ICM Partners, software developer Originate and law and consulting firm Manatt, Phelps & Phillips have created O Labs, a joint venture designed to fund and develop media and technology startups by pooling resources from each partner.
L.A.-based O Labs expects to launch three to five companies per year. The JV is led by CEO Matthew Pierce, previously Originate’s VP of strategy.
“The idea is, we’re bringing together three very well-respected and high-end service companies to build and operates companies that can address the needs of enterprise,” Pierce said.
O Labs, which has been in the works for 18 months, will have access to some 120 product designers and developers from Originate, legal and business experts from Manatt, and industry relationships and insights from ICM agents. The venture has a budget for the first two years, and each partner has committed personnel to O Labs.
There’s no preset amount of money set aside for the startups that O Labs will be incubating, and each project will have its own unique requirements, Pierce said. “We want to make sure we are investing in ideas we can put a lot of resources into,” he said. “It’s not, ‘We’ll give you $30,000 and you can come sit in our office.’ It’s not a cookie-cutter approach.”
O Labs’ first portfolio company, Versus, has developed a platform that lets videogamers wager real money in online tournaments. The startup, co-founded with game developer Brandii Grace, epitomizes the disciplines that each of the partners brings to bear, according to Pierce. The software is built by Originate, Manatt provides legal counsel in gaming, advertising, intellectual property and sweepstakes law, and ICM contributes expertise in brand positioning, sales and marketing.
“The first question a potential acquirer is going to ask about this is, How is this legal?” said Sarah Chambless, an associate in Manatt’s corporate and finance practice. With Versus, “we literally had to build the site so it was legally compliant for each jurisdiction, instead of doing that after the fact.”
O Labs will own a “very large position” in each portfolio company, Pierce said, with the exit strategy varying. “We’ve all got fairly solid relationships with outside investors,” he said. “We have a history of doing M&A and financing.”
The JV’s investment committee comprises Pierce, Manatt partner T. Hale Boggs, Originate CFO Jeff Scheinrock and Keyvan Peymani, ICM’s managing director of ICM’s digital strategy division. The venture currently is evaluating startup ideas in areas including short-form content, over-the-top video and financial services.
“The media industry, like many others, is facing fundamental changes from every conceivable angle,” Peymani said in a statement. “For several years, ICM Partners has been partnering with the top entrepreneurs, VCs and startup communities around the world to help build world-class companies that will shape our industry. This new model is another step forward.”