Benjamin Kuo’s Blog

Both Pwc/NVCA and Dow Jones VentureSource released their venture capital numbers over the weekend, reporting that we had either $950M in deals for the second quarter (according to PwC/NVCA) or $868.3M (according to Dow Jones). In both reports, Southern California was number 2 again nationally in terms of venture capital dollars put into the region. Silicon Valley still dominates, but the strength in Southern California was interesting because of what I think of as the biodiversity in Southern California’s tech sector. For example, if you look at the Dow Jones VentureSource numbers from this quarter, a huge reason So Cal topped New England again was activity in the clean technology sector (namely, a big investment in eSolar). That took energy from $15M in investments in Q1, to $204M in investments in Q2. On the other hand, Consumer Internet went from $44.6M in Q1, to only $8.25M in Q2, in the opposite direction. But, averaged across the many sectors in Southern California, we still had a healthy aggregate number of fundings. That ebb and flow in industries seems to be working in Southern California’s favor, where we’ve got enough different industries on different cycles, we’re not just pegged to one or two industries in terms of venture and other activity.

Once again, I’d like to thank the many sponsors that make socalTECH possible:

• PricewaterhouseCoopers
• Redpoint Ventures
• SVB Silicon Valley Bank
• Costello and Sons Insurance
• CBRE - Richard Abbitt
• Stubbs Alderton Markiles LLP
• Clearstone Venture Partners
• Safire Partners
• Binary Pulse Technology Marketing
• Stradling Yocca Carlson & Rauth
• GetItStarted
• Rustic Canyon Partners

A lot of folks in Southern California use our calendar of high tech related events in planning out their week. A few folks have requested that we make it easier to find stuff in their neighborhood, so we’ve rolled out a filter by general location. We’ve always had the events color-coded, but now you can select a specific area (say, San Diego, or Los Angeles) and just get the events for those cities. This is still in beta so let us know if you run into any issues.

If your events aren’t showing up on the calendar, let us know. We’re trying to include all of the community-focused events and groups in the area, plus conferences being held in the region.

On the “when will the recession hit the Internet front”: today, Westlake Village-based ValueClick announced it was reducing second quarter estimates due to a drop in Internet advertising — specifically, lackluster growth in display advertising and a steep dropoff in lead generation advertising. Despite what seems like boom times in technology today, it’s pretty clear that subprime mortgage loans, record setting foreclosure levels, runs on the bank, gas prices and (maybe the most impactful on the technology pros out there) the closure of Starbucks stores everywhere — that the economy is not in a happy place. The question is: how far and wide will dropping CPMs and lackluster retail activity hit online businesses?

I was browsing the Los Angeles Times’ interview with Demand Media’s Richard Rosenblatt today, and was amused to read this snippet from their article:

Outside Santa Monica’s dot-com circuit, the name Richard Rosenblatt doesn’t mean much. He’s one of those guys who buys and sells empty websites.

We ran an interview with Richard back in February of 2007, and have followed the company since day one, and it’s been interesting to me to observe what I call the “IAC” effect going on with Internet companies, particularly here in Southern California. IAC/InterActiveCorp — the media conglomerate headed by Barry Diller — owns a huge number of businesses sites everyone knows, such as Ticketmaster, Match.com, Evite.com, AskJeeves, Shoebuy.com, LendingTree, etc. However, for most people IAC doesn’t mean much without attaching “Barry Diller’s” next to the name.

The problem is, the firm has so broad of a business, and so many brands, no one associates it with any particular brand. That’s the problem that Rosenblatt’s Demand Media, plus a number of other firms here like Internet Brands, Move.com, Oversee.net, etc. face. They have become multiple-brand companies — where they own many, many businesses, dozens if not hundreds of domain names.

There’s no problem with that — all of these companies seem to be building huge, profitable businesses– but it means that the recognition of these companies is less than you might expect for the magnitude of the businesses they run. While you might see tons of coverage and attention given both in the traditional press as well as blogs on such things like Facebook, Twitter, Tesla Motors, etc. and other Silicon Valley media darlings, folks like Richard Rosenblatt and other very successful technology companies here in Southern California have real business models, revenues, and profits and are quietly laughing their way to the bank.

We’ve just posted a great article from attorney Sam Wu on Pre- and Post-Money Valuation in our Insights & Opinions section. For most first time entrepreneurs (or, even some who have done it before but haven’t handled the financial aspects of finding funding) it’s well worth an in-depth primer on what pre-money and post-money valuation is and how to calculate it.

Frank Peters, chairman of the Tech Coast Angels, emailed me last week telling me that the angel group has just topped one billion dollars in third party and venture capital funding to its portfolio companies. For those who aren’t familiar with the Tech Coast Angels, they are the largest angel investment group here (and maybe the nation), and very active in promoting and encouraging entrepreneurs in Southern California. The funding came as eventual funding rounds for the 150 startup companies the group has funded to date.

It used to be that I ran into a lot of people here in town who had some kind of film project going on. It is an old cliche that every waiter and waitress was either working on a project, had a script, or otherwise looking to make it into Hollywood here. Interestingly enough, it seems in recent months I’ve bumped into lots of folks who seem to have some kind of “web project” going on the side–be that a web video series, content-oriented web site, or even consumer Internet startup. It’s never a company, it’s always some “side project.” I’m wondering if this is a sign of a bubble, or just a sign of how much the Internet is affecting Hollywood and the entertainment industry.

Jason Calacanis, the oft-quoted blogger who is CEO of Santa Monica-based Mahalo.com, said today that he’s retiring from blogging. You can read more on his blog posting on why, but he said he’s going to “try and build a deeper relationship with fewer people” through an email list instead.

I don’t know if Jason will be able to quit cold turkey (if nothing else, he’s known for his ability, and need, to express an opinion–usually controversial–about anything). The interesting thing I find about all of this is that the Silicon Valley bloggers consider Calacanis an “A-List” blogger, but of the many, many folks I talk to in Southern California’s technology/business community, very few actually read his blog. (Calacanis was the founder of Weblogs, Inc. which was acquired by AOL; he also is now an angel investor in a number of firms here, and a board member at Santa Monica-based ThisNext). I’m not sure if that says more about Silicon Valley’s blog culture, or Southern California’s adoption of blogs…

Congrats to Rafat Ali of paidContent, which has just been acquired by the Guardian Media Group. Rafat has more on the acquisition. paidContent is a publisher of online news based in Santa Monica.