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They're not targeting Youtube. For example, there is NO copyrighted content on blip. They are not going for "viral video".
What they are building is a platform for independent content makers that want to build their own brand. They support these creators with lots of relevant tools. Their license is the best in the business.
The point is, they are very focused on a market that will probably support a serious businessmodel, and they are not competing with Youtube and the dozens of other video sites.
For independent content creators, right now, they are by far the best choice. That's their focus. That's their market, and thank god someone's doing it.
They're the only game in this market, and that's probably what their investors see in them.