Investment Thesis: Don Hutchison (Part 3)

SM: Describe, in some detail, the last deal you funded, and your rationale behind funding it. DH: I’ve made three recent investments; one new and two follow-on. The new is www.revision3.com, formed by Jay Adelson and Kevin Rose. This was exactly the type of new media play I was seeking–something hugely ambitious with existing traction that seeks to fully leverage the internet as a new medium for delivering more traditional media but also as an environment that will encourage new forms of media.

I feel very fortunate to be in the deal. Jay and I worked together at Netcom, and this marks a common denominator of most of my deals–I generally have a strong personal association or introduction to a deal through one or more the 00’s of folks I’ve had the good fortune to work closely with in net era.

The first follow-on is w & w communications, www.wwcoms.com, the leader in bringing the h.264 video compression standard to practical applicability–think of them as leading the technical charge to make high definition video available anytime, anywhere, over any network.

The other follow-on investment is in www.fliqz.com, a next generation video network focusing on high personal value, less voyeuristic video sharing (think little league, graduations, weddings) and which is intended as an enabling tool for sites versus a competitive destination site.

I have two pending investments; a new still quiet asp play for managing paid search and another follow-on investment in www.soundflavor.com, which has launched a s/w app. that makes finding beloved old music and introducing me to great new music truly fun and easy while creating fantastic play lists for me on the fly.

SM: Do you fund capital-intensive deals? DH: Typically not. Among the
recurring challenges for angel investors is the very real prospect of being effectively obliterated by future investment rounds. Good angel investors have to focus on ventures that offer superior capital leverage–efficiency is the desired hallmark. Of course, an exceptional deal that required a lot of follow-on capital might still make sense, circumstances depending.

SM: Do you fund built-to-flip deals? DH: No. While I hope everything I fund
will have a happy outcome–and that will most often mean an acquisition–it’s generally wishful thinking, imo, to build a company solely for acquisition. There are simply too many unconstrained variables. There may be occasional examples where a senior contact at a given firm virtually or literally asks a proven associate to develop something with a strong implied promise of a future acquisition but I’d consider such scenarios rare.

SM: Do you fund “hits” businesses? DH: I’d sure like to 😉 in candor, my
deals probably fall into two broad sectors; ones I think could reasonably garner a billion dollar plus valuation within five to seven years and others that should be very reasonable returns with dramatically smaller valuations in two to four years.

(final part next time)

This segment is part 3 in the series : Investment Thesis: Don Hutchison
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