COVERING THE I l G W SOUTH'S I l G W EC0N0M1

www.digitalsouth.cani A WARFIELD MEDIA PUBLICATION

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ATLANTA VCS STEP EMING AND MICHAEL HENOS — BRING US YOUR DEALS

man COVERING THE I l G W SOUTH'S I l G W ECONOMY

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"The first two rounds of financing we raised were unbelievably easy - it must have been a fluke." RICHARD HDLCOMB, CEO, HAHTSoftware

j) (pj\ "Keeping real focused on a limited number of things ... have served us very well so far." CHARLES BREWER, CEO, MindSpring i m

New Enterprise J Associates: How to turn /¿ I firms $3.9 million into $320 million poured $1.3 billion into in three years. 13 Southern states last year.

SUMMER 1117 5 digitalsouth digitalsouth SUMMER by martin donsky 1 97 www.digitalsouth.cnn

PUBLISHED BY WARFIELO MEDIA CHAIRMAN/PUBLISHER editor's notebook Edwin Warfield IV [email protected]

EDITOR-IN-CHIEF be made even more compact to save Martin Donsky [email protected] newsprint.

DIRECTOR OF ADVERTISING We're committed to devoting all John D'Onofrio [email protected] of our energies to the technology

ART OIHECTOR companies, venture capitalists, Patricia Hall [email protected] bankers and industry people who are driving the digital economy DESIGN CONSULTANTS what we're Martin Venezky throughout our 13-state region. Greg Paul all ABOUT Many of the entrepreneurs we will write about already are building INTERACTIVE MEDIA Glenn Ferber [email protected] WE STARTED digitalsouth to chronicle successful companies; others are David Sotnick [email protected] the growth of the technology eco- just starting out; still others have tried and failed. ASSOCIATE EDITORS nomy in this region, for better or Kris McDowell [email protected] worse. We're here to inform, edu- There are dozens of success Wendy Maxey [email protected] cate, challenge, entertain and, from stories across the region. Yet for

CONTRIBUTING EDITOR time to time, even provoke you. You every SAS Institute in Raleigh, Danialle Weaver may not agree with everything we MindSpring Enterprises in Atlanta, publish, but if we do our jobs right Digex in Beltsville, Md., or Citrix CONTRIBUTING WRITERS M.M. Cloutier, David Corder, Dale Gibson, you'll come back each issue. Systems in Fort Lauderdale, there Sheila Velazquez, Julie Waresh, Our publisher's roots in this busi- are dozens of tech wannabees that Richard Westlund ness go back more than 100 years. won't ever amount to much. (Case

CONTRIBUTING PHOTOGRAPHERS The Warfield family is one of the in point: The Panda Project is a Louis Cahill, Michael Northrup, most well-known in the Mid- Boca Raton, Fla., one-time high- Karen Tarn Atlantic. The first Edwin Warfield flyer that has burned through $50

CHIEF FINANCIAL OFFICER was a banker, land surveyor, gover- million trying unsuccessfully to Elisabeth Corson [email protected] nor and legal publisher. My boss, reinvent the PC. The good news is that VCs steered clear of the com- CIRCULATION Edwin Warfield IV was the driving Laura Hauss [email protected] force behind Warfield's magazine in pany; the bad news is that the Jose Garcia [email protected] Baltimore in the 1980s. He's an investing public didn't.)

ADVERTISING entrepreneur who caught the digi- My roots as a journalist go back Ryan Rose [email protected] tal vision a few years back and has to my high school days in the mid- Ted Harter [email protected] committed his time, energy and 1960s. I have spent 16 of the past Tiffnie Robertson [email protected] capital to creating a new media 24 years as a reporter and editor in Richard Rosen [email protected] company. North Carolina and Florida. My WARFIELD MEDIA CO. We launched this publication Florida years included five as editor 222 CLEMATIS STREET. SUITE 2 0 0 because the digital playing field of weekly business journals in WEST PALM BEACH. FLORIDA 33401 expanded greatly in the mid-1990s. Tampa Bay and South Florida. My 561 804 9505 There's a lot going on that has yet North Carolina years included 561 804 9050 fax to show up on the Silicon Valley three as senior editor of Business REVIEW.NET radar screen. As our cover story North Carolina, writing mostly WWW.tBviaw.aet — Review.Net Florida package points out, this region is a about banking and finance. ltlp://georgia.teview.net — Review.Net Georgia hotbed of technology and entrepre- http://carolinas.teview.aet —Review.Net Carolinas I welcome you to digitalsouth. I neurial efforts. know you'll be back each issue, and PUBLIC RELATIONS But there are no publications I expect to hear from you. Alexander Communications Inc. that focus on the intersection of STRATEGIC PARTNERS capital and technology in the South. Editor-in-chief Martin Donsky can Digex, Individual Inc., BackWeb Indeed, daily newspaper editors are Technologies, Quote.Com, Time Warner be reached at [email protected] Communications, NetDelivery still debating how stock listings can

