The Youtube for China website, Youku.com has managed to aquire $40 million to invest in the popular site as online video continues to grow in China as the company moves away from user generated and submitted videos. Youku Chief Executive Victor Koo said the new funds will go toward expanding its offerings of licensed professional video and content made exclusively for the Internet. Youku will also invest more in mobile video, he said.

The cash has been raised from existing investors and Youku says it has now raised a total of $110 million in private equity funds, plus $10 million from debt, from those and other investors since it was founded in 2006. Youku is also in discussions to raise as much as $40 million in additional funds, they revealed.

The Chinese video websites of which Youku is the biggest started out as standard video sharing platforms, like YouTube, but more recently they have been concentrating on more professional content like serial dramas and entertainment shows. Their new model is more similar to Hulu, a video Web site in the U.S. that gives users free access to TV shows and other video. (Hulu is a joint venture between NBC Universal, which Comcast will gain control of. Today, Youku estimates that 70% of the content on its site is professionally produced and licensed from more than 1,500 content partners.

Mr. Koo said user-generated video is less developed in China in part because the culture of recording and producing home videos is newer here. “Online video[s] in China are based more on professional, long-form video than in the U.S. due to…the relative brief history of user-generated, short-form video here,” Mr. Koo said in an interview.

According to the China Internet Network Information Center, 66% of the 338 million Internet users in China as of June used online video. Youku, which says it has attracted 350 brand advertisers so far, expects revenue this year to surpass 200 million yuan ($29 million). But Mr. Koo declined to estimate when the company will become profitable. Tudou, Youku’s Shanghai-based competitor, said this year that it expects to break even by 2010.

Mr. Koo said Youku will also invest more in mobile video technology in an effort to take advantage of growing use of China’s newly launched third-generation mobile technology, which allows high-speed data services like streaming video. The Chinese government last month said there were almost 10 million 3G users.

Youku, Tudou and other Chinese video Web sites also have been known to carry pirated content uploaded by their users, like unlicensed TV shows and films. Mr. Koo said the company works with the Motion Picture Association of America and employs an identification technology that will allow it to filter out this content at the request of rights owners.

User-generated video companies like Youku are required by the Chinese government to filter videos for a wide range of illicit content, from pornography and violence to politically sensitive material like images of antigovernment protests. The government also has released new rules this year to more strictly regulate foreign content. It is unclear how those rules will affect Youku and other video Web sites, but failure to comply with government requirements can lead to losing the legal right to operate in china.

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