Watertower Ventures Closes $50 Million Second Fund
Watertower Ventures, led by Los Angeles startup veterans Derek Norton and Jeremy Milken, has closed its second fund — a larger and more ambitious sequel to the one they launched three years ago. With $50 million in dry power, they are aiming to be the first institutional money in 35 companies over the next three years, with check sizes ranging from $250,000 to $1 million.
"We have a lot of work to do and it's an aggressive pace," Norton told dot.LA.
The new fund is a significant step up from their $5 million Fund I that focused on the connected consumer with portfolio companies such as the podcasting network Wondery and AllVoices, a service that allows employees to anonymously send feedback to top management. (Watertower also invested in dot.LA.)
Fund II will continue the digital consumer focus while adding something the firm calls "evolving enterprise," a category that includes companies like Slack and Salesforce.
Norton and Milken first met two decades ago when Norton invested in Milken's first gaming startup. The two have been friends and professional acquaintances since. Milken went on to start five more companies while Norton spent most of the last 20 years on the advising side at his boutique investment bank, Watertower Group, which also had an early stage venture capital fund called Watertower Early Opportunity Fund.
"We've been at this for awhile," Norton said. "We bring a 20 year lens."
Norton says they started raising money in late February but it was made more difficult by the pandemic. "I'm not sure I would want to revisit those two months," he said.
As they start deploying the fund, Norton says he is surprised that valuations have barely budged from their frothy pre-pandemic highs. "I would have thought we would have been seeing a reset on valuations that through 2019 got a little ahead of where they should be for seed stage deals," he said. "But we are seeing valuations increasing beyond that."
Norton says the pandemic has expanded the geographic reach of the firm. Previously it focused only on Los Angeles, the Bay Area, New York, and Utah. Watertower recently invested in two companies in Texas out of Fund I. Like every other VC, he has been forced to get used to writing checks to people he has never shaken hands with.
"We used to say we wouldn't invest in a founder without meeting them in person and at least doing a lunch or dinner, but now we've become comfortable on Zoom," Norton said.
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It's almost 90 degrees outside in Los Angeles as lines of cars pull up to Dodger Stadium, home to a mass vaccination site that opened Friday.
"Please make sure that they're not under the sun in the cart," Edith Mirzaian is telling a volunteer as she directs the person to put ice packs on coolers that hold up to 20 COVID vaccines. Mirzaian is a USC associate professor of clinical pharmacy and an operational lead at one of California's largest vaccination sites.
Dodger Stadium alone — once the nation's largest COVID-19 testing site — is slated to vaccine up to 12,000 people each day, county and city health officials said this week. Officials plan to finish vaccinating some 500,000 health care and assisted care employees by the end of this month before opening appointments up to people 65 and older.
Mirzaian is desperately trying to make sure that the vaccines don't spoil.
"We have to be the guardians of the vaccine," she said.
Earlier this month, hundreds of vaccinations were lost after a refrigerator went out in Northern California, forcing the hospital to rush to give out hundreds of doses. Mirzaian's task tells a larger story of the difficult and often daunting logistical process required to roll out a vaccine that requires cold temperatures.
"You know they can't be warm so just keep an eye out," she gently reminds the volunteer.
The volunteers and staff from USC, the Los Angeles Fire Department and CORE Response prepared enough doses to vaccinate around 2,000 residents on Friday and they plan to increase capacity each day after.
Local health officials are holding the vaccination syringes in coolers after they leave the air-conditioned trailers. The coolers are then covered in ice packs and wheeled on carts to clinicians administering shots to health care workers and nursing home staff eligible under the state's vaccination plan.
"Vaccines are the surest route to defeating this virus and charting a course to recovery, so the City, County, and our entire team are putting our best resources on the field to get Angelenos vaccinated as quickly, safely, and efficiently as possible," said mayor Eric Garcetti in a statement announcing the plan.
Health officials around the world are racing against time as the virus mutates and poses greater dangers.
"We have a little bit of borrowed time here right now because these variants are not here in great numbers from what we can tell," said Susan Butler-Wu, an associate professor in clinical pathology at USC's Keck School of Medicine of USC.
Curbing the spread of the virus is a vital way to prevent mutant strains from developing, she said.
Mirzaian, who arrived at the site before it opened at 8 a.m., said that there were logistical challenges as volunteers scrambled to assemble what will likely be the hub of the region's vaccination efforts.
"It's challenging to make sure that everyone knows what the process is and what we're doing and what to tell the patients who receive the vaccines."
After a few hours, the procedure moved quicker.
Residents have to show identification and proof of employment before they're taken through a list of pre-screening questions and given the vaccine through their car window. They're required to then wait for 15 minutes while clinicians monitor them for side effects.
Mirzaian said the process took each car about an hour. While eligible residents can walk-in for vaccinations, she recommends they make appointments so that enough doses are made available each day.
"As long as people have their appointments, they will get in," she said. "We are ready. We are like an army ready to give vaccines."
An earlier version of this story misidentified CORE Response.
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