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Friday, Sep 22, 2023

BEST – Top Venture Capitalists Reveal Their Best Deals Ever

Last year was the best ever for L.A.-area recipients of venture capital, with a total of $1.8 billion in venture funds flowing into Los Angeles, Ventura and Santa Barbara counties, up from the $513.3 million in 1998. While some of those investments were made by firms located outside the L.A. area, many of them were made by local venture capitalists. So the Business Journal asked some prominent venture capitalists around town: What was your best deal ever?

Tony Hung

General Partner

DynaFund Ventures

It’s so hard to pick one that’s the best or the biggest, but the one that’s the highest profile and it’s fresh in my mind because it was recent was eToys. We led the first-round Series A on eToys. They had gotten seed money from Idealab and a few hundred thousand from friends and family. After the angel round, they said, “Let’s get some professional investors involved,” and they did a venture capital round that’s when we got involved. That was in December 1997. Subsequently they did a couple more rounds which, of course, we took a part in. Then they went public in May.

Because we got involved very early, we took a very calculated bet on a market we thought was going to be hot in this case e-commerce. We ended up investing about $3 million in the company. It’s fair to say we made over 100 times that.

Frank Creer

Managing Director

Zone Ventures

For this fund, to date, I’d have to say eStyle, that’s the one going out quickest, and it’s had a lot of notoriety. It’s also the best performing to date. eStyle has really led the charge, with the publicity, the press and the notoriety, but primarily (the success is due to) Laurie McCartney, eStyle’s founder, who is dynamic and understood the business better than anyone. She’s talented, she knew what she was talking about, and she knew back then that there was an opportunity. We were introduced through an attorney in town. We made the investment in November 1998. Then we went through the bake-off of investment banking firms, selecting the group to take it out. It should (go public) within the next three to five months.

Brad Jones

Redpoint Ventures

My best deal in Southern California has been SandpiperNetwork. We invested about $4 million in the company in December, then it merged with Digital Island, which was already a public company. Digital’s stock went from $23 to now it’s over $100 a share. In fact, Digital Island/Sandpiper just completed over $600 million of financing, including a $300 million convertible bond.

What’s fun is to see a technology concept become real. When we first invested in the company, it had some great technology with really great people. During the time we’ve been involved, we’ve seen the company expand the vision beyond that, to being a full-service posting and delivery network.

Jon Funk

Media Technology Ventures

Our biggest winner is SandpiperNetwork, which has a software technique that speeds up content delivery for Web sites. We put in the first round in November 1997, and then recruited a CEO and a complete management team that built the software platform. We had a couple rounds of financing, then in December 1999 the company merged with a public company called Digital Island, whose market value was about $2.8 billion. We are still owners of Digital Island stock until later this year, and if it pencils out, our $3.5 million investment will come out $350 million to $400 million.

Jeff Anderson

Managing Director

Mellon Ventures

It’s a private company called IPNet Solutions in Newport Beach. It’s a business-to-business infrastructure company that allows companies and their trading partners to exchange data, and transact and collaborate via the Internet. We were involved early on, a year ago, and we have $5 million behind it. Right now we’re doing a mezzanine round a pre-IPO round and talking to underwriters.

It’s gratifying to be involved early and see the vision come to fruition. It is like being a parent it’s fun to watch your children grow up and it’s true, I feel like all my kids are pretty I’d hate to have to choose one.

James Montgomery

Chief Executive

Digital Coast Partners

I’d really like to downplay this one, but I’d have to say iBeam Broadcast. It’s going to be the biggest IPO this year. It uses multi-cast streaming content, like music and video, for any kind of Internet infrastructure, and I think it’s going to be huge, enormous. We created it it’s a new idea. We came up with the concept in December of 1997, and did the seed financing in March of 1998. We’re going public in April of this year.

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