Hedge funds, venture capitalists and private equity firms should be able to funnel more investments to local tech startups and early-stage companies, thanks in part to a recent ruling by the Securities and Exchange Commission to lift an advertising ban on fundraising solicitations.
The 4-1 decision this month will result in fundraising efforts marketed to a much larger audience.
Asset managers, for the past 80 years or so, relied on word of mouth, referrals, and small network connections to spread the word.
“This ruling will increase the awareness of technical innovations in Orange County and consequently support the flow of additional capital into new high technology businesses” said Matthew Jenusaitis, chief executive of Irvine-based Octane, which connects people and ideas with resources and capital. “The end result will be more new companies, more jobs and a stronger economy.”
Expect a barrage of marketing campaigns to hit the business press, TV, Twitter, Facebook and other online sites.
Crowdfunding and investor site Wefunder estimates that only 3% of the nation’s 8 million accredited investors are active in tech startups.
The ruling opens up advertising, but asset managers will still be able to raise money only from sophisticated, accredited investors who earn more than $200,000 in annual income or have net worth of $1 million, not including the value of their homes.
The new rule will take effect after a 60-day public comment period after its publication in the Federal Register.
China Games
Blizzard Entertainment Inc. signed a three-year licensing agreement with a unit of NetEase Inc. to bring its new card game to mainland China, an important distribution region for the Irvine-based video game maker.
It’s the first such offering for Blizzard, which has extended its brand and popular online games into comic books, art exhibits, toys and other products. The free-to-play game, dubbed “Hearthstone: Heroes of Warcraft,” is made for Windows, Macs and iPads—another new outlet for the company.
Blizzard has partnered with the Chinese-based Internet company since 2008 to distribute its World of Warcraft and StarCraft II titles and battle.net gaming platform to Chinese gamers.
China is a critical region for Blizzard, which has had a longtime strategy of releasing games there several months after domestic launches. Its latest game, “StarCraft II: Heart of the Swarm,” was released there last week, about four months after it debuted in the U.S. and Europe.
The game boosted first-quarter sales and operating income, despite another big drop in online subscriptions.
Blizzard ended the first quarter with about 8.3 million World of Warcraft subscribers, down 1.3 million from the fourth quarter. The company cited the drop-off primarily in Asia but didn’t elaborate.
World of Warcraft remains the top multiplayer online role-playing game but has seen some 2 million gamers drop subscriptions in the past two years.
Big quarterly drops typically signify that players have sifted through the game’s content.
Blizzard’s customers pay about $40 for World of Warcraft and $15 a month to play it online.
Blizzard, a unit of Santa Monica-based Activision Blizzard Inc., posted revenue of $330 million in the first quarter, up 31% from a year earlier.
The company reported an operating profit of $135 million, up 52% from a year ago.
Chris Casacchia can be reached at casacchia@ocbj.com.
