The Valley Comes to Beverly Hills

By Kyle Austin

Los Angeles is newly becoming a technology hot spot.  Led by the digital entertainment revolution, it has become one of the next big markets lauded by venture capitalists eyeing the next JibJab or Flux I’m starting to wonder when they are going to launch the Silicon Hills Insider? 

Laura Holson has the latest chapter in the digital entertainment industry’s attempt to bridge the gap between The Valley and The Hills in today’s New York Times 

According the Laura: 

“On Monday, the William Morris Agency, the Hollywood talent shop, will announce that it is teaming up with the Silicon Valley venture capital firms Accel Partners and Venrock to invest in digital media start-up companies based in Southern California.” 

Dan Primack at the peHUB actually had some general musings about a potential William Sonoma and Accel Partners seed-stage digital media/entertainment fund last week.

The interesting part of Laura’s story is that she highlights AT&T’s role in the fund, that hadn’t been previously noted.

AT&T will be a limited partner and according to Laura and is specifically interested in investing in mobile technologies that will assist their overall mobile strategy: 

“AT&T is not looking exclusively for content; the likes of CBS, ESPN and NBC already provide much of that for cellphones. Instead, it is hoping to invest in technologies that will make it easier to run ads on cellphones, as well as to nurture social networks like Facebook and MySpace, online hits that have migrated to hand-held devices. AT&T has spread money around Hollywood before — it invested in the film producer Media Rights Capital — but those investments were largely passive.”

Laura reports that the fund will be in the tens of millions of dollars, but Dan at peHUB believes it to be as high as $50 million dollars.  This would price it as a good deal smaller then rival Creative Artists Agency (CAA) venture fund with Draper Fisher Jurvetson that is believed to be around $150 million-$200 million. 

AT&T’s investment into the Los Angeles technology scene makes perfect sense as it aims to take advantage of the entertainment advantage the iPhone has given it over the rest of the mobile market.  It also has a strong hold on the IPTV market in the US, which it could address through this investment as well.  It has already invested in technologies on that front including Akimbo, a white label video service provider and ChoiceStream, a personalization provider.  

Disclosure: ChoiceStream is a client of the Racepoint Group

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