When Brightcove raised $80M, I presume they did so by stressing how much each one of their units would be worth down the road:
- The consumer site would take on YouTube, which commanded a $1.65B exit.
- The ad network would stand tall in the video space… given how much Doubleclick, 24/7 RealMedia, Blue Lithium et al. had sold for in the display ad network business… this figure could be huge.
- Its paid video business could be enormous too, especially when you considered how big the paid video market was to be, according to well-paid and in-the-know analysts.
- Last but not least, its advanced services for big publishers (WSJ, TheStreet, for example) would be cash cows with recurring payments… a division that would generate annuity-like revenue streams in perpetuity.
Investors must have been stoked. But, the actual story has unfolded quite differently. Brightcove has shuttered its consumer site, gotten out of the ad network business and instead partnered with Tremor Media, and today it announced what I’ve been saying for some time: no one wants to pay for content, especially for videos… and they will be ceasing those operations, too.
You better hope that 4th unit goes long, and gets big… because otherwise it will be very hard to get investors any semblance of a positive return, let alone a decent IRR. Bear in mind: Maven sold for a $160M exit off $30M in investment… so even if Brightcove crushes the ball… how much upside is there after $80M invested?
Anyway, we wish them well… but this just goes to show that raising too much money too early is usually the death knell of a company. Mind you, I doubt Brightcove is anywhere near troubled mode… in fact, I presume this means you can expect a Series Q round soon for an additional $50M or so.
Could the company at least acquire a bunch of similar players and ramp up that way? Maybe… I doubt it though.
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April 17th, 2008 at 10:33 am
great analysis!
April 17th, 2008 at 9:23 pm
Allen, coming from a pro like you, that is very nice of you.