The video startup Cheddar's announcement of $22 million in new funding and a $160 million valuation is eye-opening considering the gloomy overall mood in digital media.

Even more impressive is that, unlike those of many digital startups, Cheddar's audience appears to be relatively small.

And given the way Cheddar is distributed, its audience size is also hard to measure. Its founder, Jon Steinberg, said his bar was low.

Steinberg looks toward the financial-news category, where CNBC's daily live shows regularly attract fewer than 200,000 viewers. "All I need is a quarter of that," he said.

He's pushing for better research and sees an opportunity to own business news on the emerging set of "skinny bundle" cable-TV alternatives.

Nobody seems to have a clear idea of how many people actually watch Cheddar. And it probably doesn't matter.

The web-video startup, which aspires to become the business-news outlet of record for millennials, has just pulled in another $22 million in funding, bringing its total to $54 million and landing it an impressive $160 million valuation in just two years of existence.

Those numbers are eye-opening, particularly in light of the recent fallout in digital media.

The fuzzier math: How many people are actually watching Cheddar?

It's tough to gauge. Even its founder, Jon Steinberg, says so.

Nielsen and comScore don't seem to have an answer. If the biggest TV networks in the US are having a hard time measuring how many people watch their shows on multiple devices and apps, consider that Cheddar is live eight hours a day on several fledgling streaming services, including Sling TV and Philo, while distributing live and on-demand clips on Facebook and Twitter, as well as on YouTube, Pluto TV, and Xumo, and even at some airports.

Can anybody come up with a rating number that captures all that?

According to the analytics firm Tubular Labs, Cheddar had close to 500 million video views on Facebook in the past 90 days. One clip, featuring a demonstration of a clothes-folding product, has generated nearly 100 million views.

To Cheddar's credit, its main Facebook page has nearly 3 million followers, while its Twitter account has nearly 150,000.

But it's also easy to find individual Cheddar live clips on Facebook or Twitter that generate fewer than 50,000 views.

Then there's Cheddar's distribution on various so-called skinny bundles, which 4.6 million people had signed onto by the end of last year, according to an estimate by MoffettNathanson Research.

Targeting the 'skinny bundle' crowd

Steinberg said that while Cheddar initially focused on Facebook — and particularly on Facebook Live — the plan was always to go for the emerging "over the top" opportunity.

"We knew we wanted to get out of Facebook, because we knew Facebook was going to screw publishers," he said. "We needed some Park Avenue real estate."

His thinking: As media and tech giants like DirecTV, Hulu, PlayStation, and YouTube have readied these scaled-down cable-TV alternatives, there would be an opening for a cheaper option.

Whereas networks like CNBC and Fox are used to commanding high monthly carriage fees from cable distributors, Cheddar would come in cheap.

"If they are getting a dollar per subscription, we'd offer 25 cents," Steinberg said.

Instead, the skinny-bundle companies said they'd be happy to carry Cheddar — but weren't interested in paying for that right.

"So I was back in the advertising business," Steinberg said.

He says Cheddar will have distribution on every skinny bundle by the end of this year and will pull in $40 million to $50 million in ad revenue by next year.

Does a huge audience matter for a media company anymore?

What's striking about Cheddar's funding announcement is that it came at a time when companies like Refinery29, Mashable, Vice, and BuzzFeed are going through cutbacks.

And the news didn't contain any claims that Cheddar reaches hundreds of millions of unique users. It surely doesn't.

Instead, Steinberg says his bar is relatively low. He looks toward the financial-news category, where CNBC's daily live shows regularly attract fewer than 200,000 viewers and whose average audience age is much older than Cheddar's, Steinberg says.

"All I need is a quarter of that," he said. "That network pulls in close to a billion a year."

He has a point. Nielsen says CNBC's average daytime audience contains only about 30,000 viewers between the ages of 25 and 54. And according to S&P Global Market Intelligence, CNBC will pull in $778 million this year.

Is that enough to excite investors, who like to see fast scaling revenue and dream of big exits? What is it about Cheddar?

Some point to Cheddar's fandom.

According to CrowdTangle, a Facebook-owned analytics tool, in February, Cheddar's videos generated more than 3 million interactions — more than CNBC, Bloomberg, and, yes, Business Insider. That kind of interaction (shares, comments, likes) is typically seen as a sign of audience devotion.

"Building a brand on the internet is hard," said Rich Greenfield, a media analyst. "Cheddar is trying to define the news category in video online. We all know the legacy ecosystem breaking down."

Greenfield cited other digital brands like Barstool Sports as a good example of a company with a far smaller audience than competitors (like, say, ESPN) but whose profile has been exploding.

