Blinkx hasn't solved the video monetization question. But, it's certainly well on its way to solving the search and organization one. The video search engine is far and away the strongest entrant in its class, setting itself out as a coveted startup. And with $10 million raised from seven angel investors, it could be a huge exit venture capitalists end up missing out on.

Then again, Blinkx founder and CTO Suranga Chandratillake told me today at the company's booth in the Demo exhibition hall that the company may seek new financing later this year. I wondered aloud why the company would continue on as an independent one if it can't figure out the monetization question. After all, until it does, it will always rely on outside finance for its survival. And one reason for a sale is the fact that Blnkx could easily command a nine-figure exit valuation today.

Chandratillake responded that over the next five to ten years, the lingua franca on the web will be video and Blinkx's ability to find and organize all of that content will be increasingly valuable. He added that there's no reason the 27-person company won't be able to serve up contextual video advertisments in the same way that it aggregates similar video content now. So, maybe the Internet video monetization problem won't be as difficult to solve as it seems.

The size of that problem will go a long way in determining whether London-based Blinkx takes on outside capital later this year or sells out to a large media company in need of the best video search engine on the web.

For more on Blinkx, see:
Scoble Show
Vecosys

Tags: blinkx, vc, venture+capital, demo2007, demo07, search