Buy.com Founder Joins Japanese Giant to Form Venture Capital Firm
The founder of one of the hottest online retailers has joined forces with one of the world’s biggest Internet investment companies to form a venture capital firm in Dana Point that initially will invest $220 million in Internet start-up companies.
ThinkTank.com is the product of Scott Blum, the founder of Aliso Viejo-based Buy.com Inc., and Japanese investment giant Softbank Corp. Blum chipped in $20 million, while Softbank has committed to providing $200 million.
ThinkTank.com will invest in four Internet-related start-up companies a year, helping each to develop business strategies and partnerships as well as taking equity stakes in them.
The company already has sunk money into three companies: BuyNow.Com, a Dana Point provider of e-commerce services; Fax.Com, an Internet fax marketing company based in Laguna Beach; and FreeComputer.com, a Dana Point company that supplies consumers with computers when they sign up for Internet services.
Neither Blum nor Softbank officials could be reached for comment Thursday.
Softbank’s founder, Mayayoshi Son, has invested $1.7 billion in more than 100 Internet companies.
Last month, Softbank led a consortium that invested an additional $165 million in Buy.com, giving Softbank a 31% stake in the firm that Blum founded three years ago. Softbank also has close ties to Santa Ana computer hardware and software distributor Ingram Micro Inc., which supplies Buy.com with all the computer products that the online retailer sells.
Softbank recently divested itself of another Orange County technology firm, selling its 80% stake in Fountain Valley computer memory manufacturer Kingston Technology back to that company’s founders for $450 million. Softbank had bought the stake three years ago for $1.5 billion in cash and stock.
Blum, who is chairman of Buy.com, stepped down as chief executive in March, a move widely seen as a step toward taking the company public, which Blum had previously predicted would occur by the end of 1998. But an initial public stock offering has yet to come, and the company earlier this week appointed a new chief financial officer.
Blum cut his teeth on Irvine-based Pinnacle Micro Inc., a manufacturer of optical drives that he and his father, William Blum, started in 1987. Although initially successful, the company ran into trouble and engaged in some allegedly questionable accounting practices that resulted in a now-settled class-action lawsuit and a federal regulatory inquiry into the company, the Blums and other executives.
