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Media groups on lookout for next big thing

09 июня 2008

Bigpoint’s sell-out at a rich multiple is another sign of the boom in online gaming. Yet the deal also marks a coming-out party of sorts for Peacock Equity, a venture capital fund launched a year ago by General Electric siblings NBC Universal and GE Commercial Finance.

Peacock made a modest debut last June with a $3m investment in Adify, a start-up that helps media companies create online advertising networks. Less than a year later, that bet paid off handsomely when Adify was sold to Cox Communications for $300m.

Bolstered by that success, GE has since give Peacock authority to exceed its original $250m ceiling. The Bigpoint investment reflects those growing ambitions. It is far larger than the fund’s original deals, which ranged from $5m to $15m. It is also the first that gives Peacock a controlling stake in a company and is its first international deal.

“Our mandate is to invest in spaces that are in some way strategic to the platform of NBC,” Thomas Byrne, Peacock’s managing director, explained.

Peacock is one of several venture funds launched over the years by media and technology companies such as Disney, Time Warner, Hearst, Comcast and Intel, among others. The idea is that such funds can provide their parent companies with access to innovative ideas and products – something that has become particularly important for traditional media companies as they adapt to the internet era. 

“They are kind of the eyes and the ears in the market for [these companies] for new technology and new ideas,” said Dan Nova, managing general partner at Highland Capital Partners, a venture capital firm that has invested alongside Disney’s Steamboat Ventures, one of the best-known corporate funds.

For a start-up, such well-connected investors can open the doors to business relations with larger parent companies. One Highland Capital investment, Quigo, a contextual advertising company, sealed deals with Disney’s ESPN division after Steamboat joined its funding. Quigo was subsequently sold to AOL last year for more than $300m.

Hoping to replicate that success, Peacock executives travelled to Silicon Valley soon after the fund’s launch to introduce themselves to venture capital firms all along Sand Hill Road.

The fund has since invested in nine companies, all of which now have operational relationships with its corporate parent. NBC, for example, has the right to sell ads through IGA Worldwide, a Peacock start-up that places ads in video games.

Such funds sometimes stumble. The biggest knock against them is that making strategic investments is not always compatible with the goal of achieving competitive returns and vice versa. Some start-ups also prefer not to be formally aligned with one media company for fear of prejudicing other potential customers.

Peacock executives believe that their joint-venture structure provides an added layer of financial discipline and that their corporate association is more a benefit than a burden to entrepreneurs.

“They understand that we are relationship-driven, and that our focus is to assist in the growth of the underlying company,” Mr Byrne said.

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