VentureBeat

This video-content sector is getting silly, not just because it’s overcrowded.

Last week, we wrote about National Banana, a somewhat mediocre Santa Monica-based video site, where Hollywood producer Jerry Zucker, creator of Airplane! and Naked Gun, is leading the company’s production. The company received $1 million from a Silicon Valley venture firm, U.S. Venture Partners.

We’ve since been informed of another connection. Turns out, Steve Krausz, who led the investment, is Zucker’s brother in law (Krausz’ sister is Zucker’s wife.) We contacted Krausz about the unusual relationship, but he said he’d passed the investment by his firm’s limited partners for approval.

We plan to talk with Krausz more next week when he gets back from travel, but here’s what he said in response to our inquiry about the relationship thing:

The goal of the company is to create great professional comedic content for the web and other new media distribution vehicles. Jerry’s involvement is as a terrific creative resource who sees the promise of the new media allowing a mass distribution vehicle for professional content. He carries the title of Chief Creative Officer. He is very excited, but I assure you the business of the company will be the responsibility of a broad, experienced management team that will be built like any other VC backed company.

We would like to keep our precise business strategy a bit quiet for now, as you can see from the beta launch site which is more about trialing a bit of content then “final form and function”. So far we are getting excellent feedback on the early content and we expect more professional creative talent to participate in National Banana in the future.

National Banana CEO is Anthony Bettencourt, who formerly worked at US Venture Partners. He declined to comment.

Of course, none of this should be a surprise. Where can VCs turn to invest, if not to the people they know best? It happens all the time. Sequoia’s Mark Kvamme listened to his son when making the investment in Will Ferrell’s Funny or Die (scroll down), a competitor of National Banana.

And this fusion of tech investors and Hollywood is bringing all sorts of people together. Yesterday, we wrote about the bizarre relationships at a new Hollywood company called Film Department. A screenwriter with a script about Mideast politics says it got cut because of Mideast politics within the company’s board. The company, on the other hand, says the script was not seriously considered in the first place — and was cut because it was simply no good (more from the company, soon). Sequoia’s Michael Goguen , by the way, is also an investor in Film Department, although not on the board.

Should we change our name to Hollywood Reporter?

Updated

A top Hollywood producer with a new movie company backed by General Electric has killed a script about agents trying to stop a terrorist attack — allegedly due to political pressure from two of his board members.

This blog doesn’t normally cover Mideast politics, and its influence on Hollywood. But the producer company concerned, Film Department, is one we’ve covered (link; scroll down), and the writer of the script, Jason Ressler, has told us more.

Of course, scripts in Hollywood get killed everyday for office politics of one sort or another. But Ressler wrote an international secret-agent action/love story called “Dove Hunting,” set in the Middle East. He says it included examples of ways that Saudis “influence Western governments by putting their money in the right places and playing both sides of the fence.” Bizarrely, he says, his screenplay came true in this case.

Ressler told us the screenplay was based on his background in the Marine Corps reserves, adding that he “helped a lot with issues in New York and Washington after 9/11,” but he wouldn’t elaborate.

The company planning to produce it, Film Department, was itself unveiled two weeks ago by producer Mark Gill. The company wants to offer films aimed at international audiences — not just the US domestic market.

Ressler tells us that he and Gill had been close to finalizing the script when the new funders came on board. Ressler says Gill began getting cold feet several weeks before Film Department received funding. Ressler, who wouldn’t disclose his ethnic background but is nonreligious, says that Gill acknowledged to him by email that he couldn’t make the screenplay because of his investors.

Deutsche Bank had been planning for months to invest $182 million in the company. That deal fell through for unknown reasons around two months ago. New funders were found, including both General Electric — which is a top contractor for the Defense Department — and two board members with close ties to Palestine and Saudi Arabia.

One of the board members, Sheikh Waleed Al Ibrahim, is an investor in Al-Aribya, a Middle East news channel that was banned by the US-backed Iraqi government following its broadcast of Saddam Hussein’s botched execution.

The other, Zeid Masri, runs a private equity investing firm for wealthy individuals, called Silver Haze.

The decision could also have just been based on economics, not geo-politics: it may be that the two board members thought the movie would fall flat with Middle East audiences.

We tried reaching GE for comment, but haven’t heard back. Gill also has not responded to request for comment.

Masri was awkwardly called out in 2004 for funding a Jewish-community bowling alley in New York using money that originated with the Palestine Liberation Organization.

