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Video - Friday, December 7, 2007

Chinese Video's 56.com Raises $20M

One of the more interesting dramas in China is what will become of the online video sites. Several get tremendous traffic and suffer horrendous costs of business. Unlike the US online video scene, Chinese video companies don't have access to potentially high paying advertisement. And there is no breakout company like Youtube. We believe the strategy by investors is that Google and others will need to make strategic acquisitions here or risk being on the sidelines of China. If that happens either the multiples on earnings can be expected to be very high or investors or making the wrong calls here.

Today another Chinese online video big, 56.com, has closed a $20M round of funding at what Bill Burnham supposes is a a post-money valuation of $70-80M. The round was led by Hikari Private Equity (and Susquehanna International Group China with Adobe Systems and CID joined as well as previous investors Sequoia China and Steamboat Ventures.

In this market, Tudou.com is China's largest with 22$ of searches, followed by 56.com with 19.9% and Youku.com comes in at 13.9%.