Watch Out Apple TV: Boxee Raises $16.5M

Boxee has closed a tremendous third round of financing at $16.5 million. Find out what this means for the future of Boxee after the jump.

Hey Apple! Looks like Boxee is giving you a run for your money, closing a tremendous third round of financing at $16.5 million. New investors include Pitango Venture Capital and Softbank and General Catalyst, Spark Capital and Union Square Ventures contributed finances in addition to contributions to Boxee’s $6 million funding round in August 2009. Additionally, Pitango’s managing general partner, Isaac Hillel, will be joining the board of directors at Boxee.

The Boxee box, which streams Internet video to your TV, has been taking a bite out of Apple for some time now. Their box, built by D-Link, simply plugs into your television set and connects to the Internet wirelessly, allowing you to stream television shows, music, movies and more, using apps like Pandora and recently Vudu and Netflix.

So what is Boxee going to use the $16.5 million for? According to Vator News, they plan to use the funding to “improve the product, expand content and add more partners.” Janko Roettgers of NewTeeVee gets more specific. He spoke with the VP of Marketing at Boxee, Andrew Kippen, who told him the company plans to use the money to increase their company from 34 to at least 44 employees, to work on additional content partnership and to start working on the next version of their box– Boxee Box 2.0! In other exciting news, Kippen let Roettgers in on another little secret. Roettgers writes that, “The next iteration of the platform will make it possible to directly interact with TV content.” Eat your heart out, Social TV apps!

Kippen also told Roettgers, “We are trying to figure out how to make Boxee input one.” The company hopes to make it so that users can switch between their traditional TV content and Boxee without having to change the input on their television sets. According to Roettgers, this is a feature that Google TV has been offering on Logitech and Sony devices for some time, though the setup is a little awkward.

The changes, improvements and company growth made possible by this recent round of funding should put Boxee in an even better place than they are now, in terms of competing with similar services like Apple TV and Roku. Of course, the Boxee Box still costs more, but they have the advantage of an expanding content library. The recent addition of Netflix was big, and as they continue to search out more content partners the amount of free content offered on the Boxee Box is likely to increase as well. What about Apple TV’s iTunes store? Well, Boxee’s inclusion of Amazon On Demand provides a similar service, without tying users down to making selections and purchases through the iTunes store.

Of course, there are still a lot of folks that will choose Apple TV over Boxee because of the cheaper price ($99 vs. $299) and the fact that it’s got the Apple name and branding attached to it. However, I think that Boxee, especially on the tails of this latest investment, will prove itself as a much better service with a lot more options in the content department and a better user experience. What do you think? Would you go with Boxee Box or Apple TV? And how do you think this latest funding round will effect Boxee’s success?