wordpress comments. Get Disqus.
Posted by Charlie O'Donnell at August 12th, 2009 at 11:32 amThe Comcast (or someone like it) scenario makes sense to me. I have run that theory by some big cable folks, though, and they snort. But we’ll see…
Preaching to the choir on comments. We’re working on it, slowly but diligently.
Posted by Peter Kafka at August 12th, 2009 at 12:01 pm