David Bloom is a Deadline contributor.
One after another, groups of USC engineering students, ranging from thirtysomething doctoral candidates down to baby-faced undergrads, trooped to the stage today. Each pitched their newly honed and toned startup companies before a roomful of potential investors, supporters, and — in a changeup for both — executives from old-line venture capital firm Kleiner Perkins Caufield & Byers and old-line Hollywood talent agency UTA.
The Viterbi Startup Garage Day featured presentations from nine teams (another group couldn’t make the event), all recently done with an intensive 12-week program to build a working tech product and get it on the market. In some cases, Viterbi’s program was a last stop to fine tune a product built on years of research and work. Other companies had been mere proposals last spring. All the young entrepreneurs are hoping to benefit from a program that’s giving them some unexpected friends in influential places.
“Early-stage entrepreneurs need two things: help with business development and access to capital,” said Ashish Soni, the Viterbi School of Engineering faculty member who runs the first-year program. “Kleiner provides access to capital. A lot of what UTA does is dealmaking. You can replace that celebrity (the agency would typically represent) with a startup.”
Only one of the nine presenting companies had anything like an entertainment angle to it. That company, MediaHound, proposes to help consumers find (legal) access to movies, TV episodes, music, books and games, regardless of the technology platform, distributor or device involved, and make it easy for users to create and share “universal playlists” with friends, and to buy or sample the material, said CEO Addison McCaleb.
The company already has raised more than $500,000, done test runs with several prominent film festivals and signed partner deals with 60 companies, including YouTube, Amazon Instant Video, Sony’s Crackle and Hulu, McCaleb said.
But even working with an entertainment-oriented startup is a relatively new initiative for UTA, never mind working with the other startups creating health-maintenance apps, gym-management tools or 3D scanning and printing hardware, acknowledged Brent Weinstein, the agency’s head of digital media. “This isn’t a traditional business for talent agencies,” he said. “But we believe anybody, in any company, can benefit from sophisticated and passionate representation.”
UTA joined the Startup Garage program as part of a broader effort to help create tech giants that will stay in Los Angeles, a city that produces more engineers than any other in the country, thanks to Viterbi and other strong engineering programs at schools such as Caltech, UCLA and Cal Poly-Pomona, said Weinstein. But because of the general lack of big tech firms beyond what’s left of the aeronautics and defense sector, most of those engineering students tend to end up in the Bay Area, working there for giants such as Google, Facebook and Apple.
“We are big believers in the L.A. early-stage marketplace,” Weinstein said. “This program gave us a chance to dig in and help some early-stage companies thrive.”
UTA has had previous success with startups, helping launch a big shopping site and Awesomeness TV, the online video site that sold this summer to DreamWorks for $33 million up front and an earn-out that could nearly quintuple that price.
Now, both UTA and Kleiner will have an ongoing interest in the 10 firms that came through the first year of the Startup Garage, and an ongoing incentive to help them succeed, Weinstein said, though he declined to discuss terms of the arrangements.
The program also represents a change for Kleiner, the bluest of blue-chip venture-capital firms but one that typically is involved in later rounds of a startup’s development, once it has begun generating significant revenue. That’s changing, however, said Kleiner general partner Mike Abbott, because of the need for VCs to get access to what he called “foundational research” and the companies that are created from that work. Whereas once a lot of that research was being done in the R&D wing of tech companies such as Hewlett-Packard, Xerox and IBM, that’s no longer the case. And while Kleiner partners know the way to the Stanford engineering labs, they needed to extend their reach to other top-level schools to have access to more startup opportunities, Abbott said.
Abbott said USC Viterbi Dean Yannis Yortsos “sees that and understands that he needs a more entrepreneurial approach” to the research work being done in his school. “You can argue that not every team (in the Startup Garage program) is doing a grand challenge,” Abbott said, “but we wouldn’t take a team in the program if it didn’t have an engineer involved.”
The next step will be helping the teams grow into full-fledged businesses during the next six to nine months. All nine presenters were asking for additional seed funding of $250,000 to $1 million, typically to be spent for customer acquisition, marketing or hiring additional engineers or technical capacity to expand into full-scale operations. Still undetermined is timing and partners for a second year of the Startup Garage, though director Soni said he hopes to double the number of nascent companies invited to take part.