Guba and Veoh, two companies that have come under heavy criticism are cleaning up their act, hoping to capture a more mainstream users.

Veoh was facing the ire of the video bloggers for taking their content and transcoding their videos into a proprietary format. A day after, the company backed off from the practice and is now seeking permission from the video bloggers. Veoh has removed all the videos they had re-hosted without permission. Dmitry Shaprio, CEO of Veoh wrote to video bloggers group:

we have made a decision to remove any videos published via an RSS feed that have not specifically been claimed by the feed owner. If you have published your feed to Veoh, but have not been able to claim it yet, it has been removed, and we ask you to please republish it. We apologize for the inconvenience, but there was no other way to clean the database.

Guba, a company that puts a web-interface to the Usenet groups has been tainted for giving access to adult content. The company today decided to split its adult content business into a separate unit. Guba, like nearly 90 other companies, is trying to cash in on the “online video hosting and sharing” business. Thomas Mcinerney, co-founder of the service emailed me and said, “We just open up Guba for free. No subscription required. Also, we’ve split adult content into a different brand…. we’re expecting Guba to be in the Alexa top 100 inside of 6 months.”

Both the companies are in the process of raising more VC dollars, and I bet there was pressure to clean-up … fast. Veoh, I have heard is in the process of raising capital from some major hitters from the world of media and Hollywood. I will have more details later. Guba is also looking to raise more cash. “We’re talking to VCs now,” says Mcinerney. Guba is close to nailing a deal with a big studio. Perhaps that would nudge up the valuation.

The VC dollars are flying thick-and-fast into the online video business. Earlier today, Revver raised $8.7 million in fresh funding from investors such as Draper Fisher Jurvetson, Draper Richards, Bessemer Venture Partners and Will Hearst. Last week, You Tube has raised $8 million. JumpCut, Video Egg…. oh forget about it…. Mike has the lowdown on all the recent entrants in a market that is looking more crowded than an Old Delhi bazaar.

Even as the VC dollars flow into the online video space, just a little reality check: MySpace’s recent launch has already put it ahead of You Tube, though people are not spending as much time watching videos on MySpace.