Napster (NSDQ: NAPS) wasn't enough. Big box retailer Best Buy, which bought the music service in September for $121 million, is launching a new media digital fund to invest in areas including music, video, games and personal media management.
The fund, with Best Buy as the sole limited partner, will be managed by Velocity Interactive Group as part of a strategic partnership. Actually, it will be managed by Fuse Capitalthe new name for Velocity; turns out there were too many companies in the financial sector using Velocity. Fuse managing partner Ross Levinsohn was a member of the Napster board and will be one of two Fuse partners on the board of the Best Buy fund. The retailer holds three seats; after all, as Levinsohn said when we spoke, this is Best Buy's fund. It's being managed on the retailer's side by Mike Vitelli, EVP-customer operating groups. (The full release is after the jump.)
The Best Buy fund marks for Fuse an expanded focus into strategic asset management, in addition to managing its own $1.4 billion fund. The partnership was in the works before Jonathan Miller left to join *News Corp* and entails more than managing funds. Fuse is also working with Best Buy on digital media strategy and on making use of its current assets. That's one way to bridge the gap between today's desultory fundraising times and finding the support to start a new fund of its own.
Look for Pulse and Best Buy to try to take advantage of the current depressed values for businesses that complement what the retailer already does in its stores or give it more of an online sales impact.
Los Angeles May 28, 2009 Velocity Interactive Group, a leading venture capital firm in digital media and communications with more than $1.4 billion under management, today announced a strategic partnership with Best Buy that includes the launch of a new digital media fund. With Best Buy as the sole limited partner, the fund will seek to leverage the scale and scope of the multinational consumer electronics retailer to help drive growth and enhance performance of the portfolio companies. The fund will focus on strategic digital media investments as a complement to Best Buy's current digital media and emerging technology investment activity. Separately, Velocity is also announcing that it will change its name to Fuse Capital.
The new fund is designed to focus on investments in digital media companies that will help create the next generation of leaders in categories such as music, video, games, and personal media management, as well as other areas that leverage the touch points and reach of Best Buy. As part of the relationship, Fuse will work closely with Best Buy on digital media strategies and support the company's existing digital assets.
The Best Buy partnership marks the launch of Fuse's expansion into strategic equity management. The focus of the strategic equity management initiative is to become partners with global corporations that seek to augment their digital strategic initiatives with the knowledge and expertise of an investment firm dedicated to digital media and communications. Fuse's portfolio will benefit from the partnerships with these global corporations which enable them to jump-start and launch with critical mass, greatly improving the likelihood of success. Fuse's decision to change its name from Velocity to Fuse Capital reflects this strategic focus.
"This strategic initiative is a natural extension and evolution of our capabilities, given our firm's extensive strategic, investment and operational experience in both emerging companies and large corporations across digital media," said Ross Levinsohn, managing partner, Fuse. "As for our first partner, Best Buy is the preeminent retail leader in technology and entertainment products and services, and is exceedingly well positioned to take advantage of the massive shifts occurring across the media and commerce landscapes."
"This partnership is another example of how we strive to be at the forefront of consumers' entertainment and digital lives," said Mike Vitelli, executive vice president, customer operating groups, Best Buy. "We are pleased to be associated with Fuse and look forward to working with them to lead the market transformation in digital media."
About Fuse Capital
Fuse Capital (formerly Velocity Interactive Group) is a leading investment and strategic equity management firm that focuses on digital media and communications. The firm brings a unique approach to investing by bringing not just financial capital, but also human capital to its investment companies. Fuse has a global presence with offices in Palo Alto, Los Angeles, India and China. For more information, please visit http://www.fusecapital.com.
By Staci D. Kramer