DigitalSmiths Locks Up $12M Series B Funding

.406 Ventures Leads Round, Joining Original Investment Group

Research Triangle Park, NC (November 13, 2008) – Digitalsmiths, the award-winning broadband video indexing, analytics and publishing technology provider, has closed a $12 million Series B round of equity financing from a combination of new and returning investors. Boston-based venture capital firm .406 Ventures joined returning investors The Aurora Funds and Chrysalis Ventures in the investment that was announced today by Ben Weinberger, CEO, Digitalsmiths.

“After looking at numerous potential digital video investments, the magnitude of the opportunity at Digitalsmiths became crystal clear and we are delighted to have led this financing round,” said Maria Cirino, Managing Director, .406 Ventures. “The quality of Digitalsmiths’ indexing and analytics is unparalleled and as such offers exciting possibilities to content providers and advertisers looking for newer and more promising ways to monetize vast amounts of internet video. The traction that Digitalsmiths has already achieved with blue-chip customers speaks volumes for the company’s market-leading technology and is a credit to Ben and his talented team.”

“With an investment focus in the Southeast U.S., Chrysalis got involved with Digitalsmiths early in its development,” said Wright Steenrod, Principal, Chrysalis Ventures. “The deals the company is striking with major media companies solidify Digitalsmiths’ role in shaping how broadband video will be monetized.”

“Given the feverish pace at which the broadband video marketplace moves, keeping a product offering up to date is often considered a feat in itself,” said Jan Bouten, Principal, The Aurora Funds. “But the team at Digitalsmiths has consistently been ahead of the market with their technology development decisions. The media companies who depend on technological excellence to monetize their content should love them for it.”

“In the next phase of broadband video adoption, success will be earned one video stream at a time,” notes Weinberger. “Our suite of technology solutions ensures that our clients have the granular content indexing, distribution, tracking and analytics required to maximize the value of every single viewer experience with their content on every interactive platform.”

The current round of funding will be used to accelerate Digitalsmiths’ product development initiatives with a view to extending the technological leadership and engineering innovation that has kept the company several steps ahead of its competition throughout its history.

About Digitalsmiths
Digitalsmiths is an innovative video indexing and digital content publishing technology provider serving major Hollywood studios, web video destinations, media companies and advertisers. The company’s proprietary computer-vision based video indexing, search and interpretation algorithms empower content owners and publishers to efficiently monetize their digital video content, and advertisers to automatically target ads to thematically relevant video content. Digitalsmiths’ robust digital content publishing system and integrated video player enable simplified multi-platform content syndication, intelligent content recommendations, and detailed reporting and analytics. This powerful combination of Digitalsmiths tools and features improves the web user experience and extends site session times, creating new revenue opportunities for publishers.

Digitalsmiths is based in Research Triangle Park, N.C. The privately held company is backed by venture capitalists including .406 Ventures, The Aurora Funds and Chrysalis Ventures. For more information, please visit: www.digitalsmiths.com.

About .406 Ventures
406 Ventures is a venture capital firm focused on investing in market-innovative growth technology and services companies being built by the finest entrepreneurs. .406 focuses primarily on early stage, IT and services companies in sectors where the partners have unique domain expertise, a successful track record, and established networks – IT Security; Technology-enabled Business Services; Digital Media & Internet; Next-Generation Enabling Technologies. For more information, please visit: www.406ventures.com.

About Chrysalis Ventures
Founded in 1993, Chrysalis Ventures is the premier venture capital firm in Mid-America, managing one of the region’s largest funds for early-stage and growth investments. Chrysalis invests primarily in early-stage and expansion-stage companies in healthcare services and technology, media and communications, and emerging trends and technologies. Based in Louisville, Kentucky, Chrysalis has approximately $400 million under management and has made investments in over 55 companies. For more information, please visit www.chrysalisventures.com.

About The Aurora Funds
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.