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X'In a World Where We're All Scared It's Easy to Forget There are Opportunities': L.A.'s Glitziest Venture Capital Team is Still Hunting for Deals
Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

M13, named after one of the brightest star clusters in the Northern Sky, has considerable star wattage of its own and is decidedly the most L.A. of all the L.A venture capital firms.
Co-founders Carter and Courtney Reum together boast around 170,000 Instagram followers and in more normal times frequently post pictures with celebrities at parties or from their travels around the world. Carter has been linked to dating Paris Hilton, who was interviewed by Courtney onstage at the Upfront Summit in January. Sir Richard Branson is a limited partner in the firm as is Arianna Huffington.
But, now that glitz appears on hold as the brothers grapple with a pandemic that hit right as the Santa Monica early-stage consumer technology firm was in the midst of deploying the $175 million in its second fund. COVID-19 has hurt consumer companies especially hard, including once high-flying brands in M13's portfolio like Bird, FabFitFun, and ClassPass (M13 is also an investor in dot.LA.)
But Carter, 39, says he is intent on finding opportunities in how consumer behavior is changing and intends to raise a third fund next year. "Capital will be harder to get," he said. "We're hopeful that a premium will be put on what we bring to the table."
The brothers founded M13 in 2016 after they sold their spirits business, Veev, for a hefty multiple to a St. Louis beverage conglomerate. They built a reputation of putting in very long hours and expect the same from their employees. And they also share the same enviable resume: Columbia undergrad followed by Harvard Business School topped by a brief investment banking career at Goldman Sachs.
They are also relentlessly polished and on-message. When asked during a February office visit to describe the last time they disagreed about something, they looked at each other and there was a long pause. They were never able to come up with an answer.
Before coronavirus, M13's warehouse-chic Santa Monica headquarters was a bustling hive of activity, filled with people scurrying from meeting to meeting. The firm also has an office in New York a few blocks away from Gramercy Park and a partner, Gautum Gupta, based in San Francisco.
But on March 12th, all the offices closed and workers went home, connected only by Zoom, Slack, and telephones. Before focusing on business, Carter said it was essential to make sure employees had what they needed to adapt to the new reality.
"We said we didn't want to talk about anything related to work until we had the people thing settled," Carter said.
He said it was important to realize the uniqueness of the situation. Many employees are preoccupied with worrying about loved ones and are filled with anxiety. Some know multiple people who have died.
"This is different from running a remote culture when things are great," he said.
M13 set up a #CoronaCare slack channel focused on how to take care of people during the crisis. Carter says it's more important than ever for leaders to be very clear about what they expect and to formalize processes because it is impossible to walk over and chat with someone at their desk.
"You have to get in the habit when you finish a call with someone where you agree on next steps," he said.
M13 prides itself on its culture and the Reums still want to maintain it as much as possible when everyone is working remotely. They also wants people to still look forward to "going" to work everyday, even when they are stuck at home in their yoga pants.
The firm has been doing two virtual standup meetings per day, with employees dancing or celebrating St. Patrick's Day. There's also a 30-day ab workout challenge and Carter makes it a point to spontaneously make a video call with at least two employees a day to check in on how they are doing.
Beyond the Zooms and Slacks, there is still a fund to deploy and Carter says M13 is actively hunting for deals. It helps that valuations, which had ballooned in recent years, are now coming back to earth.
"In a world where we're all scared it's easy to forget there are opportunities," Carter said. "We are absolutely still writing checks."
Carter and his team are focused on how consumer behavior is changing and what businesses will benefit, and what people will need versus what they merely want. He cites two M13 portfolio companies seeing a rush of interest that he does not think will be short lived.
"Daily Harvest is booming right because people are not able to get food from local grocery stores," Carter said. "Capsule had one of its highest sales weeks because people don't want to go to pharmacies."
Carter does acknowledge that many of his companies will not be as well positioned for the present reality or even the post-COVID world.
"All of us will have companies in our portfolio that will be forced to close," he said.
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Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.
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Inspectiv Raises $8.6M To Build a Better Cybersecurity Platform
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. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
What do education startups, maternal care platforms and Minecraft servers have in common? They’re all susceptible to hacking.
Also, businesses in each industry use software created by Manhattan Beach-based Inspectiv, which announced Thursday that it’s raised an $8.6 million Series A round to continue developing its artificial intelligence that detects and wipes out security threats.
The new funds bring the total Inspectiv has raised to $16.6 million since its 2018 launch. Founder and chairman Joseph Melika told dot.LA the company’s recent growth has largely been steered by the pandemic as companies put a higher value on data security.
The heightened need for better security, according to Melika, is due to recent changes in how people work. “Just people, frankly, getting distracted,” he said, has made some businesses more vulnerable to hackers.
“They’re working remotely, their laptops are from home [with] no firewall,” he said, adding that has left a lot of systems potentially exposed to hacks.
Inspectiv’s risk management platform runs autonomously 24/7 and is constantly scanning for threats, Melika said. The software isn’t just run on A.I., it's also combined with a network of security researchers. Melika said part of Inspectiv’s intelligence comes from the input of thousands of researchers.
