Bucking national and local trends, several Los Angeles tech startups attracted a flurry of private investors and inked deals as a result of a forum they took part in here on April 17.
The L.A. Regional Technology Alliance’s Southern California Technology Venture Forum featured presentations from 16 startups that had been previously selected from more than 100 applicants and then mentored by members of the local investment community.
Vidius Inc., which is focused on providing secure digital distribution technology to content owners, said it is close to inking deals with several local VCs, at least two studios and a major software company.
“We got quite a bit of attention because of the forum,” said Vidius CEO Derek Broes. “We’re in mid to late due diligence with a couple of VCs. We’re very picky about the type of VC we work with.”
Picky?
“So far, we can be,” Broes said. “We won’t work with (just) anyone. A VC that is not right for the model of the company can hurt you more than it can help you.”
Broes said he participated last week in a behind-closed-doors panel discussion with several studio chiefs and some U.S. congressmen. The group tackled online security and privacy issues. Broes was mum on the details of the meeting and said only that it means his company is “getting involved with the political aspects” of digital distribution.
ENow Inc., one of the sexier companies presenting at the Venture Forum, is going to receive an undisclosed amount of funding from New York-based Hudson Capital Advisors as a result of the event. The company’s core technology originally developed for the Israeli military searches, accesses, indexes and redistributes tens of thousands of content sites instantly.
WaveBand Corp., a Torrance-based provider of unsexy MMW (millimeter wave) steerable antenna and sensor systems, was contacted by seven investors after the forum. The company’s R & D; has been focused on specialty antennas for broadband wireless communications.
Heavy on the “R” and a little bit weak on the “D,” WaveBand is seeking $8.5 million to turn its technology into product. CEO Ryszard Gajewski said “deals are pending.” Five years out, he projects annual revenues of $1.3 billion.
An Orange County nanotech startup, Hybrid Plastics Inc., was approached by six new capital sources as a result of the Venture Forum, CEO Joseph Lichtenhan said. The company is producing a new generation of environmentally safe plastics and holds all the patents on the technology.
The committee that helped choose the startups included members of L.A.’s investment elite, including Todd Springer of Trident Capital, Massoud Entekhabi of TL Ventures, Tony Hung of Dynafund Ventures and Brad Jones of Redpoint Ventures.
“At last year’s event, you couldn’t get the attention of the investment community in the audience because they were too busy dealing with the market’s collapse and doing damage control,” said LARTA marketing director Nicole Huntington. “We’re thrilled with the outcome of this year’s event.”
Information on the Highway
A study released last week painting a bleak picture of the nation’s growing traffic congestion was cause for frustration for just about everyone but a group of investors and entrepreneurs behind the wheel of L.A.-based startup TrafficStation Inc.
“It’s good for business,” said TrafficStation CEO Mike Snyder in response to the Texas Transportation Institute study, which ranked L.A. as the worst of 20 traffic-congested cities.
Traffic is a fast-growing problem in most metro areas in the United States, according to the study, and Snyder is hoping that drivers will try to elude the gridlock with his company’s technology.
TrafficStation provides personalized, real-time traffic information via the Net and wireless devices. The service sends traffic information to users’ cell phones, pagers, Palm devices or in-vehicle wireless devices.
TrafficStation is also enjoying increasing funding. On May 1, the company announced an alliance with Trafficmaster PLC, a U.K.-based tech company specializing in collecting traffic information and delivering the data to in-vehicle wireless devices. That industry, called telematics, is well established in Europe but just gaining momentum in the United States. As part of the deal, the U.K. company has invested $5 million in TrafficStation.
To develop its own telematics infrastructure, TrafficStation is seeking an additional $25 million. Trafficmaster will share its telematics technology and act as the lead in raising that third round, a round that will be tough to complete for a company that doesn’t expect to achieve profitability for two years.
“In the last six months, everybody has had a tough time,” Snyder said. “Our current investors have kept us alive and surviving.”
Prior to its infusion from Trafficmaster, TrafficStation received investments from Zone Ventures, East/West Capital Associates and Telecom Ventures.
Frank Creer, managing director of Zone Ventures, who was instrumental in negotiating the Trafficmaster deal, said it’s just a matter of time before the telematics network infrastructure gets built and drivers “see the value-add.”
TrafficStation currently makes most of its money from alliances with various wireless companies and portals, like Microsoft Corp.’s MSN and AT & T; Wireless.
Snyder said he is meeting with Detroit regularly. The automakers, he said, “view the marriage of traffic information and navigation technology as the Holy Grail.”
L.A. drivers have already demonstrated that they’ll use the Web to dodge soaring gas prices.
Dayton, Ohio-based GasPriceWatch Inc. operates a Web a site gaspricewatch.com that directs visitors to the cheapest gas prices in the zip code selected by the user.
This dot-com has seen its traffic soar in recent weeks, and L.A. is the company’s biggest market, according to its director of operations Chris Vendly.
“It might have something to with the fact that gas prices are so obnoxiously high there,” he said.
Vendly did not have recent traffic figures, but he said site visitors and “spotters” the volunteers who check prices and report them are the most active in L.A.
“We have more people from L.A. posting responses on our site than from any other market,” Vendly said.
Spotters are incentivized only by helping others beat price gouging. A recent prize program, in which the company planned to give away computers and other gadgets to the most prolific spotters, was ruined by cheaters, Vendly said.
As of last week, the highest price per gallon in the country, according to the site, was the $2.49 being charged at a station in Bridgeport, Calif., and the average U.S. price was $1.67.
Staff reporter Hans Ibold can be reached at (323) 549-5225 ext. 230 or at [email protected].
