In a move aimed at speeding up the process of taking Net companies from startup mode to maturity, a Santa Monica, California firm is putting together a combination venture fund and Internet incubator.
ECompanies, a startup incubator business that was itself founded just two months ago, announced Monday that it has raised $130 million from a group of about 10 investors ranging from Walt Disney to the Goldman Sachs Group.
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ECompanies was started by Sky Dayton, founder of Internet access provider Earthlink, and Jake Winebaum, former head of Disney's Internet arm. The company said it wants to make it easier for startups to seal high-level financing and eventually take themselves public.
"We're taking an idea and putting it through a very fast-flow sort of acceleration machine," Dayton said. "The concept is that any good idea is going to have six to ten competitors that are going to receive funding from all sorts of places."
Dayton said eCompanies will focus on Web businesses, but it will be a little different from most Internet incubator businesses, which typically offer new companies office space, support services, and early-stage financing in exchange for a stake in the operation.
ECompanies will fund startups and provide support for their first stage of development, but will also continue to provide money in later stages, giving the startups it sponsors ready access to a big pile of cash and a slew of connections.
Dayton's plan is to get Internet startups in commercial operation in three to six months, and to then take them public as early as possible.
The company is counting on its investors to provide the capital to help push startups from inception to IPO. In addition to Disney and Goldman Sachs, the company has secured investments from Soros Fund Management, buyout firm Kohlberg Kravis Roberts, SC First Boston, Sprint, and Times Mirror.
The combination of an incubator and venture fund makes sense, said Kirk Walden, director of venture capital research for PriceWaterhouse Coopers. Since venture funds are doling out increasingly large sums of cash to companies they sponsor, Walden said it is natural that fund managers would want to be more closely involved with ventures in the startup phase.
"There's a great need on the venture capital firms' part to have the business plans of companies they consider backing in as good shape as possible, because that saves them an immense amount of time."
