Podbridge Inc., a maker of technology used to place targeted advertisements alongside audio and video podcasts, has closed a new round of venture funding totaling $8.5 million.

New investor Sutter Hill Ventures led the Series B round with initial investors Mayfield Fund and Worldview Technology Partners also participating. As part of the recent funding, Greg Sands, Managing Director with Sutter Hill Ventures, has joined the Podbridge board.

Founded in 2005 and based in Mountain View, Calif., Podbridge has raised $14.5 million to date.

Chief Executive Murgesh Navar said the financing will be used to expand the company's services to other platforms and increase sales and marketing efforts.

"Basically we are focused on major media companies and putting their content into a downloadable format that can be monetized," Navar said. "We bring companies the ability to release their content into the wild, but still have a leash on it."

Navar said the company's current customers include Fox News, MSNBC and CNET, among others.

Navar said market research firm eMarketer forecasts that spending on Internet video advertising will grow from $775 million in 2007 to $2.9 billion in 2010, with 10% of the dollars devoted to Internet advertising used for video placements.

"This is a market that's exploding," Navar said. "We expect profitability in 12 to 24 months."

Venture capital firms have poured money into similar start-ups that aim to link advertisers with podcasts. ClickCaster Inc. provides tools to create podcasts and hosts an advertising-supported library, enabling users to create and subscribe to broadcasts. ClickCaster raised $500,000 in seed financing last year from investors including Mobius Venture Capital Managing Director Brad Feld and Flatiron Partners Managing Director Jerry Colonna.

Podtech Networks Inc. creates its own, advertiser-supported interviews and news broadcasts about technology. The company also sells its services to enterprise customers, such as Intel Corp. and Symantec Corp., which want to add podcasts to their Web sites. PodTech is backed by $5.5 million from U.S. Venture Partners and Venrock Associates.