PICK: USIX @ 28
Application Service Provider .. the concept of renting
'software' for a fixed monthly fee with internet delivery ..
This is projected to be a 'huge' industry .. the barriers to
entry appear low so first mover status is important ..
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January 07, 1999 09:23
USinternetworking Completes $62 Million Phase Two Equity Financing; Total Equity Raised in 1998 Exceeds $95 Million
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ANNAPOLIS, Md.--(BUSINESS WIRE)--Jan. 7, 1999--USinternetworking, Inc. (USi), the first and leading Application Service Provider (ASP), today announced it received $62 million in its second round of financing, which closed late December. The round, led by Grotech Capital Group and J.H. Whitney & Co., will very likely rank as one of the top two or three largest single rounds of private-equity funding raised in 1998 once the year's final figures have been reported, according to Technologic Partners. USi will use the Phase Two financing to advance its business plan, which focuses on outsourcing best-of-breed business applications over the Internet to mid-market companies for a flat monthly fee. According to Forrester Research, Inc., in Cambridge, MA, the market for branded application outsourcing services is expected to grow to over $21 billion by 2001.
The Phase Two Series B Round includes new investors Siebel Systems, Inc. (NASDAQ:SEBL), J.H. Whitney & Co., and Waller-Sutton Media Partners, L.P. Also participating are Grotech Capital Group, Blue Chip Venture Company, Massey Burch Capital Corp., U S WEST (NYSE: USW), and Venrock Associates, all of whom were investors in USi's Phase One Equity Financing in the second quarter of 1998. In addition, Michael Brooks of J.H. Whitney and an executive from Siebel Systems will join the USi Board of Directors.
"USi was the first to market in the exploding ASP space, and this round of financing shows the confidence investors have in our innovative approach to delivering enterprise applications to the mid-market," said Christopher R. McCleary, Chairman and Chief Executive Officer of USi. "We weighed various offers and feel we have chosen the venture capital partners who are the best fit as key players in our success. Their backing will fuel USi as we expand on our market leadership."
"USi is central to our investment strategy for the emerging applications outsourcing industry," said Frank A. Adams, President and CEO of Grotech Capital Group, based in Timonium, MD. "Chris McCleary and his team have built their entire business around delivering this service, and we're proud to work with the industry's first and only pure-play vendor in the field. I am particularly pleased that the pioneer is a Maryland company."
"The total of the combined two rounds of financing is an amount that few other companies succeeded in raising in 1998," said Craig Canine of Technologic Partners, a New York City-based publishing and research-services firm that tracks business and financial information affecting high-technology industries. "Clearly, the new ASP model has some high-stakes momentum behind it and USi, in pioneering this space, has attracted the confidence of some important venture and corporate investors. We will be tracking the company's progress closely."
The $33 million previously raised in USi's Phase One financing was the 10th largest venture round recorded in the first three quarters of 1998, according to Technologic Partners. USi used its Phase One financing to launch its business, which included:
-- building a global network of Enterprise Data Centers;
-- hiring 250 technology professionals;
-- acquiring two consulting and implementation companies with an additional 100 employees.
Founded by McCleary, former CEO of DIGEX (NASDAQ:DIGX), in January 1998, USi has contracted with customers including Legg Mason of Baltimore, MD, Sagent Technologies of Mountain View, CA, and Sunburst Hospitality Corp. of Silver Spring, MD.
About USinternetworking, Inc.
Headquartered in Annapolis, MD, USi is the world's first and leading Internet Managed Application Provider(SM) (iMAP), serving businesses' demands for improvements in the management of their information technology operations. USi cost-effectively delivers leading packaged application software seamlessly integrated with specialized Internet communications. The iMAP Portfolio includes the USi Enterprise Relationship Management Solutions Suite powered by Siebel (NASDAQ:SEBL), the USi Human Resources Solutions Suite powered by PeopleSoft (NASDAQ: PSFT), the USi Financial Management Solutions Suite powered by PeopleSoft, the USi Electronic Commerce Solutions Suite powered by Microsoft (NASDAQ:MSFT) and BroadVision(R) (NASDAQ: BVSN), the USi Enterprise Data Warehousing Solutions Suite powered by Sagent, and USi Web Site Management Solutions. USi maintains total responsibility for ensuring every aspect of the iMAP service is working at an optimum level for customers. The USi Global Network, a Cisco-Powered Network (NASDAQ:CSCO), was engineered specifically to provide the highest performance delivery for web-based content and information to users worldwide. Through an integration of the computing platform and the routed infrastructure, the USi Global Network is the most advanced in the world and connects the Internet backbones of North America, Europe and Asia. USiView(SM), a specialized network management system, monitors and proactively manages the entire network end-to-end. For more information, USi's website can be found at www.usi.net.
Internet Managed Application Provider (iMAP) and USiView are service marks of USinternetworking, Inc. All other trademarks are the property of their respective owners
CONTACT: USinternetworking, Inc.
Joanne Hellebrand Rasch, 410/897-4532
joanne.rasch@usi.net
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