Boxee's Backers Bet Big On Web Video, With A $16 Million Round

Here’s that big funding round for Boxee I told you about last fall: The Web video software company has raised another $16.5 million. Previous investors General Catalyst, Spark Capital and Union Square Ventures are all back, joined by new money from Softbank and Israel’s Pitango.

Boxee, which makes software that makes it easier to get video from the Web to your TV, is a buzzy company in a buzzy industry. But I wrote about Boxee’s efforts to raise $10 million to $15 million back in November. What took so long?

My hunch is that in between then and now, the startup had to figure out if it really wanted to raise more money, or sell out to a big fish. For a long time, I figured the company was eventually headed for option B, and that a cable giant like Comcast or a box-maker like Cisco would be the buyer.

And that could still happen! But now the stakes have gotten a lot higher: Boxee has now raised $28.5 million, so in order to please its investors it’s going to need a significant payout.

Which means it really will have to build a real revenue stream, which it doesn’t have yet, and won’t have until it has a significant audience. As I wrote a few months ago:

Boxee’s real plan is both clear and a bit undefined: It wants to get its software on as many devices as possible–not just the Boxee Box but everything from Sony’s TVs to Microsoft’s Xbox 360s to Samsung’s Blu-ray players. And then it wants to build some kind of business based on advertising, consumer payments or both.

So Boxee isn’t trying to make money by licensing its software to hardware companies, any more than Netflix or Pandora is when they get their apps installed on different gadgets. It’s giving D-Link, the company that’s actually making the Boxee Box, its software for free. And it will do the same for other hardware companies.

Here’s a quick interview I conducted last fall with sleep-deprived CEO Avner Ronen, going over the same territory, back in November. Note that Ronen’s plans to bring Hulu Plus to the Boxee Box have yet to pan out. What’s up with that? “As you know these things take time,” he said via email yesterday. “But we are on it.”