Shaquille O'Neal: basketball superstar, rapper and Internet executive? Arnold Schwarzenegger: action movie hero, fitness guru and online media mogul?
That's the mission of Digital Media Campus, a new local incubator that will give some of the world's top sports and entertainment celebrities a piece of the Internet action, in much more sophisticated ways than just launching fan sites. Just as important, it will give Internet startups immediate visibility and marketing clout by being associated with celebrity owners.
The incubator, set to officially open in June, already counts names such as O'Neal, Schwarzenegger, Dallas Cowboys owner Jerry Jones and Oracle Corp. Chairman and CEO Larry Ellison among its investors, who are referred to as "strategic partners." The celebrities participating in Digital Media will serve as spokespeople and advisors for sites, in exchange for an equity stake in the new company they're touting.
"In order to be successful in building a digital business in sports and entertainment, there are some important resources that need to be marshaled," said Digital Media founder and sports agent Leonard Armato. "One important element is understanding the industry itself. And it's important to have an outstanding strategy involved, so one of the things we've done is compiled a tremendous all-star list of investors and strategic innovators that spans technology, sports and entertainment."
By focusing on sports and entertainment sites that use celebrity branding, Digital Media reflects a trend of increased specialization by incubators.
Narrowing the focus
Idealab, the industry-leading incubator founded in 1996, hatches all kinds of Internet companies. But by 1998, incubators began concentrating on specific niches. Business Technology Center, an Altadena-based incubator founded that year, focuses on high-tech infrastructure and support businesses, while Interactive Multitainment Advanced Technology Center, a downtown L.A. incubator also founded in 1998, launches small entertainment, multimedia and technology companies.
With Digital Media leading the way, experts predict newer incubators will continue to target even more tightly focused markets.
"The new ones have to differentiate themselves or else there's just a lot of clutter out there," said Jeff Anderson, managing director of Mellon Ventures Inc. "(Specializing) is the hook the new incubators are employing, just like what the venture capitalists went through. Before, they did a broad array of investments, but became increasingly specialized to compete with Joe's All-Purpose Venture Capital."
Others agree that such specialization will likely help new incubators succeed.
"You obviously develop a deep knowledge of certain industry sectors, which is helpful when evaluating new investment opportunities," said Jon Funk, general partner at Media Technology Ventures, an Internet-focused venture capital firm. "When you're looking at a given business, that gives you a whole lot of context. It's very useful."
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