Online video firm Vessel has raised a new funding round of $57.5m, as it continues trying to lure popular YouTube creators to debut their videos on its service.
The Series B round was led by venture capital firm Institutional Venture Partners, which has previously invested in Netflix and Twitter among other media-related technology firms.
It follows a $77m Series A round raised in June 2014 by the US company, which was founded by former Hulu executives Jason Kilar and Richard Tom. The investors from that first round – Greylock, Benchmark and Amazon boss Jeffrey Bezos’ personal investment firm Bezos Expeditions – all chipped in to the Series B round too.
“Each of these investors brings experience, resources and long-term thinking that will guide us as we continue pursuing our ambitions,” wrote Kilar in a blog post. “Their investment in Vessel will enable us to grow, as a company and a business, equipped with the world-class team and resources we need to make our visions real.”
Vessel is planning an aggressive expansion both in terms of staff – it currently has a 40-strong team – and the number of video creators who are available through its app and website, with Kilar claiming “thousands” have applied.
“Our engineering team is working hard, too, to bring people more of the features they’ve asked us for and to make Vessel available in more of the places people want it (starting with an Android app that will launch soon),” he wrote.
Is Vessel’s new funding round a sign that it has blown through its first $77m already? Sources close to the company told the Guardian that in fact, most of that Series A round remains in the bank, but saw enough interest from investors in its expansion plans to raise again.
“If you had to back one team to build the world’s most advanced and user friendly video platform, this would be the team,” wrote IVP’s general partner Todd Chaffee in his own blog post. “Jason and Rich have assembled an exceptional management team, and they have some of the best video engineers on the planet.”
Chaffee also compared Vessel to some of the other well-known companies that IVP has invested in, saying that IVP has “been fortunate to back many great companies such as Dropbox, Domo, HomeAway, Kayak, LegalZoom, LifeLock, Netflix, Shazam, Snapchat, Supercell and Twitter. We believe Vessel has the potential to be as successful as these companies someday.”
Vessel launched its iOS app and website in January as a public beta, offering a range of channels from vloggers, musicians, comedians and other media brands, whose videos are exclusive to the service for at least 72 hours before being published elsewhere – “the first window for the web” as the company describes it.
The company is planning to charge a monthly $2.99 subscription for the exclusive videos, although it also has partnerships with companies like music videos service Vevo to offer their videos non-exclusively in its free tier.
Vessel’s pitch to partners is that they’ll earn more from its mix of subscriptions and advertising than they do on YouTube. “If you are a creator on the free web, the cheque that comes out to you after the distributor takes their cut is about $2.20 per thousand views, or maybe $3,” Kilar told the Guardian in February.
“We’re projecting that creators will make over $50 per thousand views for the period of time they’re making their video available on Vessel for early access.”
Vessel has signed up YouTube stars including Rhett & Link, Shane Dawson, Connor Franta, Brittani Louise Taylor and Nerdist, as well as music labels Warner Music Group and Universal Music Group.
In April, US television star Ellen DeGeneres also joined Vessel, striking a deal with the company to offer a year’s free subscription to fans who signed up within 48 hours of her announcement.
The new funding round is likely to fuel more of these kinds of partnerships – and promotions – with mainstream celebrities and brands, as well as the first wave of YouTube celebrities who have been encouraging their fans to try Vessel.
YouTube has already responded to the challenge, launching its Google Preferred initiative to package up popular channels for big advertisers, and thus improve the money those channels’ creators make from ads.
The company has also announced a new round of investment in top creators’ content, with its head of YouTube Originals Alex Carloss promising in September 2014 that “We’ll experiment with new formats and ideas. We’ll get our hands dirty”.
YouTube is also planning to launch its own paid subscription tier that will remove ads and – according to its email to channel owners – “generate a new source of revenue that will supplement your fast-growing advertising revenue”.
The emergence of Vessel, and its ability to sign up digital stars and raise significant funding – is one of the factors pushing YouTube to accelerate its efforts to help creators boost their revenues from online videos.
See also: Snapchat’s evolution into a platform for media as well as messaging; Facebook’s booming native video views; and the growth of live-streaming service Twitch, which is now owned by Amazon, with the latter reportedly triggering a revamp of YouTube’s own live-streaming features.
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