A few years back, when an investment banker defected from a premier shop like Donaldson Lufkin & Jenrette Securities Corp., it was usually to take a position in a client company, enticed by a compensation package heavily larded with stock warrants.

Now DLJ is watching some bankers siphoned off by what else? the Internet. Two of its telecom and media investment bankers Joseph Reece, 38, and Steven DesJardines, 31 have formed the low-profile, Santa Monica-based Encore Partners L.P. They already have raised a $50 million fund to invest in Internet early-stage companies. "We could have raised a lot more money, but we cut it off at $50 million," said Reece. "We wanted to keep it very high quality."

Like others in the local venture cap world, Reece and DesJardines (both take the title of partner) want to focus on "the people making the picks and shovels" of the Internet. They like businesses on the infrastructure side of the Net (either hardware or software) or serious business-to-business commerce. Their sweet spot is deal sizes in the $500,000 to $5 million range.

Why not content providers? After all, isn't Los Angeles the home of the entertainment industry? Reece says the timing isn't quite right.

There is a boom in the future for content providers, once broadband systems are more common. Then, "it wouldn't surprise me if people go online and decide to watch 'Star Wars' at 10:30 a.m., if that is what they want," Reece said.

But as Internet surfers know, you can't watch video very well on the Web, and even still graphics can slow download times. Those problems will be solved, but not overnight, said Reece.

By the way, Reece started his professional life as a mergers lawyer with Skadden Arps Meagher Slate & Flom in downtown Los Angeles, working with partner Brian McCarthy (now something of a legal titan in mergers circles). It pays to have friends in the business Skadden partner Mike Warnoff helped draft plans for the Encore Partners fund.

Wedbush hiring binge

Wedbush Morgan Securities has been busy of late, getting its E InvestmentBank, an online investment banking service, up and running. Now Los Angeles-based Wedbush is boosting research and institutional sales.

In that vein, last week the brokerage added three heavy hitters to its institutional sales staff. Institutional salespeople are like stockbrokers, except they try to sell stocks and bonds to big mutual funds, pensions funds, and the like.

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