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Activision Facing Shareholder Lawsuit From NYC Pensions
Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Samson is also a proud member of the Transgender Journalists Association. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Activision Blizzard is facing yet another lawsuit—this time from the Big Apple.
The New York City Employees’ Retirement System–along with various pension funds for the city’s firefighters, police and teachers–filed suit against the Santa Monica-based video game publisher in Delaware’s Court of Chancery last month, Axios reported on Wednesday.
The plaintiffs, all Activision Blizzard shareholders, claim that Activision CEO Bobby Kotick is responsible for devaluing the pension plans’ investments by failing to adequately address allegations of sexual harassment and discrimination at the company.
Kotick and his fellow Activision directors are also accused of pushing the company’s pending $69 billion merger with Microsoft “as a means to escape liability for their egregious breaches of fiduciary duty,” according to the lawsuit.
“Given Kotick’s personal responsibility and liability for Activision’s broken workplace, it should have been clear to the Board that he was unfit to negotiate a sale of the Company,” the lawsuit says. “But it wasn’t.”
In an email statement to dot.LA, Activision offered its standard response to lawsuits: “We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court.”
The complaint alleges that Kotick and Activision’s board harmed the pension plans’ investments by undervaluing the company’s stock and rushing into a deal with Microsoft after allegations of sexual misconduct and discrimination surfaced at the company. In November, the Wall Street Journal reported that Kotick knew about sexual misconduct allegations at Activision for years, but failed to inform the board or take action.
“It is now clear that during this lengthy tenure, Kotick was aware of numerous credible allegations of misconduct by the company’s senior executives—but did nothing to address them or prevent further offenses,” the lawsuit states. “Kotick therefore faced a strong likelihood of liability for breaches of fiduciary duty, together with other members of the Board.”
Kotick has faced pressure to resign as CEO in the wake of such reports, but remains in charge of the company and is reportedly eligible for more than $500 million in stock awards as a result of the Microsoft deal.
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Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Samson is also a proud member of the Transgender Journalists Association. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
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Jumpstart Nova Will Fund Black Health Care Startups with a New $55 Million Fund
By all accounts, these are heady times for health-tech startups. In 2020, as the pandemic raged, a record $28.5 billion of venture capital poured into the U.S. biotech startup scene, according to Pitchbook data. New dollars inflated valuations for telehealth services, concierge medical practices and a slew of other startups designed to save doctors, hospitals and patients time and money.
But not everybody reaped the benefits. A survey of nearly 700 health startup leaders conducted by Rock Health in 2020 found that support for Black founders was largely inadequate. Black founders were more likely than white or Asian founders to bootstrap their companies, while most were based in the South or the Midwest—far from the funding hotbeds of the Northeast and West Coast.
These inequities formed the genesis for Jumpstart Nova, which bills itself as the first venture fund investing exclusively in Black-founded and Black-led health companies. The fund—a spinoff from Nashville-based venture capital firm Jumpstart Health Investors—announced Wednesday that it has raised $55 million from health care investors including Eli Lilly and Company, Cardinal Health and Atrium Health, oversubscribing its initial $30 million target.
Jumpstart Nova partner Kathryne Cooper
Though Jumpstart is based in Tennessee, the Nova fund will have roots in Los Angeles, as well. Jumpstart Nova partner and native Angeleno Kathryne Cooper is based in L.A., and is working alongside Jumpstart co-founder Marcus Whitney to lead deals and manage the portfolio. Cooper brings an experienced background in the worlds of health care technology and startup investing. She previously managed an FDA-backed seed fund for the West Coast Consortium for Technology & Innovation in Pediatrics, and has served as an advisor to Backstage Capital, an L.A.-based venture fund for minority-led startups, as well as the city of Los Angeles’ Women in STEM (WiSTEM) initiative.
“[Black people] have been overlooked traditionally for investments from the venture space, and I believe that talent is equally distributed and anyone can build within health care,” Cooper told dot.LA. “So I think it was a unique market opportunity to create a fund that invests exclusively in Black founders.”
According to Jumpstart, of the nearly 785,000 companies in the U.S. health care sector today, only around 35,000—or less than 5%—are Black-owned. The venture fund is hoping to eliminate certain processes baked into the venture capital world that it believes make it harder for minority founders to access funding. For instance, instead of relying on in-person meetings that require founders to fly out to L.A. or Nashville, it is soliciting founders from all over the U.S.—an attempt to rectify some of the geographical inequities that leave many Black founders at a disadvantage.
“I think protocols like that are helpful because some of these methodologies have chronically underserved certain types of founders,” Cooper said. “And we don't make the same mistake, even though we're investing in Black founders.”
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Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.
Wonder Ventures Launches $31 Million Fund Focused Exclusively on LA Startups
After hitting the jackpot with hometown bets like shopping app Honey, Los Angeles venture capital firm Wonder Ventures is doubling down with a new early-stage fund focused exclusively on L.A. startups.
Santa Monica-based Wonder has raised $31 million for its new venture fund, founder and managing partner Dustin Rosen told dot.LA. The new fund is double the size of the $15 million pre-seed fund that Wonder raised in 2018, and like that one it will target fledgling L.A.-based startups that Rosen believes are too easily overlooked by larger VCs.
“The L.A. ecosystem is really mature as far as a place to build technology companies, and more capital than ever is coming into L.A. to fund our companies as they grow and scale toward an IPO,” Rosen said, noting that Wonder already deploys more than 90% of its capital in Southern California-based ventures. “We still believe that the earliest stage is underfunded—pre-traction and pre-seed. That stage is the hardest time to raise and get elite investors, and that explicitly is what Wonder does.”
Rosen pointed to an eclectic group of more than 60 L.A.-based founders and tech executives who have invested in its latest fund, including those from current and former Wonder portfolio companies like Clutter, Tala, and Honey. Other investors from local startup success stories like Snap, GoodRx, and Dollar Shave Club also pitched in.
Fom left to right: Valentina Rodriguez, senior investor; Dustin Rosen, managing partner; and Taylor Bolhack, head of platform and community for Wonder Ventures.
Courtesy of Wonder Ventures
Among the first companies to be funded by the new vehicle is RealAppeal, a Santa Monica-based startup that finds savings in homeowners’ property tax assessment bills through an appeals process. Rosen said he filed his own appeal on the company’s website as its founders made their pitch to him on the phone. “I hope to save thousands of dollars,” he noted.
Among Wonder’s most successful investments to date has been Honey, the ecommerce rewards app that PayPal acquired for $4 billion in 2019. The VC’s initial early-stage investment in the Arts District-based startup returned an exit worth more than Wonder’s entire $5 million first fund, according to Rosen.
The firm’s largest portfolio holding today is WhatNot, the Marina del Rey-based livestream auction marketplace that raised more than $220 million in venture capital last year on the way to reaching a unicorn valuation of $1.5 billion. That investment has proven even more lucrative than its bet on Honey; Rosen noted that the current value of Wonder’s stake in WhatNot is “worth more than the entire [$15 million] second fund.”
In addition to launching the new fund, Wonder has made two new hires to help oversee its portfolio of nearly 80 companies. Valentina Rodriguez, formerly an analyst and trader with Morgan Stanley, has joined the venture firm as a senior investor, while Taylor Bolhack, previously with Santa Monica-based micromobility operator Bird, has been named head of platform and community.
Wonder Ventures isn’t the only L.A-based VC firm targeting local seed and pre-seed startups. After five years with San Francisco-based Crosslink Capital, investor Joe Guzel has launched a fintech-focused early-stage fund with McLain Southworth called Haven Ventures, Guzel told the LA Venture podcast this week.
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