Derek Norton and Jeremy Milken earn known every other for twenty years. Over their longtime private and professional relationship, the two Los Angeles-based mostly fully serial entrepreneurs earn invested in every other’s firms and investment firms, nonetheless by no components worked collectively unless now.
Milken is taking the fall into institutional investing, becoming a member of Norton as a accomplice in Watertower Ventures good because the company prepares to shut on a $50 million contemporary fund.
It’s an auspicious time for every Los Angeles-based mostly fully businessmen, because the LA enterprise neighborhood sees a wave of workmanship talent relocating from New York and San Francisco within the newly a long way-off work tradition created by the COVID-19 epidemic.
“I scrutinize two things happen. One folk see on the outcomes of where the market’s going. We’re seeing powerful extra firms which are starting up off now as a outcomes of a [the pandemic],” acknowledged Norton. “New company formation is occurring sooner than ahead of covid. [And] a form of enterprise capitalists that earn relocated to LA. They’ve moved all of the vogue down to LA for contrivance of life reasons and as well they’re asserting that they don’t have to return to San Francisco.”
For Milken, the opportunity to accumulate into enterprise now would possibly well per chance be a characteristic of the company introduction and acceleration of digital adoption that Norton referenced. “The pandemic is accelerating switch within the market. Issues that can even unbiased want taken a decade are taking two years now,” Milken acknowledged.
These alternatives are constructing an opening for Watertower Ventures in markets a long way past the Hollywood hills. The company, whose customary thesis centered on Los Angeles, San Francisco, and New York, is now reducing checks on investments in Texas and Utah, and spending powerful less time looking out for firms within the Bay Diagram.
Norton’s most fashionable fund is most seemingly the greatest the most contemporary act in a profession that has considered the investor traverse the monetary companies digital media and the early days of the catch. Norton built Digital Boardwalk, a pioneering cyber web service supplier and the 2d business accomplice 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 used to be intimately serious about bringing tech to market and specializing in early stage investments. With that in tips, the Watertower Ventures team, which launched in 2017 with a shrimp, $5 million fund, is a return to those roots.
The concept, even on the time, used to be continually to raise a greater fund. After founding and running the boutique investment banking commerce at Watertower Community, Norton knew he had to raise a starter fund to note the thesis he used to be working on.
That thesis used to be to give a bridge between early stage firms and enormous abilities firms the utilization of the network that Norton has in-built the Southern California tech and entertainment neighborhood over a protracted time.
“We would favor to gain our contacts at Google, Apple, Fb, Disney, Microsoft, Cisco, Verizon, AT&T, Comcast, and other firms we deem must earn a relationship with our portfolio firms, and attend the CEOs and management groups extra effectively carry out commerce construction,” Norton told SoCal Tech when he closed his first fund in 2017. “We would favor to join them to the supreme person at those firms to attach a business relationship. That has a extremely massive impact on early stage firms, who on the entire don’t earn a deep network of relationships, and the potential to accumulate to those form of oldsters. It’s in consequence of of our advisory commerce that we now earn those relationships, and that’s also why those relationships live unusual and sharp, versus folk that aren’t in those companies. It’s nearly a elephantine time job to help that, and that’s where our tag-add is.”
Milken, who has spent his professional profession in entrepreneurship, used to be prepared to gain a see at investing, and used to be intimately familiar with Watertower and its portfolio, as an investor within the company’s first $5 million fund.
“Two years ago we began having those conversations,” acknowledged Norton in an interview. “As Jeremy exited his commerce in September it created the opportunity to bound out and lift collectively because the evolution of our partnership.”
With the contemporary capital coming in, Norton expects to help some 30 to 35 firms, he acknowledged. And, in a testament to the first fund’s efficiency, which has it within the head decile of enterprise funds for its vintage, Norton acknowledged he used as a contrivance to raise the capital amidst the business uncertainty brought on by the COVID-19 pandemic. Some 70 percent of the present portfolio has been marked up, based mostly fully on Norton.
Even supposing restricted partners, the traders who help enterprise funds, had been reluctant to commit capital to contemporary firms in March and April, fundraising returned with a vengeance in June and July, based mostly fully on Norton. The paper efficiency likely used to be satisfactory to woo extra restricted partners and particular person traders alongside with TikTok chief govt Kevin Mayer, the stale head of streaming at Disney.
Mayer’s presence within the company’s investor putrid is a testament to the company’s pitch to founders. “We scrutinize fundraising as a enormous distraction for these early stage firms from their commerce. We strive to carry that network that’s ours to those founders,” acknowledged Norton.
“I deem we’re in a special pickle starting up with a peculiar fund right here,” says Norton. “Uncertainty creates opportunity and folk are bringing solutions. We haven’t noticed any slowdown in any contrivance, we’re working with twenty five firms per week. Since the inception of the fund, we haven’t considered deal bound with the circulation at this level.”