Video e-commerce firm Kingmaker Inc. has been acquired by Joyus Inc., one of its largest competitors.
Financial terms of the all-stock deal, which closed in early September, were not disclosed, though Kingmaker founder Guy Gal said the company, which had been based in Venice, has taken a "significant" stake in Joyus.
Kingmaker was a graduate from Venice accelerator Amplify.LA and had been building an online video business modeled on the success of direct television marketer Guthy-Renker. That is, the company would pair with YouTube channels and build a portal through which it could sell custom-made products related to the content.
The easiest example would be a cooking video, where people who came to watch the food preparation could buy the special pans and knives featured in the show.
Kingmaker would take the lion's share of the revenue, with the YouTube channels getting a licensing fee.
The company was founded in 2011 and scored its first big partnership with the hit YouTube channel "Epic Meal Time." Gal said the company had since struck deals with two other channels in the beauty and style space.
But the long term goal was for Kingmaker to itself become a maker of original content, and when its $1.7 million in seed money, led by Santa Monica's New World Ventures, started to run dry, the company was in a bind.
"The question became 'do we have enough capital to scale?'" Gal said. "By the time we got to the half point of our burn we were still somewhat removed from a point where I thought we were series A ready."
Kingmaker did entertain offers for a new round, and Gal said the company was on its way to a $4 million round led by a prominent Silicon Valley venture firm.
However, during the fundraising process discussions with Jouys, its well-funded Bay Area competitor, began to get serious. Eventually, Gal and his team of six decided the terms of the Joyus acquisition were better than those of an A round.
Gal, who's originally from Toronto, has moved his team up to San Francisco to work with Joyus. Though he's satisfied with his choice of being bought out rather than accepting further investments, it doesn't stop him from wondering what Kingmaker could have been.
"This is base success, no doubt, but I don’t think it's success with capital letters," Gal said.