By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - Former macro hedge fund manager Mike Novogratz is one of several investors in VideoCoin, a startup eyeing a $50 million digital currency offering in a few months to take advantage of the growing appetite for cryptocurrencies, VideoCoin Chief Executive Halsey Minor said in an interview.
A recent $5 million initial funding round also attracted investors such as Distributed Network Advisors, a firm whose partner includes venture capitalist Brock Pierce; and Alphabit, a global fund that invests in digital currencies, Minor told Reuters last week.
Novogratz, formerly of Fortress Investment Group and who runs Galaxy Investment Partners, said in a statement on Thursday the project had all the elements he looks for in an investment. "We are convinced VideoCoin will revolutionize the video streaming industry."
Pierce and Alphabit were not immediately available for comment.
"You get all these guys in early, and the rest comes along," said Minor, a technology entrepreneur who in 1994 co-founded CNET, a U.S. media website on technology and consumer electronics that CBS bought for around $1.8 billion in 2008.
Digital currencies such as bitcoin have emerged as a new asset class over the last two years as its underlying technology called the blockchain, an online database, has gained worldwide acceptance from corporations and financial institutions.
Bitcoin (BTC=BTSP), which is traded on exchanges, soared more than 1,700 percent last year to a record high, raising fears that the volatile emerging asset poses a risk to investors and the global financial system.
VideoCoin's new token may be used by software developers and other users to pay for cloud-based video services on its network, such as encoding, storage, distribution, or rentals, Minor said.
"The internet is now about 80 percent video. It's growing at 25 percent per annum. Costs for entertainment media companies are exploding and they have no ability to monetize this."