VCs Flash $4M For Fotiva

Hoping to ease the pains of managing and sharing digital photos, Fotiva Inc. earlier this month emerged from stealth mode with $4 million worth of fresh venture capital from New Enterprise Associates and a cadre of angel investors.

With the number of digital camera users increasing at a steady clip – the Photo Marketing Association estimates that 6.9 million cameras will be purchased this year alone – the market for a software offering to help consumers organize and share their photos with friends and family is wide open, said Jim Heeger, a former New Enterprise Associates executive-in-residence who became Fotiva’s CEO in March.

“We have an interesting opportunity to help consumers who are starting to adopt digital technology have a much better experience than they’ve had to date,” he added. “It’s very hard to have a great experience with digital photography today unless you’re a computer-savvy person. In order for [digital photography] to cross over into the mainstream, you have to make it more simple.”

Indeed, that is precisely Fotiva’s charge. Currently, most people share digital photos through e-mail and file attachments. The problem with that, Heeger said, is the recipient usually has to open them and view them within the confines of a Web browser. Moreover, the photo files are often large, clumsy and difficult to view and resize.

“The person on the sending end doesn’t think about all this stuff,” Heeger said. “We’re about trying to make this process drop-dead easy, to make it simple and automated.”

Although Heeger was mum about the exact details of Fotiva’s product, which isn’t slated for release until next spring, he did say that it is a software offering designed to give consumers the ability to manage their digital photos locally on their personal computers, while also giving them access to Internet services like photo-sharing and printing.

As such, the Santa Rosa, Calif.-based company claims it is miles ahead of first-wave digital photography management devices like Adobe Photoshop, which allows users to edit their photos, and photo printing and sharing sites such as Ofoto Inc. and PhotoPoint Corp.

“[Photoshop] is PC software that is local and on the desktop, which allows you to do editing and photo projects, but that’s really more than people want to do,” Heeger said. “Then there was this whole wave of photo sites that allowed people to print and publish [photos] to the Web, but the vast majority of people aren’t willing to do that. The bandwidth isn’t there, and people want to manage their photo collections locally, not on an Internet site.”

Fotiva’s competitors may dispute that point, however. PhotoPoint, which claims on its Web site that it is the most popular digital photography site on the Internet, has more than 1.6 million members and 100,000 new users signing on each day. What is more, PhotoPoint.com attracts more than 1.7 million unique visitors each month, according to PC Data, Media Metrix and Nielsen/NetRatings.

Additionally, PhotoPoint leases its technology to help build and power digital photo-centric Web sites for heavyweight players like Intel Corp., Epson America and the College Club.

For its part, Ofoto, which is a wholly owned subsidiary of photographic giant Eastman Kodak Co., prints photos not only for general consumers, but also for well-known clients such as Amazon.com Inc., Corbis Corp., Hewlett-Packard Co. and Sony’s ImageStation.

PhotoPoint and Ofoto have succeeded, however, by expanding their business models beyond the consumer. It’s certainly no secret that business-to-consumer plays aren’t as hot as they once were, yet Fotiva claims its can survive with a purely consumer-based clientele.

Heeger, who hails from Intuit Inc., is confident perhaps that his company will succeed because he’s seen similar models thrive in the past.

“[Intuit’s] Quicken and QuickBooks made financial work very easy to do. It changed the metaphor from posting to acting to a checkbook, which everyone understood,” he said. “That same opportunity exists in the digital photography space, and we want to bring the same leap of customer ease that Quicken brought to the financial space.”

Similar to Intuit, Fotiva is engaging in grass roots research to test its software product, calling mostly on the friends and family of its employees to create ad hoc focus groups.

As such, the company expects its latest venture infusion to carry it through the product development stage, and will likely seek another round of financing early next year, around the same time it releases the first version of its software offering, Heeger said.

For now, Fotiva is content to quietly finish building its product while standing at the cusp of what it believes will be a digital photography revolution. Its chosen space, connected photo management, is for now still open to multiple players, so it may yet grab a healthy slice of that market.

Robyn Kurdek can be contacted at:Robyn.Kurdek@tfn.com