Once it finds a threat, the software alerts Inspectiv, whose vulnerability spot-checkers verify it and identify it to the client. Then, Inspectiv scans its other clients for the same threat, or similar invasions that could be lurking. There’s also the potential for the software to review backup files, in case a company wants to make sure no older resolved threats spring back to life.
Melika pointed out several current Inspectiv clients using its software are local, including GoGuardian, maternal care company Mahmee and Minehut, a platform for people to host custom “Minecraft” servers.
The funding round was led by StepStone Group, among a suite of existing Inspectiv investors including Westwood-based Fika Ventures, San Francisco’s Freestyle Capital and Santa Monica-based Mucker Capital.
CEO Ryan Disraeli (left) and Founder and Chairman Joseph Melika (right)
Courtesy of Inspectiv
Inspectiv also announced a leadership transition this week alongside several new hires – former CEO and co-founder of fraud prevention service Telesign Ryan Disraeli will take the reins as CEO of Inspectiv, while Melika will remain on board as the company’s board chairman.
“Inspectiv is really helping secure the internet, and that was something that personally I could get passionate about,” Disraeli said. “To be able to work with a team of people that we brought in that also has that security background, but also experience scaling up organizations was a pretty exciting opportunity.”
The company also hired Karen Nguyen as chief revenue officer, Ray Espinoza as chief information security officer and Ross Hendrickson to be vice president of engineering. Disraeli said the Inspectiv team is currently 22 people but the company is “adding aggressively to that number” by expanding its product development team.
Disraeli wouldn’t disclose revenues but told dot.LA he’s confident he can grow Inspectiv quickly.
“There's a lot of companies raising money that don't have customers and don't have real growth,” Disraeli said. “This is a company that has real customers that are growing and growing with us.”
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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. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Activision Buys Game Studio Proletariat To Expand ‘World of Warcraft’ Staff
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. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Activision Blizzard intends to acquire Proletariat, a Boston-based game studio that developed the wizard-themed battle royale game “Spellbreak.”
VentureBeat first reported that the Santa Monica-based publisher was exploring a purchase, noting its ongoing mission to expand the staff working on Blizzard’s hit massively multiplayer online game “World of Warcraft,” which launched in 2004.
Proletariat’s team of roughly 100 people will be merged into Activision’s “World of Warcraft” team to work on its upcoming expansion game. Though there’s no release date as yet for the title, “World of Warcraft: Dragonflight” is expected to debut before the end of this year.
Activision did not immediately return a request for comment. Financial terms of the deal were not available.
This Proletariat deal is Activision's latest push to consolidate its family tree by folding its subsidiary companies in under the Blizzard banner. More than 15 years after it bought out New York-based game developer Vicarious Visions, Activision merged the business into its own last year, ensuring that the studio wouldn’t work on anything but Blizzard titles.
The deal could also have implications for workers at Activision who have looked to unionize. One subsidiary of Activision, Wisconsin-based Raven Software, cast a majority vote to establish its Game Workers Alliance—backed by the nationwide Communications Workers of America union—in May.
Until recently, Activision has remained largely anti-union in the face of its employees organizing—but it could soon not have much of a say in the matter once it finalizes its $69 billion sale to Microsoft, which said publicly it would maintain a “neutral approach” and wouldn’t stand in the way if more employees at Activision expressed interest in unionizing after the deal closes.
Each individual studio under the Activision umbrella would need to have a majority vote in favor of unionizing to join the GWA. Now, Proletariat’s workforce—which, somewhat ironically given its name, isn’t unionized—is another that could make such a decision leading up to the Microsoft deal’s expected closing in 2023.
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. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Snap Officially Launching ‘Snapchat Plus’ Subscription Tier
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Snap is officially launching Snapchat Plus, a paid subscription plan on Santa Monica-based social media company’s flagship app.
Snap is now the latest media company to tack a “plus” to the end of its name—announcing Wednesday that the new service will provide users with “exclusive, experimental and pre-release features” for the price of $3.99 a month. The first features available to paying subscribers include the ability to customize the style of app’s icon, pin a “BFF” to the top of their chat history and see which users have rewatched a story, according to The Verge.
The new product arrives after Snap confirmed reports earlier this month that it was testing Snapchat Plus—though the version that it has rolled out does not incorporate the rumored feature that would allow subscribers to view a friend’s whereabouts over the previous 24 hours.
Snapchat Plus will initially be available to users in the U.S., Canada, U.K., France, Germany, Australia, New Zealand, Saudi Arabia and the United Arab Emirates. While certain features will remain exclusive to Plus users, others will eventually be released across Snapchat’s entire user base, Snap senior vice president of product Jacob Andreou told The Verge. (Disclosure: Snap is an investor in dot.LA.)
The subscription tier introduces a new potential revenue stream for Snap, which experienced a “challenging” first quarter marked by disruptions to its core digital advertising market. However, Andreou told The Verge that the product is not expected to be a “material new revenue source” for the company. He also disputed that Snap was responding to its recent economic headwinds, noting that Snap had been exploring a paid offering since 2016.
Despite charging users, Snapchat Plus does not include the option to turn off ads. “Ads are going to be at the core of our business model for the long term,” Andreou said.
Snap is not the first popular social media platform to venture into subscriptions: Both Twitter and Tumblr rolled out paid tiers last year, albeit with mixedresults.Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.