Foundation of Stone by Rita Freeman
Despite the technology bust that has brought down countless
Internet companies during the past year and a half, Philosopher's
Stone Ventures of Redondo Beach continues to invest millions
of dollars in the battered market sector. The nearly 2-year-old
firm is an incubator for technology companies providing
seed money, management services and software. In these hard
economic times, choosing the right investment is especially
tricky said CEO S. Ramesh.
"The thing that we focus on when we invest is whether
the companies have a real business, whether they have a
reasonable chance of making a profit and how they can suit
their customers," Ramesh said. "Those companies
that meet those criteria are usually the best situated."
Ramesh, who also serves as the firm's chief software architect,
started the enterprise in February 2000 with chief financial
officer Jenny Sakhrani. The company helps create high-tech
firms that work in such area as software development, Internet
infrastructure and Internet security.
Philosopher's Stone has helped create eight companies.
The incubator serves as the parent of two of those start-ups:
Razorwire Security and RippleImpact. Razorwire, a provider of
network and software security systems, was launched in February
in Huntington Beach. RippleImpact which develops software
applications for various service industries, was launched
in May and shares offices with Philosopher's Stone.
Philosopher's Stone Ventures is managing RippleImpact until
it assembles a separate management team for the start-up,
Ramesh said. But he wants to wait until the economy improves
before giving the firm its own team. "We are trying
to set aggressive goals for the company to meet," Ramesh
said. "It is hard for us to judge because if the team
fails, then we won't know if it was the economy or just
them. In good economy, if the company fails then we know
it could have been them."
Another company that Philosopher's Stone Ventures helped
launch more than a year ago is ProcessClaims, a Redondo
Beach firm that processes computerized estimates for insurance
companies. "They helped us with not only financial
resources, but with other investors and other technology
people," said David Ferrara, ProcessClaims co-founder
and executive vice president.
Philosopher's Stone Ventures invests $250,000 to $2 million
on each venture.
Sakhrani said the incubator projects about a 40 percent
overall return on its investments. She did not give estimated
revenues for 2001.
"We look to between three to five years for them (the
start-ups) to be either acquired by another company or merge
with another company," Sakhrani said. "At that
point we're looking at those returns."
However, since the Sept. 11 attacks in New York and Washington,
D.C., some of the companies they invested in took a direct
hit while some of them saw their fortunes rise. Razorwire
Security became profitable in October partly due to the
terrorist attacks.
Razorwire Security provides vulnerability assessments and
security consulting, and establishes secure networks for
companies trying to build dotcom applications.
Mark Monaghan, an Irvine-based computer consultant and
former CEO of the Torrance-based Software Council of Southern
California, said that a company like Razorwire Security is
providing a service that is now in great demand. "It
is protecting networks from intrusion, protecting from a
hacker getting unauthorized access to networks," Monaghan
said. "In this economic climate where cyber-terrorism
is a real threat, that expertise really helps address fears."
ProcessClaims also has grown despite the sinking economy,
Ferrara said. "We specialize in auto claims. People
are still getting into accidents and filing claims, and
that will not stop despite a falling economy," Ferrara
said.
However, RippleImpact's business has not fared so well,
Ramesh said. The startup has lost potential clients while
existing customers are delaying projects.
Despite the ups and downs of the current economic slowdown.
Philosopher's Stone Ventures continues to look for new investments.
"Anytime we invest, there's always a risk some of our
investments will go under," Ramesh said. "That's
part of the venture business and that's us."
South Bay Business Watch
Name: Philosopher's Stone Ventures
Location: Redondo Beach
Founded: February 2000
Owners: CEO S. RameshCQ and CFO Jenny Sakhrani
Revenues: Projected 40 percent return on all investments
Services: Investment firm and incubator for technology
companies
Customers: Eight companies and 40.50 clients for
consulting firms
Phone: 310-316-3100
Address: 1874 S. Pacific Coast Highway, #722
Web site: www.philstone.com
Back
