SplashCast Focuses on Social TV, Looks To Get Acquired

6/5/09Follow @gthuang

Portland, OR-based SplashCast has been making news in the past day or so, after a report surfaced in TechCrunch that it has discontinued its original product—user-generated content software—and is looking for a buyer after failing to raise a Series B funding round. Rick Turoczy, of the Portland-based blog Silicon Florist, pointed out that when it comes to a startup being for sale, “Who isn’t?”

I caught up with SplashCast chief executive Michael Berkley this morning, and while the TechCrunch piece is essentially on target, he had some important clarifications to the broader story. For one thing, SplashCast is not going out of business—it is refocusing. “The real story was that the product we originally launched with in 2007 was a user-generated content system that we are taking offline, and we’re focusing all our resources on the product we’ve been developing in the past year,” Berkley says. “We took a shot at user-generated content. It’s a really difficult product. It’s a difficult play in general to monetize. Now we’ve found something really easy to monetize.”

That something is “social television”—software that syndicates TV shows directly to viewers’ social-network pages on the Internet. And the money comes from big advertisers. Back in December, we reported on SplashCast’s partnership with video service Hulu to distribute TV shows on Facebook and MySpace. “The value we’re giving advertisers is a way to get their branding and messaging into Facebook and MySpace in a really authentic way by using premium television content as the vehicle,” Berkley says. “For large brand advertisers like car manufacturers or cereal companies, they’re very concerned about what social network users will say about their brand. But they want to be part of Facebook and Myspace. So if there’s a way for them to do it by associating themselves with predictable content, in the context of Facebook and MySpace, that’s what we’re offering.”

As for the other half of the story—the part that has some observers worried about another startup going belly-up in Portland (Vidoop recently closed)—Berkley was reassuring. “We’ve been struggling with raising a series B round of funding,” he says. “In the meantime, we’ve been approached by a couple of larger companies looking to buy us, and we’re evaluating those opportunities. The truth is, we’re on the M&A market.” He adds that any acquisition will play out in the next two or three months.

SplashCast currently has eight employees. It was founded in 2006, and raised $4 million in first-round funding from angel investors. “That’s one of the reasons it’s been hard to raise the series B,” Berkley says. “We don’t have a VC in the Series A to help with the introductions and provide the validation a lot of series B investors would look for.” He adds that an ongoing discussion locally is that “it’s very hard to raise money in Portland. There isn’t the VC establishment here.”

(Sounds like an opportunity for Seattle and Silicon Valley to me.)

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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