When Viva.com Chairman and Chief Executive Scott Ingraham landed $12.5 million in first-round venture funding last year, he got more than just a chunk of cash. He also got access to a network of Fortune 500 companies and those fabled “synergies” that will prove critical to the ultimate success of his startup.
“It is extremely important to have a strong brand-name recognition in this industry,” said Ingraham. “By aligning ourselves, through our venture capital investors, with a wide variety of media and other companies, we have a much greater opportunity to put ourselves on the map.”
Ingraham, a veteran of the real estate industry, started Viva.com last year together with his partner Allan Hunter. The company lets people looking for rental housing list themselves for free on Viva.com’s Web site; landlords can send a rental offer to those with matching location and housing criteria. If a lease is signed, the landlord pays Viva.com 32 percent of one month’s rent.
Through an angel investor in his company, Ingraham was put into contact with Jonathan Funk, a principal with Media Technology Ventures. Funk liked Viva.com, not just because of its innovative business plan and experienced management team, but also because he saw that the company could benefit by teaming up with some of Media Technology’s corporate investors.
“We specifically look for deals where we can leverage our network of partners,” said Funk. “We consider these partners a unique level of added value to our entrepreneurs.”
In the case of Viva.com, that meant working with, for example, Hearst Corp., owner of the Houston Chronicle and an investor in Media Technology Ventures. Houston, as it turns out, is one of the six target markets for Viva.com, and according to Ingraham, Hearst can give free or discounted ads in the Chronicle to Viva.com to give it the necessary exposure.
Another of Media Technology’s investors is American Express Corp., which is in discussions with Viva.com to provide credit card services to renters.
“We’ve been planning a credit card product for our renters, so that they can pay their rent using a credit card,” said Ingraham. “We were already way down the road with Visa, but now American Express also wants in. They see it as a great way to brand their product to a new market segment.”
In addition, American Express and Hearst stand to gain substantial financial rewards from Media Technology’s investment in Viva.com, so it is in their own interest to help such startups as much as possible.
Media Technology is lead investor in Viva.com, but two other firms, Rosewood Venture Group and Kline Hawkes California LP, also bring in an impressive array of potential partners.
San Francisco-based Rosewood Venture counts as one of its main investors the Fisher family, founders and principal shareholders of The Gap Inc. Both The Gap and Viva.com are targeting the 22- to 36-year-old market segment. Ingraham has been meeting with people at The Gap about a deal to promote Viva.com at its stores, while Viva.com would promote the stores at its Web site.
“They are very excited about working with a company that is developing a complementary product in the same consumer market as they are,” said Ingraham. “We still have a lot of work to do to hammer out a real reciprocal arrangement. Ideally, of course, we would like to have something inside The Gap stores.”
The networking relationship between Viva.com and its venture capital firms is not entirely one way. Next month, Viva.com’s two founders will speak at a conference in Northern California organized by Media Ventures. Ingraham and Hunter will make a presentation to a group of potential investors in Media Ventures’ fund.
“In a way, it is doing them a favor,” said Ingraham. “But at the same time, it is an opportunity to create more interest in our company and to lay the groundwork for future alliances and expansions.”