With $5 million, Derek Norton's Watertower Group expands role in L.A. tech

Derek Norton has spent the last 15 years introducing start-ups to potential investors and acquirers. That won't change.

But now Norton, a well-known advisor behind the scenes in Los Angeles tech, is moving beyond his role as matchmaker.


Norton announced that he has raised $5 million from a group of friends to invest in consumer technology start-ups in Los Angeles, New York City, Boston and San Francisco. He hopes to support many more companies than he could previously through his advisory firm Watertower Group and personal checkbook.

Former clients include video game firms Riot Games and Machinima. And Norton has invested in growing venture funds such as CrossCut and Double M. But he's missed out on chances to get stakes in companies such as mobile game studio Scopely.

"I'm not trying to reinvent the wheel," said Norton, a lifelong Angeleno. "I just happen to be in a unique position because I've been in the offices of every major venture capitalist and major corporation in the U.S. We're trying to take that unique network of relationships … and deliver it."

The selling point to start-ups is that Norton can help foster partnerships between them and the likes of Disney, Microsoft and Procter & Gamble.

"We're going to help move the needle by shortening the timeframe from idea, concept or thought to getting the paperwork signed and starting to benefit from that relationship," Norton said.

Watertower Ventures plans to invest $100,000 to $500,000 per company and wants to be among the first institutions backing a firm. The funds come from Barry Porter of private equity firm Clarity Partners, investor and entrepreneur Jeremy Milken, music festival organizer Kevin Wall and veteran advertising executive Michael Kassan. Other investors include current and former executives from major technology and entertainment companies.

Norton said he and his partners intend to put additional cash into well-performing companies to maintain or increase their ownership stake.

They've yet to make their first investment.

Layer3 begins offering new cable TV service in Los Angeles

Layer3 endeavors to offer a "modern, robust" user interface, its chief executive says.
Layer3 endeavors to offer a "modern, robust" user interface, its chief executive says. (Layer3)

For $120 per month, homes across Los Angeles will be able to get 250 channels and tens of thousands of hours of on-demand programming piped into their households from a new player in cable TV. Prices start at $89 for one set-top box.

At first glance, it doesn't sound that different than what Spectrum (formerly Time Warner Cable and Charter), Cox or other local TV providers offer. But Layer3 TV says its video quality, DVR capabilities and social media tools are unmatched in the industry. The Denver company is taking advantage of leased infrastructure to maintain a unique connection to every television, which means a home can record seven channels at once and change channels without lag time, and that advertisers someday could show personalized commercials.

"It's really about bringing a robust, modern TV experience to the living room in a way that's price competitive but doesn't constrain you," Layer3 TV Chief Executive Jeff Binder said.

A new cable-TV option at a time when data show that cord-cutting is exploding may seem odd. But Binder insists that most U.S. households remain interested in a traditional TV service. Cord-cutting and cord-slimming affect about 30% of the country — a slice yearning for more affordable and specific offerings, which includes Dish's Sling service and the upcoming YouTube TV offering.

"There's a big group that now has alternatives to the full bundle of cable, but that doesn't mean the top 75% of the market is changing their behavior," Binder said.

His gamble on this proposition isn't cheap. Layer3 received a $100-million investment from groups including Evolution Media Capital, the joint venture between talent agency CAA and private equity firm TPG Growth. The cash has gone to technology development, licensing deals and now marketing.

A new cable-TV services come with a set-up box that's capable of recording.
A new cable-TV services come with a set-up box that's capable of recording. (Layer3)

Layer3's initial Los Angeles service area is expected to cover about 80% of the region, mostly in the higher-income areas on the Westside and the valleys.

The service works in Chicago and several other cities, covering about 13 million households. Subscriber figures haven't been disclosed. But Binder said the average user watches seven hours of Layer3 per day.

The company wants other apps to work with its set-top boxes. The goal is to integrate popular services such as Facebook, Twitter, Nest and Amazon's Alexa.

"There's no question that by bringing alternate assets into the experience, how people are going to interact with the television set is going to change," Binder said.

Kairos Society gets into investing

An entrepreneurship network anchored at universities across the world has pooled cash to launch a small investment fund designed to support its members.

Kairos Society said the new venture capital arm will focus on helping jump-start companies. Initial deals include backing retirement pay service Abaris and smartphone book app Radish Fiction.

The Venice-based fund, which has at least $10 million to work with, is co-managed by Ankur Jain, vice president of product at Tinder; Alex Fiance, the society's chief executive; and investor Ryan Bloomer.

Kairos alumni include co-founders of live-video app Periscope, mattress brand Casper and business software maker FiscalNote.

Elsewhere on the Web

Santa Monica business incubator Science Inc. has launched a millennial focused online entertainment company, Mammoth Media, according to Adweek.

Riot Games co-founder Brandon Beck talks to Zillow CEO Spencer Rascoff in a podcast about the gamemaker's 2,000 employees in Los Angeles, its thoughts on making a movie and what it's like playing his own game.

Anonymity-focused social media app Whisper has partnered with Los Angeles Times parent company Tronc to auto-generate videos featuring users' posts that are relevant to the topic of a story published online, according to Techcrunch.

Santa Monica online video streamer Hulu is looking to open an office for 300 people in either San Antonio or New Mexico, according to Texas Public Radio.

Snap opened a store on the Venice boardwalk to sell its Spectacles sunglasses, according to Techcrunch.

Pasadena start-up Miso Robotics has developed a burger-flipping robot called Flippy for restaurants, according to Inverse.

Alteryx, an Irvine company that sells data analysis software to businesses, is seeking to raise up to $145 million in an initial public offering of stock, according to


Finnish mobile game developer Next Games is moving forward with IPO plans, with TV giant AMC Networks planning to buy a portion of the shares, according to a press release.

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Coming up

OpenTable, the San Francisco company known for its restaurant reservation service, will host an Innovation Summit at the Andaz hotel in West Hollywood on Monday. The event, featuring chefs, restaurant owners, executives and food critics, will tackle "emerging industry trends," Open Table says.

Twitter: @peard33