- - WINTER ISSUE 2014 FINANCE INVESTMENT BANKING | STARTUP FINANCING | Silicon Beach A hotbed for technology startups, financing, and M&A More Than a Passing Fad, a Leading other lesser-known tech hotbeds is its Influencer unique location at the intersection of 1 Jim Freedman Skeptics believe that Silicon Beach is media and technology. One such Chairman merely a “passing fad” garnering undue example is celebrity Jessica Alba’s Managing Director media hype. We think it will become startup, The Honest Company, which a leading influencer in the global raised a $70 million Series C round technology arena, rivaling many other earlier this year and now commands a hot spots of innovation. Successful valuation approaching $1 billion. Honest businesses in the area have done more provides an eCommerce and subscrip- than provide unique and innovative tion service allowing consumers to products to market; they have adopted easily order and receive eco-friendly the local themes of media, entertain- family essentials from their desktops ment, and fashion and fused them with or connected mobile devices. They do a dose of technology. a wonderful job of catering to new-age Silicon Valley was the first to the consumers who have an increasingly Tristan Snyder scene in the 1970s, emerging in the insatiable craving for on-demand, Vice President, Digital Media San Francisco Bay Area in a fertile linked convenience from products and & Technology ecosystem claiming industry pioneers services that satisfy their wants and Intrepid Investment Bankers like Hewlett Packard, Intel, Apple, and needs quickly and efficiently. Los Angeles, CA Cisco and innovation incubators such Another example of this distinctive Jim Freedman and Tristan Snyder are as Stanford University. Silicon Valley convergence is Disney’s recent $950 senior bankers at Intrepid Investment ultimately became the world’s foremost million acquisition of Maker Studios. Bankers, a specialty investment bank that provides M&A, capital raising technology hub. Fast forward decades Maker is a talent-driven online content and strategic advisory services to later to the mid-1990s to Silicon Alley, production company and one of middle-market companies across which rose in Manhattan’s Flatiron YouTube’s largest networks. Maker various industry sectors. Mr. Freedman is a Founding Partner of Intrepid and its District to put the East Coast on the provides Disney with progressive Chairman. He has more than 30 years technology map. technology and awareness into con- of investment banking and corporate Today, enter Silicon Beach, spanning sumers’ discovery and collaboration finance experience and is an expert on the financial aspects of corporate Santa Monica, Venice, and Playa Vista, with online videos, including Disney’s strategy. Mr. Snyder has completed and home to more than 500 tech startups proprietary content. The acquisition more than 35 transactions creating in such as Snapchat and Hulu, as well as gives Disney an increased ability to excess of $1.5 billion in aggregate value for middle-market entrepreneurs and regional offices for tech giants such as engage younger audiences seeking to business owners across a diverse set of Google, Twitter, Microsoft, Yahoo, and digest digital content on a large scale. industries, including SaaS, eCommerce, YouTube. Lastly, a slightly older but relevant and digital, Internet, social, and mobile media. data point highlighting this theme is Where Media, Entertainment and Tencent’s nearly $350 million acquisi- Fashion Converge With Technology tion of Riot Games. Riot is a leading What differentiates Silicon Beach from developer of short-form online social its Northern California, East Coast, and games, where players use real money - - WINTER ISSUE 2014 FINANCE INVESTMENT BANKING in exchange for various virtual items focused on creating and scaling Local media and technology business that enhance gameplay. The acquisi- businesses by providing deep operational owners seeking to raise capital or pursue tion strengthens Tencent’s domestic strategy alongside investment capital. an M&A event should feel comfortable U.S. presence and Web-based gaming Their advent has helped create a much that the overall sector interest level and awareness as the company continues its more attractive investment commu- activity will likely continue to grow. quest to become the preeminent Internet nity that fosters growth and innovation (Source: socaltech.com) and mobile advertising, eCommerce, and among a wide variety of media and value-added services platform. technology sub-sectors. A Breeding Ground for Innovation, Financing, and M&A 1 Creative and Strategic Capital Billions Raised and Counting We find that accessing capital or achiev- Deployment Southern California technology ing an exit at a premium valuation re- Another unique characteristic attributable companies raised more than $1.52 quires the entrepreneur to have a unique to the Southern California tech scene billion in capital from a combination of and disruptive idea, a scalable business is the current absence of the proverbial venture capital and private equity firms model, a vision for sustained growth, and “800 lb. gorillas”. The ecosystem here has in the first half of 2014, an increase a highly capable team to execute the plan. a fresh, almost nonchalant feel, where of approximately 28% over the $1.19 Equally as important, the company must local entrepreneurs seem undaunted by billion raised in the first half of 2013. have an advisor who takes the time to the shadows of the Googles, Apples, and Some of the more notable H1’14 financ- understand the model and the vision, and Facebooks of the world, an aspect that ings include NantHealth’s $135 million can sometimes participate in defining and is all too prevalent in Silicon Valley. This investment round; Swagbucks’ $60 articulating them to the market. apparent immunity effectively causes a million Series A round; and Whisper’s Recent examples where we played paradigm shift in the investment $36 million Series C round. such a role include raising $65 million philosophy of the key institutional in growth capital for a new entrant in investors that are active in the space. In addition to the high level of the wireless technology space, and the The pre-IPO multi-hundred million institutional financing activity, sale of a boutique, full-service creative dollar rounds are no longer the “norm.” Southern California had a strong digital advertising agency known for its Investors are searching for more creative showing of media/tech IPO and M&A work with widely-recognized brands. and often smaller platforms to deploy events, with such companies as TrueCar We believe that Southern California, their capital. The changing landscape and its $70 million IPO; The Rubicon led by Silicon Beach, is well-poised for has spurred the rollout of several local Project’s $102 million IPO; Apple’s continued large-scale growth, making incubators such as Launchpad, Amplify, $3.2 billion acquisition of Beats; AOL’s this region a prolific breeding ground for and StartEngine as well as “disruptive $101 million acquisition of Convertro; new digital media content and technol- aggregators” like Science, Inc. Unlike and Facebook’s $2 billion acquisition of ogy and disruptive business models. traditional venture funds, these firms are Oculus. CONTACT US: Phone 310/478.9000 Email [email protected] [email protected] Website intrepidib.com Address 11755 Wilshire Blvd. Suite 2200 Los Angeles, CA 90025.