VideoEgg raises $12 million, going for bigtime

San Francisco photo editing start-up VideoEgg has raised $12 million from a team of investors led by Maveron, the venture capital firm of Starbucks Chairman Howard Schulz.

The funding, reported in BusinessWeek (worth reading, for the background) comes hours after news emerged that Yahoo had acquired Jumpcut, another San Francisco video editing company.

VideoEgg and Jumpcut are part of a crop of sites that have emerged lately — including Eyespot and Motionbox — that offer a range of tools for users to edit video, add sound, insert ads and so on. Another of these sites, Grouper, of Sausalito, was just acquired for $60 million by Sony. With acquisitions still happening, and providing a way for venture capitalists to make money, it is no wonder that VideoEgg is getting more. The difference, of course, is that Jumpcut was lean and low-burn — it hadn’t raised any venture capital, and so could sell to Yahoo without worrying about getting a price that would please investors. VideoEgg is spending money, having acquired a company. VideoEgg may pay the price of this, if its technology becomes a commodity. VideoEgg previously raised an undisclosed amount from August Capital.

At the same time, VideoEgg is going for the bigtime. By working with other sites to make it easy to upload videos, VideoEgg is used to download 15 million videos a day. With recent agreements with more sites, VideoEgg plans to hit 50 million downloads a day by the end of the year.