I haven’t seen this much public drama between founders and their investors since the FilmLoop forced merger in early 2007. Earlier today I wrote that Israeli startup KnockaTV was heading to the DeadPool. Employees, who are apparently going unpaid, are pushing the company into liquidation to try to get at least some of what is owed to them.

We dug a little more into the story, because it just didn’t make sense: the startup was well funded with $3.5 million in capital from mid 2007 and the founders, who were among the creators of ICQ, had a $407 million payday in 1998. That doesn’t guarantee the startup would be successful, but it suggests that employees wouldn’t have to worry about their paychecks this early on.

Based on rumors going around Tel Aviv, there was some sort of major fallout between Evergreen Venture Partners (the venture firm behind the financing) and company founders, particularly Sefi Visiger. Product development may have been seriously delayed. Burn rate was so high that an additional funding round was needed, and Evergreen may have demanded the founding team put up more cash instead. Tempers flared, the founders elected to shut the company down, and are reportedly supporting the employees in their efforts to liquidate it. According to one source, the liquidation will ensure that employees are paid before other creditors become too numerous.

A liquidation would knock out existing stockholders, leaving the company assets to be sold off. Quite possibly they would then be acquired by the original founding team, leaving Evergreen without any stock, or their original investment.

How much of this is true? Sefi and Evergreen won’t comment directly to us. But there is little our contacts in Israel want to discuss today other than KnockaTV and what they heard happened. Companies that closed substantial funding just a couple of months prior don’t generally fall apart immediately before launch. Evergreen’s reputation in Israel is considered excellent, whereas some members of the KnockaTV founding team are said to be major league partyers first and serious business people second. More will likely be said on this story, from both sides, before it is finally put to bed.

The sad part of all this (other than employees going unpaid) is that the product actually held promise. Our early reviews were generally positive.

Israeli startup KnockaTV looks to be in serious trouble. If this article in the Globes is correct, 21 employees went without salaries in January and the company is ₪1.2 million in debt (about $300,000).

We first wrote about KnockaTV, which was founded by the same team who founded Mirabilis (ICQ), in August 2007 (Mirabilis was sold to AOL in 1998 for $407 million). They went into private beta in December 2007. The company raised at least $1 million in seed funding (the Globes article says they’ve raised $3.6 million in total). Update: the company is telling us they raised a total of $3.5 million, half from Evergreen, half from the rest. CrunchBase updated.

The founders have a lot of personal capital at their disposal, and it seems unlikely they’d let employees go unpaid. Still, the unpaid employees have supposedly petitioned the Tel Aviv District Court to appoint a provisional liquidator to the company.

I’ve emailed the company for a comment. For now, KnockaTV goes into the TechCrunch DeadPool.

Knocka.tv ends speculation today by alpha launching an Internet television network. As a TechCrunch exclusive, 1000 of our readers will be the first users to gain access—the sign-up form is at the bottom of this post.

The concept is a multi-channel Internet broadcast network that features both professional and user generated content. Knocka packages the content prior to broadcast with promos, branding, transitions, credits, etc. The participatory angle comes into play by having users determine the playlist and in the future actually take part in live shows.

By no means is Knocka inventing a new category. Similarities can be found in offline Current TV, and in online maniaTV.com. In much the same way that news is democratized by Digg, Knocka is attempting to empower users to create and determine television broadcasting on the Net.

Knocka describes itself as a “professional internet television network for user generated content.” I feel that “participatory internet television” is in fact both a more befitting description, and it’s also five words shorter.

This leads to what I view to be Knocka’s main problem. While the offering is indeed compelling, at the same time it’s also complicated to the point that users will have a problem comprehending its nature, let alone explaining it to others. There are many moving parts to Knocka, so do your best to follow:

Professionals and amateurs upload videos that enter a pre-screening pool where they are rated by users. The top rated ones are broadcasted, but not before Knocka packages them up and creates the actual playlists, which is done 24 hours in advance. Once broadcasted, users can again rate the individual videos, or shows. Individual videos can then be selected to be seen independently of their original show. While all this is happening, users can communicate with each other through chat rooms, private text messaging, and by webcams. Got that?

Basically, instead of focusing its appeal to a single group, Knocka is trying a bowling alley approach by attempting to appeal to the entire food-chain: Producers, influencers, communities and viewers (passive and participatory).

Knocka is kicking-off with 8000 videos by 600 producers, including Break a leg, aniBoom, Ministry of Sound, and Fashion TV. The three debut channels are:

• Knocka One – A general channel featuring “the best of the best” from Knocka’s channels.
• Kilowatt – Knocka’s very own music channel featuring independent artists.
• Kandy – A “sexy” channel featuring scantly clad women (amateurs & pro’s). The raciest I caught was a coed in a thong.

Knocka is 100% browser based and there will be no embedding. On the cosmetics front, Knocka scores high marks with me. The frontend was done in Flex and while the interface requires some fine-tuning, all-in-all it looks good. I also really enjoyed the packaging which took me back to when MTV defined “cool” and actually played videos.

An interesting tidbit about Knocka is that it marks the return of ICQ co-founder Sefi Visiger back to the startup scene. He took a major leave of absence since the big exit back in the day.

It’s fairly obvious that massive participatory events around video will happen sooner or later. Knocka still has work to do, but it comes out of its corner for round one with potential.

We just heard about a new Israeli video/TV startup called KnockaTV, which has the tagline “The People Have Taken Over.”

KnockaTV is self described as:

Knocka.TV… the latest from the inventors of ICQ, the web’s first Instant Messenger (www.icq.com). Building on our success with bringing people together on the web, “We’ve created a new form of Television!”. It’s social and real. It’s hyper-interactive and creative. Best of all, it’s democratic. Knocka lets the People decide what’s on TV, playing only original videos from the best web video producers in a professional TV broadcasting style.

They are also looking for original content producers to submit content to the service. Beyond that there isn’t much information yet. The site has not yet entered private beta, but it does show a constant stream of quick video clips on the landing page. Some of those clips show a counter for total number of current viewers; others contain a thumbs up or thumbs down icon, suggesting viewers will vote on the content, possibly skipping stuff they don’t like (as Pandora does when playing songs). This is all speculation, though. I haven’t yet spoken to the company.

The founders of instant messaging service ICQ are behind the company. ICQ was created by Yair Goldfinger, Arik Vardi, Sefi Vigiser and Amnon Amir in 1996 (it’s not clear if all of those individuals are involved in KnockaTV) and its parent company was acquired by AOL for $408 million in 1998. Yotam Eshel’s LinkedIn profile lists him as the product manager for the company.

Alarm Clock says they raised $1 million in capital in June 2007. Evergreen Venture Partners, an Israeli firm, was named as an investor. Evergreen is also behind Aniboom, a user-generated cartoon site that launched in late 2006.

Whatever KnockaTV is, it looks like a hell of a lot of fun. Thanks for the tip, Orli.