By BRETT SPORICH Staff Reporter
Venture capital investment in online consumer businesses soared more than 20-fold during the past two years in Southern California and now William Morris Agency is seeking a piece of the action.
The iconic Beverly Hills talent agency is moving to capitalize on the region’s explosive growth in Internet businesses, even though it’s better known for representing the likes of Denzel Washington and Russell Crowe, as well as corporate heavyweights such as GM.
It joined last week with Silicon Valley venture capital heavyweights Accel Partners and Venrock, as well as communications giant AT & T;, to create a joint fund targeting social networking, advertising and entertainment start-ups.
“We’re looking for the next MySpace-type entrepreneur,” said Jim Wiatt, chief executive of William Morris.
William Morris, whose clients have included MySpace, has acted in recent years as a media and branding agent, bringing together its Hollywood and corporate clients for ad campaigns. But the agency is a neophyte when it comes to investing serious money in newly formed companies.
It’s also a pioneer in Hollywood. While Century City-based Creative Artist Agency, the industry’s leading talent agency, has been raising money to create a similar angel investment arm, William Morris is the first to create an independent fund.
However, through the joint fund William Morris will be able to rely on its experienced Silicon Valley VC partners, which have financially mentored dozens of successful Web companies, including Facebook and DoubleClick.
The company would not disclose the total value of the fund, but Wiatt did say that the group plans to begin with a select few modest investments of $1 million or less. That would reflect more of an angel investor strategy than that of venture capitalists, who normally come along with bigger sums at a later stage of a company’s development.
“This arrangement gives Accel and Venrock exposure to companies at a much earlier stage than they would get otherwise,” said fund manager Richard Wolpert. “And it gives William Morris the investing and business mentoring experience of some of the best VCs in Silicon Valley.”
Wolpert, a former president of Disney Online and a chief strategy officer at RealNetworks, was tapped to manage the fund because of his own experience as an angel investor in more than 30 companies, Wiatt said. One hit was AdECN, an online advertising exchange recently acquired by Microsoft.
Birddogging it
Given that Accel and Venrock are headquartered in the Silicon Valley and more focused on tech companies, it’s expected that William Morris, and Wolpert in particular, will be more active identifying potential Southern California targets.
“The idea is to get in before the initial VC rounds and hang on for big profits if and when the company becomes a hit,” said Adam Wade, VC industry analyst at VentureSource, a Dow Jones company.
And while AT & T;’s involvement in the joint venture might indicate there would be some preference for mobile entertainment and communications startups, Wolpert and Wiatt said that is the not the case; the telecommunications giant is simply looking to make profits on the region’s growth in Internet businesses.
Venture capitalists have boosted investment in the region’s Internet consumer sector to $558 million in 2007, up from just $22.5 million in 2005, according to Dow Jones.
“It’s easy for a big company like AT & T; to work with a Google or a Yahoo, but, like Accel and Venrock, this gives them the opportunity to get involved at a much earlier stage then ever before,” Wolpert said. “If there is any sweet spot it would be the Internet consumer space, meaning anything related to online entertainment, advertising or social networking.”
