The Standard [www.thestandard.com] Evercore, eCompanies Join Forces
By Jim Evans
Oct 02 2000 07:03 AM PDT
The partners have formed an investment firm to manage both companies' Web-related investments.
The Southern California incubator eCompanies has joined with New York-based Evercore Partners to form a new investment firm - eCompanies/Evercore Venture Partners - to manage both entities' new-economy venture investments.
Evercore founding partner Austin Beutner will manage the new firm. He will also become the third partner of the eCompanies incubator, joining Sky Dayton and .
The partners are also raising a new fund, according to observers close to the combined company.
The principals say the partnership formalizes the two firms' commitment to combining the offline world with the online world. Evercore represents the offline world. Founded by Beutner and former Deputy Treasury Secretary Roger Altman, the boutique investment firm Evercore makes equity and venture investments and offers strategic corporate advice. In September 1999 it made waves by serving as principal adviser to CBS (dossier) in its $37.3 billion merger with Viacom (VIA). Former Disney Internet executive Winebaum and EarthLink founder Dayton founded eCompanies in July 1999. In August of that year it closed a $130 million venture fund and subsequently backed a host of companies in both the consumer and the business-to-business categories, none of which has hit the public markets yet.
"We wouldn't have brought a third partner in unless it was someone we were very comfortable with, like Austin," Winebaum says. "And the more we talked about where things were heading, the more we realized there was an opportunity to work together."
The idea of combining online and offline expertise in an investment firm is nothing new, of course. This year, Kohlberg Kravis Roberts [KKR] hooked up with the VC firm Accel Partners to form AccelKKR Internet. Kleiner Perkins Caufield & Byers partnered with consulting firm Bain & Co. and managing partners from buyout firm Texas Pacific Group to form eVolution.
However, while those firms have made it their mission to carve Web businesses out of Fortune 500-type companies, Evercore/eCompanies plans to work more with startups, some of which would come from eCompanies' incubator.
It hasn't all been rosy so far for the incubator. Its very first company, eParties, went belly-up in June, firing its employees and selling pieces of the business to eToys (ETYS). But Beutner says he thinks the incubator is on the right track.
"We wouldn't be doing this if we didn't have confidence in the investments made by the individuals involved," Beutner says.
Evercore seems to be coming on board at the right time. Dayton and Winebaum brought virtually no venture or private equity experience to the company when they founded it last year, and
Among the company's limited partners are
Accel Partners,
CS First Boston,
Disney,
EarthLink,
Goldman Sachs,
KKR,
Soros Fund Management,
Sprint (FON),
Sun America and
Times Mirror (TMC).
"The reason we picked the LPs we did is because we wanted them to be engaged." Winebaum says. "We did as good as any fund does, but we knew we'd be under more scrutiny because of who our investors are."
Last month the eCompanies-incubated Business.com drew a $61 million round of financing co-led by Pearson's Financial Times Group and Reed Elsevier (dossier)'s Cahners Business Information. In August, eCompanies and Sprint founded a wireless incubator. The incubator will be hosted at eCompanies, (dossier)and Sprint invested $15 million in the venture.
The Standard IS NOT part of the new partnership of Evercore and eCompanies.
I posted the Texas Pacific Group as a matter of interest --- the former President Bush E.P.A. director and O.P.I.C. may ring some bells.