As it adds Jeremy Milken to the partnership, Watertower Ventures nears $50 million close for its new fund

As it adds Jeremy Milken to the partnership, Watertower Ventures nears $50 million close for its new fund

Derek Norton and Jeremy Milken have recognized one another for twenty years. Over their longtime private {and professional} relationship, the 2 Los Angeles-based serial entrepreneurs have invested in one another’s corporations and funding corporations, however by no means labored collectively till now.

Milken is taking the plunge into institutional investing, becoming a member of Norton as a companion in Watertower Ventures simply because the agency prepares to shut on a $50 million new fund.

It’s an auspicious time for each Los Angeles-based businessmen, because the LA enterprise neighborhood sees a wave of expertise expertise relocating from New York and San Francisco within the newly distant work tradition created by the COVID-19 epidemic.

“I see two issues occur. One folks have a look at the consequences of the place the market’s going. We’re seeing much more corporations which might be beginning up now on account of a [the pandemic],” stated Norton. “New firm formation is going on sooner than earlier than covid. [And] numerous enterprise capitalists which have relocated to LA. They’ve moved right down to LA for life-style causes they usually’re saying that they don’t want to return to San Francisco.”

For Milken, the chance to get into enterprise now’s a operate of the corporate creation and acceleration of digital adoption that Norton referenced. “The pandemic is accelerating change within the market. Things which may have taken a decade are taking two years now,” Milken stated.

These alternatives are creating a gap for Watertower Ventures in markets far past the Hollywood hills. The agency, whose unique thesis targeted on Los Angeles, San Francisco, and New York, is now chopping checks on investments in Texas and Utah, and spending a lot much less time in search of corporations within the Bay Area.

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Derek Norton, founder, Watertower Ventures: Image Credit: Watertower Ventures

Norton’s newest fund is the one the latest act in a profession that has seen the investor traverse the monetary providers digital media and the early days of the web. Norton constructed Digital Boardwalk, a pioneering web service supplier and the second industrial companion for the trailblazing browser service, Netscape.

Later, at Jeffries Technologies, and the $120 million Entertainment Media Ventures seed and early stage enterprise capital fund, Norton was intimately concerned in bringing tech to market and specializing in early stage investments. With that in thoughts, the Watertower Ventures group, which launched in 2017 with a small, $5 million fund, is a return to these roots.

The plan, even on the time, was at all times to boost a bigger fund. After founding and operating the boutique funding banking enterprise at Watertower Group, Norton knew he needed to elevate a starter fund to show the thesis he was engaged on.

That thesis was to supply a bridge between early stage corporations and enormous expertise corporations utilizing the community that Norton has constructed within the Southern California tech and leisure neighborhood over many years.

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“We wish to take our contacts at Google, Apple, Facebook, Disney, Microsoft, Cisco, Verizon, AT&T, Comcast, and different corporations we imagine ought to have a relationship with our portfolio corporations, and assist the CEOs and administration groups extra successfully do enterprise improvement,” Norton instructed SoCal Tech when he closed his first fund in 2017. “We wish to join them to the suitable individual at these corporations to create a industrial relationship. That has a extremely massive influence on early stage corporations, who sometimes don’t have a deep community of relationships, and the power to get to these kind of individuals. It’s due to our advisory enterprise that we now have these relationships, and that’s additionally why these relationships keep contemporary and lively, versus individuals who aren’t in these companies. It’s nearly a full time job to take care of that, and that’s the place our value-add is.”

Milken, who has spent his skilled profession in entrepreneurship, was able to attempt investing, and was intimately aware of Watertower and its portfolio, as an investor within the agency’s first $5 million fund.

“Two years in the past we began having these conversations,” stated Norton in an interview. “As Jeremy exited his enterprise in September it created the chance to exit and lift collectively because the evolution of our partnership.”

1597635965 56 As it adds Jeremy Milken to the partnership Watertower Ventures

Jeremy Milken, normal companion, Watertower Ventures. Image Credit: Watertower Ventures

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With the brand new capital coming in, Norton expects to again some 30 to 35 corporations, he stated. And, in a testomony to the primary fund’s efficiency, which has it within the high decile of enterprise funds for its classic, Norton stated he was in a position to elevate the capital amidst the financial uncertainty brought on by the COVID-19 pandemic. Some 70 % of the present portfolio has been marked up, in line with Norton.

Even although restricted companions, the traders who again enterprise funds, had been reluctant to commit capital to new corporations in March and April, fundraising returned with a vengeance in June and July, in line with Norton. The paper efficiency doubtless was sufficient to woo extra restricted companions and particular person traders together with TikTok chief govt Kevin Mayer, the previous head of streaming at Disney.

Mayer’s presence within the agency’s investor base is a testomony to the agency’s pitch to founders. “We view fundraising as a large distraction for these early stage corporations from their enterprise. We attempt to ship that community that’s ours to these founders,” stated Norton.

“I believe we’re in a novel place beginning with a contemporary fund right here,” says Norton. “Uncertainty creates alternative and individuals are bringing options. We haven’t observed any slowdown in any respect, we’re working with twenty 5 corporations per week. Since the inception of the fund, we haven’t seen deal movement at this degree.”


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