From Friday's WSJ:
idealab! Stake of 1.34% Bought By Japanese Firm
By: Rick Warzman
One of Japan's biggest distributors of mobile phones said it acquired a 1.34% stage in idealab! for $100m million, giving the Pasadena, Calif., incubator of Internet companies an indicated value of $7.46 billion as it finalizes plans to go public.
The Tokyo-based company, Hikari Tsushin Inc. has been racing to become a big player on the Internet, and its relationship with idealab! will provide a window to spot emerging Web ventures.
Analysts cautioned that if idealab goes public, it won't automatically command the value that Hikari Tsushin has placed on it. "I don't think it necessarily sets the price," said Gail Bronson, a Silicon Valley start-up strategist and senior analyst at IPO Monitor, which tracks initial public offerings. But, she added, the Hikari Tsushin investment certainly "is going to be marketed by idealab's underwriters and will "bolster the offering with additional credibility."
idealab!, which was founded by entrepreneur Bill Gross, has nurtured more than 30 Internet start-ups by providing everything from office space to counsel on business strategy and technology. Among idealab's progeny--including five companies that have gone public themselves--are eToys, Inc., GoTo.com, Inc., Ticketmaster Online-City Search, Inc.
idealab! typically doesn't solicit business plans but generates most of its concepts for new companies internally. Generally, idealab! holds a major equity position in the firms that it fosters.
Of course, not every company that idealab! has spawned has panned out. IdeaMarket, which a couple of years ago looked to sell intellectual property online, quickly folded. EntertainNet also flopped. And Free-PC Inc., which Mr. Gross himself served as chairman, abandoned its strategy of giving away "free" personal computers when it agreed to be acquired late last year by eMachines Inc.
A spokeswoman for idealab! said no one would comment on the Hikari Tsushin investment. She said that while idealab! hasn't made a formal announcement about going public, it has undertaken a "self-imposed quiet period" as it prepares for a Securities and Exchange Commission filing. She added that she couldn't say when that filing would be made.
Mr. Gross, who founded the educational software company Knowledge Adventure, launched idealab! in 1996. Early investors included DreamWorks SKG's Steven Spielberg and Compaq Computer Corp. Chairman Ben Rosen. Their exact stakes haven't been disclosed. |
