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| VC Targets User-Generated Content Sites |
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| September 25, 2006 | Dow Jones Newswire |
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By Mark Boslet
PALO ALTO, Calif. (Dow Jones)--Internet sites like YouTube Inc. and MySpace.com that let users create their own content online are the current rage.
Even more excitement for Web users is on the way, according to venture-capitalist Shanda Bahles, general partner at El Dorado Ventures.
Bahles sees big opportunities ahead for Internet companies that foster "user-generated content." And she is pouring money from her firm's $200-million seventh fund into some of them.
"It's really taking off in a big way," says the Silicon Valley investor. "I think it's a long-term trend that will continue to create opportunities and change the (online) landscape."
Many of the most creative sites are drawing large audiences, even if they haven't entirely figured out how to make wads of money the way Google Inc. (GOOG) has with search advertising. MySpace.com, owned by News Corp. (NWS,NWSA), has about 98 million registered users and attracted 46 million visitors in June alone.
But the theory is that as more and more people sign up, it is only a matter of time before popularity leads to dollars. Offering proof again is MySpace.com, which in August struck a three-year $900 million advertising deal with Google.
Privately held venture-capital funds typically don't release fund-performance data and Bahles declined to provide details of her firm's performance. But she says limited partners have shown a willingness to stay with the firm. Ninety percent of investors who put money into the seventh fund, raised last year, have been investors for 15 years, she says. And El Dorado's sixth fund, raised during difficult times in late 2000, will return profits to its limited partners, she adds.
Bahles hopes to capitalize on the user-generated-content trend by investing not just in startups building their own Web sites, but those constructing the software tools other Internet companies will use.
In August, she agreed to participate in an approximately $5 million financing round for Infinity Channel Networks of Austin, Texas. Infinity Channel is developing software to allow video stored on a Web site to run flawlessly on any computer, irrespective of whether it runs on a Windows machine, a machine with Apple Computer Inc.'s (AAPL) Macintosh or a PC with another format.
An additional venture she backed is WisdomArk Inc.'s OurStory Inc., a Web site that lets users share their life stories by posting blogs, photos and videos. El Dorado helped provide the Los Altos, Calif., company with a $6.3 million round of funding in January.
Bahles says the site is presently in beta, or early testing mode, and is seeing a growing audience.
The Internet is truly becoming a network where people can exchange content and communicate in large numbers, Bahles says. |
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