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| Foreign company rumored to be buying startup Metacafe for $200 million | Published by: The Marker
www.themarker.com/eng
Guy Griml
07/12/2006
| Startup circles are whispering of a $200 million deal to take over Israeli online-video and content management startup Metacafe. The talk is that the buyer is a foreign company. Founder Arik Czerniak denied that the company is in any such negotiations and added that any reports to that effect could do it harm.
One of the startup's backers, the Benchmark venture capital fund, also said that it knew nothing of negotiations. But TheMarker has learned that there have been offers to buy Metacafe, since Google acquired video clips site YouTube for $1.6 billion.
Also, another founder, Eyal Hertzog, who is supposed to participate in the Israel Business Conference next week, has flown to the U.S. A source in the know explained that his trip has nothing to do with any takeover: he's on a recruitment drive.
Metacafe was founded in July 2003 by Hertzog, Czerniak, Ofer Eldar (who also co-founded Incredimail, which floated on Nasdaq and another Israeli. The company rates, collates and distributes content. Its business mode is based on ad revenue and sharing profits with other media outlets.
Each month some 300 million video clips are uploaded to Metacafe, which competes with YouTube and Google Video.
A surfer loads a clip onto the site, the algorithm checks whether the site already has a similar one, and looks at the quality of the clip, too. If the clip meets at least one of the criteria, it is rejected.
At this point, Metacafe is aided by a group of some 50,000 surfer critics, who filter through the approved content and reject boring clips. The rest, which are deemed to have some redeeming feature, get uploaded.
In July 2006 Metacafe raised $15 million in second-round financing, from Benchmark and Accel Partners. Its company valuation in the financing round was not made public. In its first round the startup raised $4 million from Benchmark and private investors.
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