Video streamer iClips nabs $4.6M
Aug 09, 2000 04:14 PM ET

By Kathleen Spring, LocalBusiness.com

NEW YORK, Aug. 9 (LocalBusiness.com) -- In the midst of ramping up streaming video services for businesses and consumers, iClips Inc. today pocketed $4.6 million in first round financing.

The start-up is an entrant in the video-streaming category, which targets a nascent industry that is a hybrid of the business-to-business and business-to-consumer segments.

Opticality Ventures led the round and was joined by Schoffstall Ventures.

Michael Diamant, founder and chief executive officer of the 10-month-old Silicon Alley company, told LocalBusiness.com his company would use the money in part to make its streaming video technology more user-friendly.

Consumers with video cams and access to Real Player software can create and send videos with a minimum of fuss through iClips' Website. Templates encourage visitors to send birthday greetings and baby announcements, and also to use streaming video to market their homes or promote their goods on auction sites.

Creating traffic on its home Website is just a minor part of iClips' business plan, however.

Hadar Pedhazur, founder and principal of Briarcliff, N.Y.-based Opticality Ventures, explained that iClips' plan is to aggregate users by signing up community sites -- any online destinations where Internet users now gather -- as partners. He cited eBay as an example of the type of company with which iClips would like to form a partnership.

IClips does not plan to charge either consumers or partner sites for the use of its service, but rather will obtain revenue from advertising.

Each video clip a consumer sends will contain a short advertisement before and after the message.

"This is a hot, competitive space," Pedhazur said of the emerging consumer-targeted market for streaming video services.

Pedhazur is expected to serve on iClips' board of directors and play an active role in developing the company. He said it is important that iClips move quickly to get its product into as many hands as possible.

Other mass market streaming video players, including New York City-based UStreamIT, are following a model through which they will set up video messaging services on clients' Websites and derive revenue from set-up charges and application service provider fees.

Pedhazur said iClips would not take that route. He said that would involve spending too much time convincing partners that one particular technology is better. He said iClips would put its efforts into aggregating consumers.

The value of those consumers, of course, is their desirability to advertisers. Diamant said national advertisers have shied away from banner-heavy Internet advertising with its limited potential for branding. He said his company is counting on television-like streaming video as a lure to those potential advertisers.

Kathleen Spring covers the New York area for LocalBusiness.com. E-mail her with story ideas and comments.