Animoto Is Already Cash-Flow Positive, Raises Another Round To Go To 11

forum_c7ff0629_spinal_tap_but_it_goes_to_elevenIn a world where most startups choose gaining users over making money, Animoto is an odd exception: It’s doing both. Since launching in August 2007, the company has signed up some 750,000 users, and some 10% of those are paying customers. And that’s allowed the company to run cash-flow positive since December of last year, CEO Brad Jefferson tells us. And it could keep going on like that, but like most startups that taste success, it wants to do more.

So it has raised by far its biggest round of funding to date, a $4.4 million Series B led by Madrona Venture Group. With an already proven business model, Jefferson says the company just wants to accelerate everything it’s doing, and push harder. That means a more diverse roadmap and more importantly, a much broader distribution strategy with more partnerships. One of those partnerships with with iStockphoto, whose founder, Bruce Livingstone, participated in this round.

For those not familiar with Animoto, the startup basically allows you to take your images and your music and mash them together to create cool videos. What makes the videos cool is the company’s technology that renders the pictures so they’re in-step with the music you’ve chosen, adding nice transition effects. We’ve gushed over it previously here, here and here.

One relatively new area of focus for the company is the mobile realm. Back in December, it launched an iPhone app that allows you to create videos from your pictures and music on the device. The app already has 300,000 users. And Animoto has had version 2 of the app ready for months, but Apple has yet to approve it. Jefferson isn’t sure what the actual hold-up is since the first version submitted had very little different besides some upgrades from the first version. And later, Apple apparently didn’t like that it was pushing users to its site to sign up for pro accounts, something which should be rectified shortly with the iPhone 3.0’s in-app purchase system, according to Jefferson. The plan is to have an app that charge the same $3 (or less) that it does on the site to make premium videos (using full-length songs).

And another reason the company is going to need that money is because it’s expanding beyond using photos for its videos and into also using actual videos. Jefferson wouldn’t say too much about it, but check out the Webby’s video below for a preview of how that will work. At this year’s Webby’s it won both the Judges Choice and People’s Voice awards for Best Services & Applications.

“We really believe we’re at the tip of the iceberg for cinematic artificial intelligence technology,” Jefferson says. “We want to allow users to create high production video that tells a story. That has the feel of a short form documentary. Right now that’s mostly teed off of music, but in the future it will be done off of meta data in the photos as well,” he says.

Animoto has raised $5 million in funding total so far, including money from Amazon back in May that was rolled into this round. Prior to that a group of personal investors provided $600K. Additional investors in this round beyond Madrona, Livingston and Amazon include Jeff Clavier’s SoftTech VC. Matt McIlwain, the Managing Director of Madrona Venture Group is joining Animoto’s board of directors.×360.mp4/image/