Wish you could watch old or obscure movies that they never have at the video store? Akimbo Systems Inc. says it has the answer: video-on-demand to television via broadband Internet. While the general public may not be convinced of the viability of Internet video, Kleiner Perkins Caufield & Byers was convinced enough to lead a $12 million Series B round in Akimbo.
In another vote of confidence, media mogul and Kleiner Perkins partner William R. Hearst III has become chairman of the company.
The round was oversubscribed and had a target of $10 million. Previous investors Draper Fisher Jurvetson, Sprout Group and Zone Ventures also funded the round. Kleiner Perkins invested slightly more than half the round, which the San Mateo, Calif.-based company says was an up round from its $8.5 million Series A in 2002.
The post-money valuation on the company’s previous round was $10 million, according to Thomson Venture Economics (publisher of Private Equity Week). Akimbo CEO Josh Goldman says the prior round’s valuation was “significantly higher” than $10 million, but he declined to reveal the amount.
The new round is actually Akimbo’s second Series B financing. It was recapitalized with a new Series A in 2002, and it changed its focus in April 2003. Formerly known as Blue Falcon Networks, the company has raised more than $32 million since its founding in 1995. It pulled in its first venture money in 1999, raising $2.2 million from Zone Ventures and Technology Funding.
Goldman says that the latest round should take the company to profitability, but he did not rule out the possibility of raising a Series C to fuel growth. The company has 27 employees today and expects to have between 35 and 40 employees by year-end.
Goldman says Akimbo’s biggest challenge is promoting the idea of the Internet as a delivery channel for television-worthy content. “We have to convince people that the Internet is a perfectly viable way to deliver video with the right technology platform, and we’ve got that,” says Goldman, a former Sprout Group executive and former president and CEO of Internet shopping network mySimon. “We’ve got to overcome the notion that Internet video equals poor video.”
Akimbo makes a box that connects a TV to the Internet. It plans to have the box in retail stores by the end of the year and is now selling it on the Web. It has inked partnership agreements with content distributors such as Action Television, IFilm and Undergroundfilm.org to make video/DVD titles available to consumers via the Net.
“From the very beginning this company was focused on the television experience rather than the dancing-postage-stamp video experience where ballet looks like break dancing,” says Hearst of Kleiner Perkins.
Hearst adds that one of Akimbo’s principal strengths is that its complex engineering allows for a smooth customer experience. “What you really want is the selection of Google and the ease and use of Amazon,” he concludes.