The speed at which Fandom Inc. has gotten off the ground surprises even its founders.
Since last August, the company has gone from two employees to 100, acquired an older, bigger company, and garnered $25 million in two rounds of venture capital financing. Nonexistent a year ago, Fandom expects to post $20 million in revenue this year, and going public in 2000 isn’t out of the question.
“We have 100 employees, and I was in my garage six or eight months ago,” says co-founder and President Chip Meyers.
Santa Monica-based Fandom is trying to become the premier entertainment site for fans of horror, fantasy and science fiction movies, books, games and collectibles. Enthusiasts of the genre can find news, fan-generated content, surveys, contests, an auction site and an online store.
The company’s founders and investors believe the market for science fiction/fantasy content is huge, based on the worldwide interest in everything from “Star Wars” to “The Exorcist” to “Pokemon.” Especially in the United States, where baby boomers were raised on “Star Trek” and the novels of J.R.R. Tolkien, there is a pool of well-off fans seeking to buy merchandise, keep up on potential movie sequels and exchange information using the Web.
“We’re promoting a lifestyle,” said co-founder and Chief Executive Mark Young. “Our core audience is well-educated and affluent people, who have a passion for science fiction and fantasy. The market for ‘Star Trek’ stuff alone is around $2 billion.”
Fandom is the brainchild of Meyers, who has started several other companies over the past decade. In 1998, he was working at the interactive division of Centropolis Entertainment, a production company that helped make the recent remake of “Godzilla,” and which operated the official Web site for the movie.
When the film opened to less than uniform acclaim, fans of the 40-year-old Japanese monster series began swapping criticism on the site’s message board. Centropolis shut down the message board, but unofficial sites sprung up where Godzilla fans could continue to voice their displeasure about the movie.
“It made me realize that fans have the power, not the studios,” Meyers said. “This is a large demographic. These are the people who discovered ‘The Blair Witch Project.'”
Meyers drew up his first business plan for the company last May, and quickly began looking around for financing. He turned to brother-in-law Young, who at the time was working for Morgan Stanley Dean Witter & Co. in London, for help. Young quit his job in August, and the two quickly raised more than $3 million in funding from friends and family.
Armed with some seed capital, the two moved into their first offices in September and shopped their business plan. By October, they had raised about $9 million in their first round of financing, led by RRE Investors of New York.
Much of the money went toward launching the company’s Web site, Fandom.com, which premiered at the end of October. Seeking to ensure an established consumer base, Fandom began negotiating to buy Virginia-based AnotherUniverse.com, an Internet retailer of comics and science fiction products.
With the site up and running, Meyers and Young began seeking additional financing, and quickly found interest from Redpoint Ventures. Ironically, Redpoint had passed on getting in during the first round of financing.
“They didn’t really have critical mass yet,” said Redpoint Managing Partner Brad Jones. “But when we looked at it a few months later, things had improved. Their revenue rate was improving. The AnotherUniverse deal hadn’t closed, but they were negotiating.”
Redpoint and Wasserstein Adelson Ventures co-led the second round of financing, which raised $16 million and closed in February. By that time, Fandom had purchased AnotherUniverse, adding 70 or 80 employees to its roster.
The two sites are in the process of being merged, and combined already have about 1 million unique visitors each month.
Coping with such rapid expansion has meant hiring additional management and concluding deals with other companies, and the contacts and advice provided by Fandom’s venture partners have been essential. Thanks to Redpoint, Fandom is working with Nexgenix Inc., an Irvine-based Internet consultant, on improving its site.
“Brad Jones has been incredibly successful in harvesting investments in this space,” Young said. “His track record speaks for itself. (Redpoint) has the ability to make a decision remarkably fast. They’ve identified senior management to bring in to the company; they’re finding partners to work with us. We’re very, very satisfied.”
