Provenance Ventures (www.provenanceventures.com) is a new, Los Angeles-based venture capital firm that just raised a $10M fund for investing in what it calls socially forward ventures. We spoke with the founder and Managing Director of Provenance, Bryan Biniak, about the fund, what they are looking for in investments, and specifically on the types of entrepreneurs and companies are most attractive to the firm.
Ben Kuo: Tell us a bit about your fund, and the kinds of investments you're targeting?
Bryan Biniak: The firm is focused on what we're calling socially forward ventures, that is, ventures that advance society in a meaningful way. We are focused on entrepreneurs that have a passion and track record for bringing these kinds of products to life, and not necessarily commercially. Our goal is to help them realize the public and commercial success for those products, by bringing early stage capital, as well as operating and market expertise. The first fund that we've raised is a $10 million fund that is focused on media and communications. We're going to be making our first series of investments next month, in socially forward ventures.
Ben Kuo: What's your definition of socially forward ventures?
Bryan Biniak: It's interesting. In terms of technology, what we're looking for are unique technologies, versus another social network with a new name on it, or another online video service with another name on it. We're looking for individuals who are a bit ahead of the curve, who are paving the way. In this first fund, we're looking at media and communications. We look at the two as being conjoined, and our feeling is that in the future the two together are essential ingredients for success. On the communication side, we believe media will become a bigger component of communications. As an example, I spent almost the last three years at American Greetings. We found that in instant messaging, it's not just about text anymore. People are integrating a broad array of multimedia into their communications. We're seeing more creative mechanisms for enabling people to express themselves to others.
Ben Kuo: What's your background, and how'd you decide to get into VC?
Bryan Biniak: I've been fortunate that I've taken an interesting route here. I started at Boston College in Business and Economics, and started out in retained executive search. I was at a firm called Chestnut Hill Partners doing high tech search, and I moved out to L.A. to do retained search out here. What I found was I got more and more involved with the companies I was working with, and started providing a broader array of consulting. I then went in-house as part of companies, at Trimark and the Motion Picture Corporation of America. In the process, I was recruited by Chuck Abrahamson, who had a great deal of success at firms like Eesof, and Comsat. Eesoft was sold to HP. I then found an interactive music company that brought me experience in marketing and business development, where we brought in Intel and other third parties as investors in that business. I was subsequently recruited by people out of the MIT Media Lab and a VC to help start up a company called Harmonix Music Systems, spun out of a group at MIT. It developed one of the most successful video games in the market, an amazing game called Guitar Hero. While I was there, we were building theme park attractions and network toys and PC software console games, and I spent about four years with them, two of them in L.A. The last two years I spent in Japan, working with lots of interesting innovative companies in the entertainment and technology space. I was there until 2001, and learned a lot of the challenges of doing business in Asia. I was then recruited to a company in Santa Monica, Yourmobile, as COO, and ten months into that we sold to Vivendi Universal and changed the name to Moviso. I ran that for a couple of years, with a team of people during the Vivendi Universal divestiture, and it was part of those companies sold off to Infospace. It's now the basis for the majority of the revenue coming out of Infospace on the mobile side. About two years and eight months ago, I was recruited by American Greetings to start their wireless business, and set it up here. I had 160 people reporting to me at eight different locations. I then decided I wanted to get more involved at the ground level of a startup business, and take a proactive role, not just in the operations but also in investment.
Ben Kuo: It looks like you've got a pretty small fund, where is your money coming from?
Bryan Biniak: We've got a very small number of investors, including several individuals and strategic investors. We're making smaller, entry level investments, and at 250K to 500K per investment that's 20-40 investments.
Ben Kuo: What's the ideal company for you to invest in?
Bryan Biniak: We're looking for an early stage company, someone who is past an idea and ideally has moved beyond a simple business plan. We're looking at not only executive level individuals, but at the university level. I was fortunate enough to be part of a group of people who worked on the USC Mobile Media Institute, which was around for about a year and a half. It combined the graduate school of business, law, cinema television, engineering, music, and the Annenberg School of Communications with the mobile industry. I had experience there bringing together commerce and education, and looking at how we can tap into a lot of the talent base that exists out here. Our focus is on Southern California, though that's not an exclusive focus. You don't have to go to Stanford and MIT for all the innovation--there are lots of talented individuals here at USC, UCLA, and other local schools.
Ben Kuo: I find it interesting that you're starting a fund now, it seems like there's quite a bit of competition out there for deals. Any thoughts there?
Bryan Biniak: It's crowded if you want to follow the herd. If you look at the hype, funds are investing in the same types of companies. I think because there has been success in a few--with some sort of M&A activity, the number of people making the same kinds of investments far exceeds the market to support those types of businesses. However, it's a good time now for early stage, as more people are going upstream, and making much later stage investments. We're going to make it a practice to be involved in the businesses we fund. We have the capacity to make 20 to 40 investments, but it doesn't mean we'll do that. We're going to leverage our expertise that we bring, based on our operating experience and M&A experience, to get companies out of the gate, and faster to success. The goal for us is not to be a board room investor, to be more hands on, and to roll up your sleeves.
Ben Kuo: We have lots of entrepreneurs who read our publication--what are you looking for most in a company--management, technology, or something else?
Bryan Biniak: I think our ideal investment is someone who comes in with a very focused concept that is beyond the concept stage, where they've either created a demonstrable version of the product or who have a very clear path toward a demonstrable product. We also are looking for someone who is not looking for a quick buck and a quick exit. We want someone who is prepared to go the distance with the investment. There are lots of people looking for money, but don't have a connection with the product they're building. They don't have an interest beyond the dollars that want to bring in the door. Their success is raising venture capital, and not the product. More importantly, those people are not building businesses. We haven't been around as long as a lot of VCs in the marketplace, but I can remember in the early 90's when people were investing in a five to seven year exit window. That wasn't unreasonable, and was very practical. Now, you see people looking for one to two year windows for an exit, to move on to the next thing. In the businesses I was involved in, we all had to go without salary to get over the hump, and made a lot of sacrifices to build the business. We are looking for people who are prepared to do that, and those are kinds of people who you definitely want to have on your team. That doesn't mean you have to live on ramen, but you've got to get your priorities straight.
Ben Kuo: Thanks for the thoughts, and good luck on your fund!