Rumor: UStream.TV Turning Down $50 Million From Microsoft; Wants To Work With VCs Instead

UStream.TV is a live, interactive video company that allows anyone with a fast Internet connection to stream and record shows.  The company was founded by Brad Hunstable.  UStream.TV is based in Los ALtos, Calif.  Frank Cuafield and the Band of Angels are investors in UStream.TV.  Caufield is a founder of Menlo Park, Calif. based venture capital company, Kleiner Perkins Caufield & Byers.

Valleywag has a source that UStream.TV is turning down a $50 million bid from Microsoft and wants to work with a VC firm instead.  Angel investor, Chris Yeh stepped in as CEO of UStream, but then gave the position to founder of Esurance founder, Chuck Wallace.

If Valleywag’s source is correct, then this would be a foolish move for UStream.TV.  I think that $50 million overvalues UStream’s worth given their traffic measurements.

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