As wealthy individuals and companies from around the world invest in American companies through private equity — especially in Hollywood — this incident highlights how information being produced is prone to influence in ways we often don’t realize.

Update: Sequoia Capital’s Michael Goguen is also an investor, although not on the board.

Here’s the latest (updated) action:

The solar-powered motorbike from SunRed in Spain — Read the little story about how the company hopes to make a prototype soon, and needs venture capital to do so.

Marchex launches huge Web site — The public company said it has launched more than 100,000 local and vertical Web sites, publishing more than one billion pages of content for hoping to bait people surfing online. These are third-rate sites, originally filled with advertising, but now hosting more than 15 million business listings in sundry categories. Marchex also scrapes the Web for reviews and other content to place in these sites. The sites include www.cuisine.com, www.locksmiths.com, www.remodeling.com, and www.bayareahotels.com. Marchex paid Yun Ye of Name Development $164 million for 100,000 sites. Marchex says 30 million unique visitors monthly land on its sites by typing in domain names, willingly or unwittingly. This is very similar to the strategy of Demand Media, another opportunist land-grab company we’ve covered. (More at the NYT).

Venture Capitalist blasts buyout industry — Dixon Doll (left), the co-founder of venture capital firm DCM, next chairman of the National Venture Capital Association, said his group is working hard to fend of a new tax that could affect the VC industry. He blamed the buyout industry for the recent proposal in Congress for such a tax, saying it is “plain and simply because of the unbelievable egos of the guys running the PE firms like Blackstone and KKR,” he said. “They put big targets on their back … calling attention to themselves in a nonflattering way.” (We’ve reported on the lavish parties and $300 stone crab eaten by the Blackstone crowd.) They also don’t create jobs, he said: “It’s ‘Barbarians at the Gate’ all over again,” he said. (Via VentureWire.)

The slow video joint venture between News Corp. and NBC Universal — We’ve reported on this joint effort to answer YouTube. Today (Thursday), they appointed a high-level Amazon.com executive, Jason Kilar, to be chief executive of the venture. He led Amazon’s efforts in video and DVD. It is supposed to launch later this year. However, we were on the conference call today, and the date of launch seems uncertain. This is a very slow project. And each week that goes by, YouTube gets bigger. And strangely, News Corp.’s own MySpace launched MySpace TV today, which will serve to confuse. The venture has 30 employees, Kilar said. The venture — which still has no name — is reportedly trying to raise $100 million on a valuation of $1 billion (Paid Content).

Hollywood veterans launch Film Department — Mark Gill, formerly president of Warner Independent Pictures, and Neil Sacker, a former executive vice president at Miramax, said they’ve formed an independent film company with $200 million in financing from a group of unnamed private investors. (Update: We’ve been told Gill got money from Deutsche Bank). It will be called Film Department (no site yet). It will produce six films a year with budgets between $10 million and $35 million. Sounds almost retro, at a time when there’s so much Web novelty. (Details here.)

Google Gadget Ventures — Google announced a pilot project to support third-party developers of gadgets, the cornucopia of items you can choose for your Google home page. It is offering (1) grants of $5,000 to developers who’ve built gadgets in for Google’s directory that already receive at least 250,000 weekly page views, and (2) seed investments of $100,000 to previous Google Gadget Ventures grant recipients who’d like to build a business around the Google Gadgets platform. More details here. This is a smart way for Google to build an active community around its platform

The exodus continues from Google — Indeed, Google may need to nurture those smart developers sooner than they think. Here’s a good summary in the WSJ about the growing stream of people leaving Google. The Silicon Valley mentality: There’s no point working for a public company, especially if it looks like the stock has hit highs for a while, and when you can go roll the dice at another start-up. By being up in Redmond, Microsoft doesn’t suffer the same walk-across-the-street problem. This will be interesting to watch.

Google Docs & Spreadsheets supports folders — Folders, that’s right. Gmail doesn’t give you folders, but Google Docs does. This, and other updates (details here).

Feedster launches disorienting “Version 2.0″ — We’re having difficulty understanding what this well-funded company does that is different. Odd. We’ll look into it.

Pageflakes turns your home page into a social network — Pageflakes is one of dozens of companies offering you a home page where you can put widgets of information such as email, news, weather and sports. Next month, it launches Blizzard, which lets people subscribe to their friends’ widgets of information, or “pagecasts” as Pageflakes calls them. (Erick Schonfeld has the details).

Webwag, which is similar to Pageflakes, lets you synchronize your widgets with your phone — Details here. We first wrote about this company here.