MARINA DEL REY, Calif. – Web Capital Group Inc.’s Internet incubator 3wVentures.com in December launched a $100 million-targeted venture fund, the firm’s first foray into venture investing.
3wVentures will invest about $2 million into some 50 individual Internet and e-commerce-related companies at its SiliconLosAngeles.com facility in Los Angeles, slated to open in February, said Garrett Krause, president and chief executive officer at 3wVentures.
The plan is to secure a total $100 million from 10 separate venture firms or individuals, who will contribute $10 million each. In return, the limited partners will be granted first participation rights in all subsequent rounds of financing in each portfolio company, Krause said. The company is negotiating relationships with five potential partners, based on an 80%/20% carried interest structure.
The fund is set up to dilute the risk of investing in start-ups by spreading the risk over 50 companies and that goal will be achieved if just one of the 50 has a really successful initial public offering. “It will repay the whole fund,” he said.
About 70 business plans pass through 3wVentures each month and at press time, 3wVentures was considering investing in four or five start-ups. The company launched 3W Capital Partners to manage the fund and is in the process of hiring a fund manager.
The “high-tech Internet campus,” or incubator, will be staffed with senior-level management, including CEOs and chief financial officers, as well as programmers, lawyers and accountants. The company plans to launch five such facilities worldwide within two years, he said.
3wVentures, in addition to running the fund, manages the operations of four Internet-based Web Capital Group holdings: SolutionNet International Inc., USLab.com Inc., Tril-MediaNet.com Inc. and TheMovieSource.com Inc.
The parent company is a public venture firm that acquires and invests in Internet-related companies, technologies and projects, that upon maturation will become publicly traded companies. 3wVentures plans to register to go public in the second quarter 2000.