The move comes on the heels of a similar effort launched late last year by
Meanwhile, another major Hollywood talent agency,
Representatives for Accel and William Morris did not respond to requests for comment.
Two sources told PE Week that the agency and venture firm plan to raise between $30 million and $50 million to make seed investments in digital media companies. The sources were not privy to the fund’s strategy, although there has been speculation that it may be related to Accel’s investment in social networking site Facebook.
One source says that in addition to Accel, another venture firm and a large corporation are also involved in the project, but PE Week was unable to confirm the information before press time.
Investors who are experienced in the digital media space say it is a tough nut to crack.
“One of the challenges in working with talent agencies is that actors and other artists that the agencies manage are used to getting paid up front,” says a VC who has been involved in digital media since the mid-1990s. “In some cases, they are unwilling to consider equity as a form of compensation. They often insist on guarantees that are paid in advance of any work that is performed.”
Even if a VC can convince a celebrity to take options instead of payment up front, just having a celebrity associated with a website is no guarantee of success.
To date, no celebrity-endorsed website has been a smashing success. For example, comedian Will Ferrell’s FunnyorDie.com, which reportedly has raised $15 million in backing from
Not even household names, such as Oprah Winfrey and Martha Stewart, are close to cracking Alexa’s Top 500 list: Oprah.com ranks 4,179, while MarthaStewart.com ranks 6,861.
“It’s difficult to sustain celebrity,” says the veteran digital media investor. “Will Ferrell is hot at the moment, because he has a new movie coming out, but where is he going to be in two or three years? VC ventures take time to grow. It’s no accident that VC funds last for 10 years.”
William Morris, a worldwide talent and literary agency, apparently wasn’t jaded by its first attempt at getting its clients into the Net business. In 2000, the agency introduced Whoopi Goldberg to Flooz.com, a website that offered unique Internet currency that users could accumulate and cash to make online purchases.
After the actress/comedian met with the CEO of Flooz, she signed a contract within a week and “was shooting print ads—becoming in the process the third-largest shareholder in the company,” the New York Times reported in June 2000.
Guess Goldberg should have demanded cash up front.