Venture capitalist: Warren Lee, venture partner, Canaan Partners 

Canaan online video investments: Motionbox, Tremor Media 

Warren Lee said it's obvious that venture funding is down across the board, and is sagging even in the video space. He said, although he considers online video "overfunded," he doesn't consider it to be any more puffed up than other sectors that have attracted significant venture attention.

"Veoh, Metacafe, and other generic video sharing companies are obviously struggling," he said. "They have the fundamental issue of their cost structures not being covered by their monetization currently."

Lee also didn't see a bright future in venture funding for online video production companies, but was quick to add that it was more due to the fact that their businesses are founded on creative effort, rather than technological prowess.

He is still optimistic about the online video industry's outlook, however, because the underlying trends of consumption are still strong, the cost of video delivery is steadily decreasing, and the diversity and quality of content online has also steadily increased. While Lee said that he thinks end-users still prefer to view core news, sports and entertainment content on a big TV screen, he said he has been amazed by how quickly consumers have embraced online video destinations like YouTube and Hulu.

"It's still very early, and there are still many questions around business models," Lee said. "But you have to give the studios and content owners credit for begin ahead of the curve in embracing the Internet to gain some revenue, where newspapers and music labels waited and lost control of their product."

Lee said the present economic environment favored strong companies that could raise money and aggressively grow to put themselves in a good position during the economic recovery.

"Those companies that are features rather than products will have to come back, and then they'll have a hard time building brand," Lee said. "The interesting thing about video is it's not like text, pictures, and banner ads which are relatively easy to deliver. Video is a heavy duty application with a lot of cost and complexity. There are 1,000 things that can go wrong and often do go wrong before the end-user consumes a piece of video."

For that reason, Lee said one of the most important things an online video company needs to have is a strong operations team.

"You need to have a strong team operationally, because being a trusted technology provider really can build brand in this space," Lee said. 

Venture capitalist: Ken Elefant, general partner, Opus Capital 

Opus online video investments: iWidgets, Jivox 

Ken Elefant sees his portfolio companies tapping into online video in different ways to reach their core audiences. iWidgets, a social media syndication platform, focuses on the core thesis that end-users don't want simply to view videos, but also to interact with them and form communities around common interests. iWidgets accomplishes this by integrating with social media sites like Facebook and MySpace natively, and allowing users to export their social graph across media sites. 

He said his firm looks for three primary strengths when evaluating companies: a management team with significant experience, targeting a small, rapidly growing market, and clear core differentiation from other offerings, whether that is achieved through distribution advantage or intellectual property. He said Jivox's self service architecture and its focus on bringing online video to local advertisers was key in it getting funded. 

Elefant said he is interested in developing companies with technology around online video analytics and content distribution.