hwoodWe’ve been covering how online video sites — especially YouTube — are seeing an uptick in traffic that may be due to the ongoing movie and television writers’ strike. Many video sites promise new ways for creative types like writers, actors and directors to distribute their videos online and make money (more here).

At the other end of the spectrum, the top Hollywood creators are also looking to make moves. But they’re trying to go big time on their own through creating their own studios and production houses, with the help of venture capital and private equity.

While online video sites are still figuring out how to monetize, this upper echelon of new studios will aim for distribution in theaters and on DVDs — more reliable ways to make money from videos.

One trend among these companies is that they are trying to be more efficient with capital than the major Hollywood studios. While a studio may spend hundreds of millions on a special-effects and superstar-laden blockbuster, these new studios typically want to spend $10 million or less. The reason is that these smaller films are much more profitable.

The example movie these companies keep holding up is coming-of-age character drama Juno, which was produced with a budget of $7.5 million but has already made more than $100 million.

Some of the more interesting recent Hollywood/VC partnerships:

mend2Aaron Mendelsohn is a Hollywood writer (of 1997 movie Air Bud fame) working with several other striking writers on the creation of a new Internet-based production company that is said to be looking to raise more than $30 million in VC funding. They plan to develop and produce original films with the intention of distributing them online and perhaps eventually selling them back to traditional Hollywood for television or film distribution.

blowtBlowtorch Entertainment (our coverage) is one of the most recent and prominent examples as the company launched in November with a $50 million investment from Ignition partners, private equity firms, as well as some Hollywood players. One of the partners in this venture is Paul Schiff, a producer behind such Hollywood films as Rushmore, Walking Tall, and Date Movie. Their goal is to create low-budget films ($5 million or under) with the hope that the films will become cult hits with the college-aged crowd. They intend to use their site to allow for user participation in making these films such as allowing for visitors to help pick the cast.

caa logoCreative Arists Agency (CAA), the biggest of the Hollywood talent agencies, has also been out there after VC money. In December they were working on raising between $150 – $200 million to invest in startups i the digital and entertainment worlds according to paidContent.org. FunnyorDie has also worked closely with CAA – probably not surprising considering Will Ferrell is represented by CAA in Hollywood. They are hardly alone as fellow talent agencies ICM, UTA, WMA, and Endeavor are also all working in funding these types of new media ventures in one form or another as well.

decaaaaaDECA is a Los Angeles-based startup that received VC funding with the hopes of creating a breeding group for popular digital content. They currently have a partnership in making the hit Internet show Boing Boing TV.

fodddFunnyorDie is another startup with big Hollywood power. Back in April, the Will Farrell and Adam McKay production company received funding from Sequoia Capital. While the idea has thus far been more of a YouTube knock-off allowing users to upload their comedic videos to share, the videos that Farrell and McKay have done themselves have been massive hits. Moving outside of the online realm, the site has launched a nationwide college tour both to promote themselves and Farrell’s new film Semi-Pro. The site will also be used as a promotion tool for the movie as a new short video will be released each week on the site leading up to Semi-Pro’s release at the end of February.

mydamnMyDamnChannel is a startup from former MTV executive Rob Barnett and actors Harry Shearer and David Wain. They have the same approach as FunnyOrDie in creating a distribution site for user generated content, but again their most popular content is that which is created by the Hollywood talent behind the project and their friends.

sandlSandlot Venture Group (our coverage) works with film projects in their development phases to get them funding similar to how an Internet startup would receive funding as it builds itself.

These are some of the better-known companies that blend Hollywood with VC funding in the hopes of creating new hit content both on and offline in the 21st century. America is hardly the only place this convergence is taking place however. In India, venture firms are starting to raise money to back films as well.

Look for this convergence of Hollywood and VC backing – as well as web-borne content meeting traditional Hollywood content to continue at an ever-quickening pace in the months and years ahead.