|Volume 1: No. 37|
Bay Area venture funding was down this last quarter, but several institutional sources are again making long-term funds available to venture capitalists. Software companies getting funding (and hence hiring) are Cross Access (Santa Clara, CA), for database software; Information Work Bench (Mountain View), automating customer service; McAfee Associates (Santa Clara), anti-virus software; Parcplace Systems (Mountain View), object-oriented programming tools; Pillar Corp. (Foster City), corporate planning; Quickturn Systems (Mountain View), CAE; Remedy Corp. (Sunnyvale), network management; Versant Object Technology (Menlo Park), object-oriented software; Vertex Design Systems (San Francisco), CAD for architects; and Vividus (Palo Alto), multimedia software. [Steve Kaufman, SJM, 12/2.] McAfee Associates really stands out, with $10M as an initial venture-capital infusion. Anti-virus software must be a hot market.
When Kamran Elahian needed money for Momenta (Mountain View, CA), he and co-principals raised their first $1M without a business plan. (The suppliers had previously dealt with Kamran's CAE Systems and his international Cirrus Logic.) That stake from American investors soon grew to $5M. Momenta needed both large amounts of funding and connections in many countries, so Kamran raised the next $7M from the U.S., Singapore, and Taiwan. Another $18M required inputs from Japan, Europe, and Kuwait. His most recent $10M tapped all of the above plus Indonesia, Korea, and the Middle East. An advantage of dealing with so many people is that there are deep pockets that could still be tapped as necessary. However, Kamran was turned down by five investors for every one who chipped in. He had to make 52 trips to Japan, 23 to Europe, 16 to Taiwan, 10 to Singapore, and 6 or 7 to Korea. [Mary Eisenhart, MicroTimes, 11/25.]
Stephen Bingham, president of Alias Research Inc. (Toronto, Canada), says "There's a curious advantage about doing software in Canada. From day one, you realize that there ain't no market here. That's a terrific advantage." More than 25% of Canada's industrial R&D is software-related, but technology is "not even on the government agenda." Stephen couldn't find more than one or two bankers in the country who understand technology, so he went to Boston for his second round of financing. [Douglas Powell, Computing Research News, 11/91.] (U.S. academics assume there is a market here, and may put years into a project without exploring industrial interest. If no customers seek them out, they expect government support.)
If you need $100K or more, an investment broker may be the way to go. The following are some electronic matchmaking services, with the fees they charge companies looking for cash. [Bruce G. Posner, Inc., 10/91.]
Georgia Capital Network, (404) 894-3575, $75/year. Kentucky Investment Capital Network, (502) 564-4252, free. Mid-Atlantic Investment Network, (301) 405-2144, $35/year. Northwest Capital Network, (503) 294-0643, $100/year. Pacific Venture Capital Network, (714) 856-8366, $200/6 mo. Private Investor Network (SC), (803) 648-6851, $100/year. Tennessee Venture Capital Network, (615) 898-2745, $100/6 mo. Texas Capital Network, (512) 794-9398, $100/6 months. Venture Capital Network at MIT, (617) 253-7163, $250/year. Venture Capital Network of Minnesota, (612) 223-8663, $100/6 mo. Washington Investment Network (WA), (206) 464-6282, free.