Digitalsmiths Secures $6 Million In Venture Funding

The Aurora Funds and Chrysalis Ventures Lead Series A Round

Raleigh-Durham, N.C. – (June 25, 2007) – Digitalsmiths Corporation announced today that it has raised a $6 million Series A round of funding from The Aurora Funds, Chrysalis Ventures and individual investors. Digitalsmiths is the creator of VideoSense, the first platform-agnostic broadband video contextual advertising solution. The funding will enable Digitalsmiths to expand its sales and marketing ranks and accelerate the deployment of VideoSense.

Broadband video is exploding, and content owners are cashing in by making their content available across multiple platforms. According to the Interactive Advertising Bureau, online video content is projected to grow by 89% by the end of 2007. Moreover, online advertising revenues grew by 35% in 2006 and are expected to reach over $4.8 billion this year. These trends have ad networks and broadband content providers racing to implement automated solutions to capture their share of the online video marketplace and contextual advertising revenues. VideoSense is the key to unlocking new advertising inventory and maximizing ad revenues for publishers.

Founded in 1998, Digitalsmiths’ first venture into digital video asset management resulted in a suite of innovative video indexing processes and technologies used by motion picture and television companies to maximize the value of their library material by digitizing video and making it easily searchable. Major film and TV studios have used Digitalsmiths’ system, marketed under the InScene brand name, to manage and exploit content including feature films and television series. In 2007, the company, led by founder Ben Weinberger and Chief Technology Officer Matt Berry, completed the transformation of their technological innovations into VideoSense, a patent-pending Internet video indexing and contextual ad-matching solution.

This funding represents a tremendous vote of confidence in VideoSense and recognizes the incredible revenue opportunities created by the explosion of broadband video and online advertising,” said Ben Weinberger, chief executive officer, Digitalsmiths Corporation. “The Aurora Funds and Chrysalis Ventures are ideal partners for our funding needs. They have proved invaluable in helping us to establish new and productive relationships across our industry.”

“Digitalsmiths is a great complement to our portfolio,” said Jan Bouten, Principal, The Aurora Funds. “In VideoSense, Ben and Matt have created an impressive product that is a true distillation of their collective experience in the digital media, entertainment and technology arenas.”

Founded in 1994, The Aurora Funds is a venture capital firm that provides capital, connections and strategic guidance to entrepreneurs with early stage health care and information technology companies in the Southeastern and mid-Atlantic United States. The firm manages over $230 million in five venture funds. The firm’s six investment professionals have over 85 years of combined venture investing experience.

Wright Steenrod, Principal, Chrysalis Ventures added, “Digitalsmiths’ offering will enable marketers, ad platforms and networks to more efficiently reach the online audience and generate revenue. This investment matches an innovative product and a talented management team with the rapidly growing broadband video market. It is a great fit for our media and communications portfolio.”

Founded in 1993, Chrysalis Ventures is a leading source of equity capital for young growth companies in the Southeast and Midwest. Chrysalis invests primarily in early-stage and expansion-stage companies in healthcare services and technology, media and communications, and business services. Based in Louisville, Ky. Chrysalis has more than $250 million under management and has made investments in over 50 companies.

About Digitalsmiths Corporation

Digitalsmiths Corporation is the digital video asset management technology company behind VideoSense, the first broadband video contextual ad-matching system to integrate seamlessly with existing online ad networks. Digitalsmiths also developed InScene, the automated video indexing technology used by motion picture and television studios to digitize feature films and television series and make them easily searchable. Founded in 1998, Digitalsmiths is based in Raleigh-Durham, N.C., with offices in Los Angeles. For more information, please visit: www.digitalsmiths.com.