Young Companies Seek Funding, Glimpse Future of the Internet
PR Newswire - September 18, 1998 12:07
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$160 Million Search for Capital at Mid-Atlantic Venture Forum
MCLEAN, Va., Sept. 18 /PRNewswire/ -- Fifty-five of the region's most promising early-stage information technology and telecommunications companies came to this week's Mid-Atlantic Venture Forum seeking a total of $160 million from venture investors and got the bonus of a view into the future of the Internet.
The first annual Mid-Atlantic Venture Forum, held September 15-16 at the Ritz Carlton Tyson's Corner Hotel, attracted a sellout crowd of 580 local entrepreneurs and venture capitalists from across the country. Featuring company presentations and product demonstrations, the startup companies were seeking on average approximately $3 million each for what would be their first or second rounds of venture financing.
Venture capitalists typically invest in promising young companies in exchange for a portion of equity. According to PriceWaterhouseCoopers, the rate of investment in venture-backed companies in the Mid-Atlantic region is rising twice as fast as it is in northern California and Massachusetts, the nation's technology epicenters. In fact, the Mid-Atlantic surpassed Massachusetts by $200 million in venture investment during the first quarter of 1998.
Since 1990, initial public offerings by venture backed companies in the Mid-Atlantic have totaled more than $6 billion.
The Mid-Atlantic Venture Forum, presented by the Mid-Atlantic Venture Association, represents the first such event in the region to focus solely on early-stage information technology and telecommunications companies. Fueled by compelling business plans and the possibility of venture investment, these firms hope to achieve the successes enjoyed by such locally based industry heavyweights as America Online, UUNet (now part of Worldcom) or Visual Networks.
"The Net Millennium," a keynote panel presentation moderated by Stewart Alsop, Fortune columnist and partner with venture investment firm New Enterprise Associates, produced varying optimistic views of the future of the Internet in the new millennium.
"The Internet will drive everything we do in the 21st century," stated Gabe Battista, CEO of Network Solutions, Inc. He predicted that the Internet's greatest effect will be felt among retailers that, through electronics, will be able to understand individuals' buying characteristics in the same way that small town shopkeepers did in the past. "Success will depend on lower transaction costs and effortless convenience," he noted.
John Gerdelman, president of networkMCI Services, forecast that the greatest growth of Internet technologies would occur in products and services for the internal networks known as Intranets. "Companies will be able to save hundreds of millions of dollars on the cost of communications," he said.
Christine Varney, former member of the Federal Trade Commission and White House advisor who is now a partner with the law firm Hogan & Hartson, predicted that the Internet will be affected by regulatory activity of Congress and future judicial findings. She named trust and authenticity as issues that may inhibit public use of the Internet for commercial transactions. "Consumers now will use the Internet for research, then go offline for transactions," she said.
The future of the Internet holds more than just development of the World Wide Web, according to Michael J. Saylor, president of MicroStrategy, Inc. "The Internet connects with much more than just web sites on personal computers, and includes voice mail, paging, video and other devices." He said the successful Internet brand marketers would need to provide levels of convenience and ease of use associated with consumer products such as soft drinks and chewing gum.
Gary H. Arlen, president of market research firm Arlen Communications, said the future of the Internet depends on such issues as the increase of commonly available bandwidth (the capacity of phone lines to transmit data to homes) and in solving the "cultural" problems that arise when dissimilar companies or industries collaborate on products or services.
The tremendous success of the Mid-Atlantic Venture Forum underscores the culture of entrepreneurism in the Mid-Atlantic region. This growth is documented in a recently released PriceWaterhouseCoopers study conducted for the Potomac KnowledgeWay -- a leadership organization that helps prepare and educate the Greater Washington Region (GWR) to be a global leader in advanced telecommunications, content, and Internet-related industries.
The study, "Toward a New Economy," ( knowledgeway.org ), substantiates the growth in the Mid-Atlantic's InfoComm cluster. The InfoComm cluster -- facilitated by the overwhelming adoption of the Internet and complemented by the region's core competencies in communications, content, and systems integration -- is fueling the expansion of the New Economy in the GWR.
According to the study:
-- The region has 328,000 employees working in InfoComm companies,
compared to the 340,000 working in government.
-- One in every seven workers in the region is employed in the InfoComm
industry.
-- The InfoComm employment base is larger than the construction, wholesale
trade, transportation and manufacturing industries combined.
The dominant presence of Internet-related companies in the region is the foundation on which the InfoComm cluster is built, and largely responsible for the influx of venture capital and events like the Mid-Atlantic Venture Forum in the region. For example:
-- Regional companies supply nearly 50 percent of the Internet backbone.
-- Almost 50 percent of on-line service subscribers are serviced from GWR
companies.
"Toward a New Economy" outlines why the venture capital community,
comprising venture capitalists and angel investors, is attracted to the Mid-
Atlantic region. According to the study, venture investment in the region
totaled $390 million in 1997. Additionally, more than two-thirds of the
region's venture investments for the first three months of 1998 went to
InfoComm companies.
The Mid-Atlantic Venture Association fosters the development and growth of
businesses by creating a forum for interaction of the providers of private
equity, their service providers, and successful entrepreneurs in Washington,
D.C., Maryland and Virginia, and by working with the Greater Philadelphia area
to promote entrepreneurship throughout the Mid-Atlantic region.
SOURCE Mid-Atlantic Venture Association
/CONTACT: Dave Kirby of MAVA, 410-539-6888, davidkirby@aol.com, or Chris
Carleton, of CHEN PR, 781-466-8282, ccarleton@chenpr.com/ |
