SAN FRANCISCO, May 7 (Reuters) - Much-maligned social-video sharing company Color is trying once again f or a shot at success by tying up Verizon, according to a post on Color's blog on Monday.
Color raised $41 million in first-round funding. Most other startups are lucky to raise $5 million or $10 million at that stage.
But the company has struggled to catch on with consumers. It has provided plenty of ammunition to those who argue Silicon Valley is in the throes of a consumer-Internet bubble.
If the alliance with Verizon, which will make the app available on its high-speed 4G LTE network, boosts Color user numbers, it will show founder Bill Nguyen still has his magic touch. A serial entrepreneur, Nguyen is perhaps best known for founding music service Lala and selling to Apple Inc for about $85 million in 2009.
If the alliance fails to raise Color's numbers, it will boost the case of people who argue that many startups have unproven business plans that don't match the cash they're raising from venture capitalists.
"The consumer environment is getting pretty heated," one venture capitalist said echoing the comments of many of his colleagues in recent months.
Nguyen believes the ability to share live video without the lags and glitches that come on slower-speed networks will give the company a leg up, he said in an interview. He envisions families capturing milestones like children's birthday parties for absent grandparents, or people capturing political demonstrations and the like.
"We're good enough to replace a tweet," he said, referring to the instant messages sent on micro-blogging service Twitter about live happenings. "We'll replace recorded video."
Color, which allows its users to share video with all or some of their Facebook friends, started as a photo-sharing service last year. It changed gears after a few months to focus on video.
About 1 million users have downloaded its free app, but the company declined to say how many use it regularly.
Nguyen said he is not bothered by the fits and starts, noting that Lala started as a CD-trading company before becoming an online music company. T h at service took several years to gain traction before attracting millions of users and eventually selling to Apple Inc. for about $85 million in 2009.
For Verizon, the attraction lies in helping the company boost its 4G service, which has about 8 million customers-- about 9 percent of its customer base, said spokeswoman Debra Lewis.
"Video is a great application to use on that network," she said, adding the company's video-harnessing NFL app is one of its most popular on its 3G and 4G networks. Color will come preloaded on some of its phones later this year.
Color's videos are limited to 30 seconds. While other live-video sharing services exist, Nguyen said Color's technology makes it better.
Eventually, he plans to make money from the app using advertising. Color's backers include Sequoia Capital, Bain Capital Ventures, and Silicon Valley Bank.
Color declined to disclose terms of the deal.