Back when entrepreneurs with any half-baked business model could secure millions of dollars in backing as long as the company name ended in "dot-com" incubators were the hottest game in town. Led by Bill Gross' Idealab, which produced a number of companies that pulled off phenomenally successful public offerings, incubators began cropping up all over Los Angeles.
The idea behind tech incubators is to provide management assistance, financial backing, and in some cases basics like office space and equipment, to promising entrepreneurs in exchange for an ownership stake.
While the concept is beginning to fall out of favor, especially with the recent tech-sector meltdown, there's little question that some of the most interesting ideas in the Internet space are being born at incubators. Here's a look at some of the most promising projects at prominent L.A. high-tech breeding grounds.
Look out, Regis Jackpot.com's gaining on you. The online sweepstakes dot-com hatched by Pasadena-based Idealab has already doled out $4 million including three $1 million prizes and plans another $1 million giveaway in December, according to company President Keith Cohn.
The site attracts more than 2 million regulars, who play various gambling games for free. Revenues come from advertisers, whose logos are incorporated into the various games for example, on the virtual slot machines one might see a logo for Nabisco or MasterCard instead of the normal oranges, bars and lemons.
While few advertising-sponsored sites have been able to turn a profit, Cohn expects Jackpot.com to be in the black this month one year after its founding and double its customer base to 4 million users by year's end.
Meanwhile, another of Idealab's companies, DotTV, has changed the fate of a small island nation. DotTV purchased the domain suffix dot-tv from Tuvalu for $50 million, to be paid over the next decade. The money allowed Tuvalu in September to pay the dues needed to join the United Nations and the British Commonwealth giving it economic clout and a say in world diplomacy.
So far, more than 50,000 companies have leased dot-tv names from the company, some paying as much as $100,000 for the privilege, according to Chief Operating Officer Craig Frances. Takers include Pax TV and the Academy of Television Arts and Sciences. Tuvalu now owns 20 percent of DotTV, while Idealab has a 50 percent stake in the company.
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