Israeli start-up Boxee recently closed a $16.5 million round of financing led by new investors Pitango and Softbank, as well as prior investors General Catalyst, Spark Capital, and Union Square Ventures.

The company that makes software for watching online video on your TV set, says it will use the money to further develop its product and establish more partnerships for content and hardware gadgets.

Boxee’s media center software is based on open code, which finds a user’s favorite shows and movies that are already available on the Internet and puts them on the TV, without a monthly fee.

The funding comes after the company raised $6 million in August 2009, but the company has expanded substantially since then and now needs more funds to compete against other set-top boxes including TiVo and the Apple TV.

“We are more hungry and driven than ever,” Boxee’s Avner Ronen said in a blog post. “Less naive, but dreaming even more ambitious dreams. We are also recruiting, so if you are a Boxee fan and passionate about what we’re doing then maybe you can join us in NY or TLV.”

Ronen founded the company in 2007. ISRAEL21c listed Boxee as one of the must-have Top Ten gadgets emanating from Israel in 2009.

Boxee aims to put its software on a range on different devices, and has already succeeded with the Mac, Windows and Linux platforms.