"It's unclear if Cheddar can be a unicorn, but significant value can be created by the brand," Greenfield said. "They are a beachhead to build a multiplatform media business."

It's an advantage that Cheddar doesn't have legacy costs or infrastructure, said Farhad Massoudi, the founder and CEO of Tubi TV, an ad-supported video hub.

"I do think there's a business opportunity to produce news content and distribute it everywhere and not be locked into traditional news deals," he said. "They've also done a good job of managing to keep the production costs low."

"Cheddar is the leader in live digital news video and owns all its IP," said Simon Freer, the chief commercial officer of Liberty Global's content-investments arm, which participated in the most recent funding round. "We believe Cheddar can go global, and we are excited to collaborate with the company to make that a reality."

It's almost as if what matters to investors now is that Cheddar has built distribution, the ability to produce a large volume of content, and a name. Amassing a significant audience is a secondary concern.

Still, the Cheddar haters are out there

There's little question that Cheddar has become Cheddar in large part because of Steinberg's self-promotion, deal-making prowess, and connections in the media and ad worlds.

"He's a real hustler," said one digital-ad-industry veteran. "I've never seen somebody so transparently trying to sell a business. One thing he's got going for him is the dynamic of 'anybody will say anything if you stick a camera in their face.' But I don't know if 21-year-olds want to watch this."

Steinberg definitely has a showman side, which some love and some don't. He posts his workout videos on Instagram and wears funny hats while on Cheddar. He's known for putting together splashy press events, like an announcement on a yacht in Cannes a few years ago that he, WPP CEO Martin Sorrell, and Evan Spiegel, the founder of Snapchat, were launching a new social ad agency dubbed Truffle Pig.

Steinberg says he loves making deals. Sometimes that results in landing huge sponsors, but in other cases, it has meant bum deals. His spending $26 million to acquire Elite Daily while running Daily Mail's North American operations became a big money loser for Daily Mail's parent company, which eventually unloaded the property.

But Steinberg said he's not looking to sell Cheddar.

"I just raised $22 million," he said.

The other knock on Cheddar is that it is live during an era when young people want everything on demand.

"I don't think live TV makes any sense," one person told Business Insider. "That's dead."

So Cheddar is pushing into more non-newsy content. And its live footage can easily be turned into clips for the web.

Friends like these

Steinberg has surely used his connections to land guests such as Sorrell and the CEO of CBS, Les Moonves. But he bristled at the idea that Cheddar is just his Rolodex.

"These are not all my friends," he said. "We book 30 or 40 people a day. We had Drew Barrymore the other day; she's not my friend."

Cheddar even had Tim Kaine, the 2016 Democratic vice presidential nominee, as a guest.

Drew Barrymore on Cheddar. Cheddar

Going forward, Steinberg says that he'd welcome getting Cheddar on traditional cable packages and that he's interested in getting distribution via local broadcast stations.

He also sees an opening as some smaller local cable companies appear to shift their focus to becoming primarily broadband providers, given how high the profit margins are. His thinking is that perhaps Cheddar could provide video content for those services at a much lower cost, letting cable companies focus on broadband.

Steinberg acknowledges that big names and deals will take Cheddar only so far in the near term, as there's one group that will care about measuring Cheddar's audience: advertisers.

To ramp up ad revenue, Steinberg's talking to Google about testing "dynamic ads" that could be delivered automatically during breaks in Cheddar's livestreams. In the meantime, he's pushing hard for better third-party research to please ad buyers.

"We get very limited data from the skinny bundles and are prohibited from sharing," he said.

He says he's hired the research company Cogent (which CNBC also uses) to help track viewership on streaming services "at great cost to us."

According to Cogent, Cheddar viewership has already climbed to 10% among US millennials. In addition, upstart streaming web platforms like Pluto TV and Xumo add in about another million viewers, Steinberg says.

Cheddar says that, overall, "hundreds of thousands watch Cheddar live each day, and hundreds of millions watch Cheddar video clips on social media monthly."

But Steinberg seems to realize this hodgepodge of data won't be enough for big marketers in the long term. It's hard to plug these numbers into a chart and compare them with live-TV audiences.

So he's pushing for Nielsen to come up with a solution.

"It will probably cost me an arm and a leg," he said. "But I'm dying for it."

He added: "If I can get Nielsen to measure us, even if the average viewership they come up with is 5,000 people, I consider 5,000 viewers a victory, because CNBC only has 30,000 between the ages of 25-54 — our whole audience is in its 20s and 30s, and we are two years old."