VentureBeat

Eyespot, a start-up that lets people make video mashups, said it has raised a first round of funding of $3.7 million.

The round, led by Silicon Valley firm Gabriel Venture Partners, is the latest sign of how hot video editing tools are — now that the user-generated video revolution, a la YouTube, is underway.

We’ve mentioned EyeSpot before, when writing about a competing company called Movie Masher, which itself has just launched and is looking for a strategic buyer. Another player in this area is Jumpcut (bought by Yahoo). As explained, these companies let people overlay images on other videos — which is basically flash animation on video. You can mix video, photos and music into a single, edited video, and customize various aspects of these, changing and inverting image color, for example.

Here and below you see still images of the sorts of “gooey” and “drippy” videos people are creating (go to Eyespot to see a real video highlighting this). Movie Masher also illustrates elements of this.

Other investors in Eyespot include Express Ventures and executives from MP3.com and DivX, the company said.

EyeSpot wants to provide the technology to major media companies. Since its “beta” testing launch in April, it has signed partnerships with Lions Gate, Blip.tv, Veoh Networks, Current TV and various artists, it said.

Doug Anarino, a New York Web developer, has just put his video site, Movie Masher, up for sale at VentureBoard.

It is notable because it is the latest example of the explosion of creativity going on in the Web 2.0 area, but where innovation is so incremental that new companies or their products no longer can afford to wait around for user adoption.

We’re pointing to Movie Masher because it does offer users some new video features. Movie Masher leverages technology made available in Adobe Flash 8 architecture to offer so-called “compositing” tools, which let you overlay videos on other videos in sophisticated ways. There are other sites, such as Eyespot and Jumpcut, which give you limited ways to overlay flash animation on video. But they restrict you to set templates, letting you add things like dancing girls or snowflakes, for example, but not your own customized logo. They don’t let you do things like choose or resize fonts. Movie Masher lets you change such variables, including contrast and brightness, on a sliding scale — and allowing you to adjust them as the video plays, for transitions.

Doug has worked on the site’s code for two and a half years, he says. He reckons the site has about a three- to six-month jump on competitors, and that a large company with resources will therefore be in a much better position to market the product (see VentureBoard listing here).