Securing Financing - @ventures

@VENTURES

One of the first Internet-only based venture capital firms, @Ventures was founded by holding company CMGI in 1995. CMGI had made its first investment in an Internet-based firm the previous year with its $900,000 round of funding for Book Link Technologies, one of the first commercial World Wide Web browsers, which also allowed users to search for and purchase textbooks. Book Link was later sold to America Online (AOL) for $30 million in stock, and it was with the proceeds from the Book Link sale that CMGI formed @Ventures. Initially, @Ventures provided funding to companies building Web communities, those providing Web tools for online advertisers and direct marketers, and those offering e-commerce, infrastructure, and content-related services.

In 1995, @Ventures invested in Lycos, Inc., a fledgling Internet hub founded that year. Less than a year later, Lycos conducted its IPO; in October 2000, it merged with Spain's Terra Networks to form Terra Lycos. @Ventures also provided financing to Web-based community developer GeoCities Inc. in January of 1996. GeoCities went on to complete its IPO in 1998 and was acquired by Yahoo! Inc. the following year. Early stage financing was also provided to Silk-net Software, Inc., a customer relationship management (CRM) system developer that merged with Kana Communications in February 2000 and Half.com, a fixed-price online marketplace operator acquired by eBay, in July of that year. CMGI secured its own investments from Intel Corp. and Microsoft, which allowed the holding company to continue pumping funds into @Ventures. Other Internet startups financed by @Ventures included CarParts Technologies, Critical Path, ONElist (later named eGroups), Ikonic, KOZ.com, MotherNature.com, PlanetAll, Reel.com, Softway Systems, Speech Machines, Chemdex (later named Ventro Corp.), and Vicinity.

The aggressive growth strategy of @Ventures ground to a halt in the second half of 2000 when holding company CMGI began to flounder. In an effort to improve its performance, CMGI restructured its 17 operating companies into six different business units: search and portals, infrastructure and enabling technologies, Internet professional services, e-business and fulfillment, interactive marketing, and venture capital. CMGI also announced that @Ventures would limit new investments in 2001.

Standard initial investments by @Ventures range from $2 million to $10 million, and the firm most often acts as the lead investor when it participates in a round of financing. Typically, @Ventures takes a seat on the board of each firm to which it provides financing, and it also offers incubation services to businesses seeking such an arrangement.