Betting the Net: It may be easy...
Betting the Net: It may be easy to hang a shingle in cyberspace, but sustaining and growing an Internet business definitely takes money.
That’s why hundreds of online entrepreneurs gathered at the Queen Mary in Long Beach at last week’s VentureNet ’97 conference.
Would-be “netrepreneurs” heard advice from success stories like Earthlink Network founder Sky Dayton and CitySearch’s Charles Conn. Attendees pitched their business plans to potential investors and partners and networked with fellow start-uppers to share war stories and advice.
Massoud Entekhabi, managing partner for Coopers & Lybrand’s regional high-tech team, shared some encouraging statistics: Venture capitalists invested $2.4 billion in start-up businesses in the first three months of 1997, after pouring $10.1 billion into new companies in 1996. A third of that money went to firms in California, mostly in Silicon Valley, according to “The Money Tree,” a soon-to-be-released Coopers & Lybrand survey.
“The Internet phenomenon is fueling the investment phenomenon,” Entekhabi said. But firms in the Southland have a tough time attracting venture capital because of a perceived dearth of experienced managers here, he said.
Dayton, who said he raised his first $100,000 from family, friends and even his chiropractor, cautioned entrepreneurs not to lose sight of their core businesses.
“So often, I think, companies are so concerned with raising money that they forget about the product,” he said.
Conn recommended raising money from wealthy individuals known as “angels” because “they have more time for us than corporate venture capitalists.”
Easy for them to say. Pasadena-based Earthlink endured nine rounds of private fund-raising before going public in January and getting $27 million from the stock market. Conn admitted he was lucky to count Steven Spielberg among CitySearch’s early investors, which certainly helped him convince others that his company was worth funding.
But aggressive attendees didn’t let their lack of backing from movie moguls slow them down. Paciolan Systems President Jane Kleinberger made an impassioned presentation on why her Long Beach company, which makes software for ticketing systems, deserves $850,000 to develop an “Internet ticket exchange” that could be shared by many venues and distributors. By charging a 25-cent fee per ticket, Paciolan could generate tens of millions of dollars in additional annual revenue, she said.
Richard Beedon, chief executive of University Netcasting in Carlsbad, Calif., tried to convince investors that the company’s FansOnly (https://www.fansonly.com) collection of Web sites geared toward college athletics could be leveraged into promotions with fast-food restaurants such as McDonald’s and Burger King.
And Engage Games Online’s CEO Jeff Leibowitz boldly asked for some of the $10 million to $15 million the Irvine firm hopes to raise by the end of the summer. Engage operates a Web site (https://www.engagegames.com) where visitors can play video games against one another, and plans to go public in about a year and a half.
Not everyone at the conference was ready to ask for money yet. In one of several panel discussions for start-up neophytes, Jon Goodman, executive director of EC2, the Annenberg Incubator Project, urged netrepreneurs to visit the Securities and Exchange Commission’s Edgar Web site (https://www.sec.gov/edgarhp.htm) to read up on their competitors.
