Meebo snags $25 millionApril 30, 2008: 11:59 PM ET
By Michael V. Copeland
Web chat platform Meebo has landed $25 million in a venture funding from a group of investors including Time Warner Investments (TWX) (Fortune is owned by Time Warner), JAFCO Ventures and KTB Ventures. Existing investors Sequoia Capital and Draper Fisher Jurvetson also re-upped in the Series C round, which puts a valuation on the year-old Mountain View, Calif-based startup at an estimated $200 million before the additional money.
Meebo joins Web 2.0 startups Slide and Ning in recently closing massive rounds of venture capital funding (Slide, which creates widgets, raised $50 million at a $550 million valuation. Ning, a platform for creating social networks, raised $60 million at a $500 million valuation).
Ning investor and co-founder Marc Andreessen has explained his company's Series D round as a way "to make sure we have plenty of firepower to survive the oncoming nuclear winter." Other bellwether social media startups including music discovery site Imeem, and widget factory RockYou, are also rumored to be on the fund-raising trail, looking for equally large war chests and valuations to go along with them. They are being watched very closely as proxies for the rest of the Web 2.0 ecosystem.
With M&A seemingly drying up, many Web 2.0 startups are scrambling for another round of venture capital money so they can survive -- most won't. In the last few months, VCs and other private equity players have become reluctant to pour more cash into all but the most wildly successful Web 2.0 companies.
Meebo, with 30 million unique users in March, fits that bill in terms of growth for its instant messaging service and chat rooms, but it has very little revenue. Instant messaging has not been a place that companies have found easy to monetize, but Meebo thinks it may have landed on the right formula.
The startup has been testing forms of advertising on its service, including buddy icons and wallpapers sponsored by brands like Puma and featuring television shows from CBS.
The idea is to create advertising in forms that people will want to pass around to their friends, whether that is movie trailers, quizzes or buddy icons, says Meebo CEO and co-founder Seth Sternberg.
"Social media is all about sharing, it's our job now to go out to the market and show that the units of advertising we create produce clicks," Sternberg says. "So far the units we have been testing have been performing fantastically, but the next step is to really blow it out. Our two fundamental goals are to continue to grow and work in earnest on monetization."
Sternberg acknowledges that this round of funding will ensure Meebo gets through any rocky economic period. "We wanted this to be a round that would carry Meebo very far," he says. "It's possible that the markets are going to become weak, but it's a great time to build a business when times are rough and I think it's wise to put yourself in a position so you can get through them and grow."