Wednesday, April 2, 2008

Web TV startup sparks interest from venture capital firms

Baltimore company raises $15M in first round

E-mail this article \ Print this article

Mollie Spilman, CEO of TidalTV of Baltimore, hopes her startup does for computer videos what iTunes did for music and did for travel destinations: consolidate a variety of content and information and provide it through one user-friendly online source.

The young video programming company recently raised a first round of $15 million in venture capital led by New Enterprise Associates Inc. of Chevy Chase and Valhalla Partners LP of Washington, D.C.

The company plans to launch its online presence this month, Spilman said.

‘‘You will go to the TidalTV site and watch all kinds of content on your PC from branded broadcast and cable TV. And you will be able to request specific episodes of TV series,” Spilman said. All content will be free, but with commercials produced by TidalTV.

The company is working on providing programming from 25 of the biggest media companies, she said, including news, magazine content and music.

Spilman and Chairman Scott Ferber, both formerly with, have been working for a year on developing the TidalTV concept.

‘‘It is the natural evolution,” she said. ‘‘Media companies such as ABC and NBC are putting some of their episodes online. It makes sense to have an aggregator like TidalTV to come in, similar to what and did for travel, a greater distribution for their content.”

Art Marks, general partner with Valhalla, likes that video industries ‘‘have decided that it’s OK” to distribute via Internet protocol.

‘‘We think this is the best way to do it. We can make money this way,” Marks said. ‘‘While [video originators] are exploiting multiple ways to distribute, we are not going to be surprised by this like newspaper and print were.”

Internet protocol TV is a new field for the venture capital company. In addition to TidalTV, Valhalla recently invested a total of $13 million in two other IPTV startups in the region, Avail Media Inc. of Reston, Va., and KZO Innovations of Herndon, Va.

One of the rationales for these investments, Marks said, is ‘‘demographic destiny.”

‘‘There is a new generation of users younger than 25 who are not interested in entertainment the way the older generation was,” he said.

A two-hour movie with impressive sound on a big screen is not what they want, he said.

‘‘They are multitaskers, no single threads. They do their homework, send e-mails, instant message, watch something [on TV] and eat, all at once,” Marks said. ‘‘They want a little screen they can keep track of while they are doing everything else.”

Valhalla’s second rationale is technology logic.

‘‘You now have feeds in both the home and mobile and you have utility that satisfies the eye,” he said, and the diversity of video programming from new companies is the future.

‘‘With all those forces lining up, the trick for investors is, what are the best strategies? And who are the winners? Those guys who are just doing TV on IP, we are not interested in. We are interested in the next big thing ... I think this is a pretty big thing,” Marks said.

TidalTV has 30 employees in Baltimore, five in sales in New York, one in Los Angeles and four in product development in Austin, Texas, where developer Kevin Haley preferred to stay, Spilman said.

She wanted the headquarters in Baltimore for several reasons: the ability to use more product-testing ‘‘beta” companies, a high percentage of Internet users, many universities and a good mix of demographics where ‘‘the content will resonate.”

‘‘We believe that this will be a cutting-edge venture and there is nothing else out there,” Spilman said. ‘‘Just like iTunes, it will hopefully impact media behavior. But unlike YouTube, the content won’t be overwhelming. We will only have branded [not amateur] content.” TidalTV will be a Flash-based service that works on a Web browser and users will be prevented from downloading content, she said.

According to the, an online video and television trade publication, TidalTV’s main attraction ‘‘seems to be that it is headed by the co-founder of online advertising network” — Ferber. That company was sold to AOL for $435 million in 2004. Ferber provided TidalTV’s undisclosed seed financing, Stilman said.

This report originally appeared in The Business Gazette.