Joost , the internet broadcast quality television platform, annouced on May 10th that they raised $45 million from 5 leading firms : Sequoia, Index, Li Ka Shing Foundation, CBS and Viacom
I think that the founders’ choice of firms is very smart. Combining leading venture firms in the US and in Asia gives Joost windows in the two leading continents while the are european based. In addition, the investments from media giants CBS and Viacom suggests that they will be able to secure content which these firms may want to distribute through the start-up. This investment is not about money : Zennström sold Skype to eBay for $2.6 billion in 2005. It relates to the ability to show public support. The investment is about accelarating geographical expansion and viewers so that they implement their business model based on monetazing traffic.
They face two challenges : Joost is still in Beta testing and needs to strenghten the content offering. The product looks great but has scaling problems. They signed non exclusive dsitribution agreements with CBS, Sony, Viacom, Turner Broadcasting, Warner Brothers, and Endemol, but that won’t be yet enough to initiate the needed volume.
Let’s see how Babelgum, founded by Scaglia the 746th rich man in the world, one of their leading competitors, will react.
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