Excerpts from The Los Angeles Business Journal, 16 October 2000.
Key Players at Ground Zero of L.A.'s Dot-Com Shakeout
The following 20 "Roadkill Warriors" are among those resourceful Angelenos who are either already capitalizing or poised to capitalize on the dot-com meltdown. They are bankers, lawyers and venture capitalists who are restructuring, merging, acquiring, liquidating or otherwise cutting deals involving the new-media roadkill that couldn't quite cut it on the digital superhighway.
Riggs Eckelberry arrived at NetCatalyst in Santa Monica fresh from the sale of Internet technology startup TriVida to public Internet company Be Free.
At NetCatalyst, Eckelberry has helped develop "liquidity engineering," a set of processes by which "we remedy issues affecting liquidity issues in a basically healthy company," he said. "We take companies that still have cash, but for some reason are stuck. Their business model needs refocusing, they lack partnerships, need revenues, or they're not getting funded. We remedy that."
PLAYERS HUSTLE TO CASH IN ON DOT–COM MELTDOWN
The sky is falling on dot-coms, and a number of savvy L.A. professionals - lawyers, investment bankers, investors and others - are moving quickly to capitalize on the carnage. In some cases, the flailing Internet ventures are being acquired and merged with healthier online outfits, or with Old Economy companies. In other cases, the dot-coms are being completely re-engineered, even given totally new business models and management teams. But in almost all cases, the deals are being struck at dirt-cheap valuations, compared with valuations of even a few weeks ago. The action is fast and furious as dot-coms undertake what in some cases are last-ditch efforts to survive...It's a fitting metaphor for the general perception of Internet companies these days: They've used their money in frivolous ways and now are behind the eight ball...NetCatalyst bills itself as a [Liquidity Engineer], packaging New Economy companies for "liquidity events" like an initial public offering, sale or merger. More and more, it's the latter two that are being pursued, sometimes desperately pursued. The tech-heavy Nasdaq has been tumbling, making the IPO route to riches an impossibility for many dot-coms.
"Some companies deserve a quick burial, and the sooner the better," NetCatalyst's Eckelberry said. But he also believes there's money to be made in "shocking the pool," the industry phrase for restructuring a relatively sound e-company even to the point of changing its business model to sell it to the right buyer. "You can scale a lot of these ventures," he said. "A lot of Internet spaces have been balkanized. (Consolidation) can create value."
© 2000 Los Angeles Business Journal Associates. All rights reserved. Los Angeles Business Journal, Los Angeles, CA 90036, USA.