(Updated with substantial clarifications from Juice co-founder Nick Desai)

juicewireless-logo.bmpJuice Wireless, the New York mobile video-sharing start-up, is still on hunt for financing, raising questions about its prospects amid a retrenchment hitting the video sharing industry in the new year.

Juice is raising a roughly $3.5 million round of financing, now calling it a “bridge” to raise even more capital — in recognition that competition has raised the stakes, and will require more resources.

A month ago, the company told GigaOm it was wrapping up the funding, but VentureWire reports today (sub required) it is still in the process of doing that. Moreover, even after soaking up $5.5 million in previous funding, and raising this next $3.5 million, Juice now plans to raise an additional $7.5 to $12.5 million.

Even after the gigantic success of YouTube (sold to Google for $1.65 billion), it isn’t clear just how these video companies will make money. Some even question whether YouTube would have survived without Google. Granted, video-sharing on the mobile phone, where Juice is more active, is a somewhat different market, but YouTube and others are already expanding there. It isn’t clear how Juice Wireless’ product, JuiceCaster is doing. It also isn’t clear whether its delay in raising venture capital is due to the lack of takers, or a search for venture backers willing to give it money on better terms.

Casualties are mounting. Last month, Mojungle, a site that lets you deliver photos and video to blogs and web sites from your mobile phones, listed itself on ebay for $60,000 (scroll down). It let users deliver video via SMS, MMS and email, but that wasn’t enough to lift it above all the competitors doing similar things (Shozu, Veeker, Mywaves, etc).

McInerney-mug.bmpGuba, a San Francisco video-sharing start-up that bootstrapped itself and so doesn’t need to answer to investors, has hit rocky times too — even after signing several deals with Hollywood and boasting 300,000 subscribers paying $15 a month. Chief executive Tom McInerney (pictured left) has just stepped down, with the astonishing admission: “I think we can all acknowledge that YouTube has won the big prize….Guba is at a crossroads, and we’re deciding whether to look for funding or to sell. I think we’re inclined to sell.” He said other execs might follow his exit as the company figures out its future. “The billion-dollar opportunity has kind of passed,” McInerney said. “(The executives) are bright, and they’re interested in going for the gold.”

Just a few days ago, we reported the departures of two co-founders of Revver, another video competitor.

As for Juice, the company now says the $3.5 million round will close in late January and will come mainly from existing backer and angel investor group 21Ventures. The continued announcements suggest the company is fishing for other investors (a very public approach, when compared to YouTube’s secretive fund-raising).

21 Ventures’ David Anthony said Juice Wireless has signed deal with AOL in the U.K. and Cricket Communications in the U.S., and has a number of deals with other carriers being finalized, according to VentureWire.

[Update: Co-founder Nick Desai tells VentureBeat that VentureWire’s reporting was misleading, and that David Anthony did not say — or at least did not intend to say — that the $3.5 million round would be raised by the end of this month. It will close this week, and was easy to raise, Desai said. Moreover, he said Juice is attempting to raise as little capital as possible each time, to be efficient. The $3.5 million will last through most of 2007, he said, and the additional round of capital will only be raised if the company can not find a buyer sometime this year. By raising less cash, Juice can ensure its primary investors a solid return, he said. He said 21 Ventures’ Anthony referred to the additional financing in response to a question from VentureWire about what Juice will do if it takes longer than expected to find a buyer. Finally, Desai said he concurs there’ s retrenchment underway in video sharing, but that Juice considers itself in a different industry, letting people upload photos and videos to their channel on Juice, but also to friends and other sites. Juice does not seek to be a destination site.]

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