SUMMER ins? \\ digitalsouth digitalsouth coverstory technology startups are SPROUTING through- out the South. VCs are staking their claims, and the money is flowing. by danialle weaver and martin donsky critical mass LAST YEAR. Stephen Fleming and investors since mid-1995. North Carolina, South Michael Henos reviewed more than These are but three Carolina, Tennessee and 400 technology business plans sub- pieces of anecdotal evidence West Virginia. Include mitted by entrepreneurs in Georgia that have prompted many Arkansas, Kentucky, Loui- and the Southeast. The two men, observers to conclude that siana, Maryland and partners in Alliance Technology the South, once the nation's Virginia — states tradition- Ventures, an Atlanta venture capital economic backwater, has ally considered part of the firm, did only four deals, but each over the past few years South — and the region's was good enough to include syndi- evolved into a hotbed of Charles Moseley: stature grows even more. cate partners from Silicon Valley and entrepreneurial activity, Bets on past In fact, last year, the South Boston's Route 128. much of it involving infor- winners would rank second, above In North Carolina at least eight mation technology, tele- New England, in VC home-grown venture capital firms communications and new media. dollars. are soliciting money from investors Surveys confirm these trends. For to start new funds. Some of these the past two years, according to the The 13 statesiin the firms already have closed their first annual Price Waterhouse national region drew $1.3 billion in venture funds and have begun raising more survey of venture capital invest- capital investment last year from money. ments, the South has ranked third in 150 different funds, according to our And in Florida, two new media VC investments, just under New analysis of the Price Waterhouse startups — America's Health Network England. numbers. in Orlando and SportsLineUSA in Price Waterhouse included eight Nobody is suggesting that this Fort Lauderdale — have drawn more states in its regional analysis: Ala- region will replace Silicon Valley, than $100 million from venture bama, Florida, Georgia, Mississippi, which still gets the lion's share of VC

SUMMER i a ) ; 33 digitalsouth cover story

non-traditional geographic areas," Southern Deal Flow - 1996 says Kurt Waiden, national director SI.33 BILLION invested in com- of the Price Waterhouse survey. panies based in 13 Southern "There's every indication that this states "they say that on trend will continue into 1997," says 150 DIFFERENT venture capital James D. Atwell, director of Cooper's the INTERNET no one funds Money Tree Report. FLORIDA was leading recipient, knows you're In fact, it already has. In the first with $388.7 million quarter of 1997, five venture firms a dog. Well, no one VIRGINIA ranked second, with invested in Alabama companies, $222.8 million knows you're according to Price Waterhouse. One NEARLY 200 COMPANIES based in 13 a SOUTHERNER, either!" was from Alabama, one was from Southern states received Chicago, one was from Virginia and start-up or additional round dollars — 25 percent of the approxi- two were from Boston. And firms in financing mately $10 billion invested last year, North Carolina, Georgia and Flo- ABOUT 85 PERCENT of the deals according to the PW survey and rida, too, saw most of their first- were technology, communica- Coopers & Lybrand's annual Money quarter VC money come from out- tions or health care-related. Tree Report. Silicon Valley's technol- side the state. LEADING CATEGORIES were com- ogy culture and lifestyle — spawned puter hardware, software, by 40 years of technological innova- some of t h e money telecommunications and tion and still growing — is unlikely is coming from firms that tradition- network equipment to be duplicated in any other part of ally invest in the Southeast and Mid- MOST ACTIVE INVESTORS included this country, despite the hopes of Atlantic. Some is coming from home- Edison Venture Fund, Cor- Chamber of Commerce types grown VCs that have raised their dova Capital Partners, TL through the South who, regardless of first $10 million or $15 million. But Ventures, NEPA Venture location, have begun calling their capital requirements can overwhelm Fund, Intersouth Partners, markets "Silicon Beach," "Silicon the resources of regional VCs, most New Enterprise Associates, Bay," or "Silicon anything." of which are relatively small. Almost Massey Burch and But venture capitalists and others by definition, that means Southern OneLiberty Ventures say the South is reaching critical companies must find outside Source: Price Waterhou** National Venture Caprtal Survey mass. It has taken 20 or more years, investors. It is increasingly common, but the ingredients needed to seed in fact, for a deal to involve a syndi- and start a technology business — cate of VC investors from within the money, ideas, infrastructure and region supported by larger, national the deal fl0W aiso management — are increasingly VC firms based in Silicon Valley, shows that many of the high-profile available in this region. New England or New York. venture firms based in Silicon Valley Look at the list of VC deals in the and New England are taking a closer our analysis «r region last year and you'll see a mix look at deals in the South and work- last year's investing patterns bodes of Southern-based venture capital- ing in conjunction with regional VCs. well for the South and its growing ists and others. Lawrenceville, N.J.- This includes VCs such as Kleiner, digital economy. based Edison Venture Fund was the Perkins, which kept Fort Lauder- Last year, for example, about 60 busiest, with six deals, according to dale's SportsLine afloat in its early percent of all venture investments our analysis of the PW survey. Other days, Hummer-Winblad Ventures went to locales outside Silicon Valley leading investors included Atlanta's and Draper Fisher Associates. and New England, the country's Cordova Capital Partners, TL Ven- other traditional venture market. tures in Wayne, Pa., NEPA Venture n O dOUbt this new- And, barring unforeseen circum- Fund in Bethlehem, Pa., Intersouth found interest in the South reflects stances such as a contraction of cap- Partners in North Carolina's the fact that record amounts of ven- ital overall, geographical diversity in Research Triangle, Baltimore's New ture capital are being raised. In investing is likely to continue. Enterprise Associates, Massey short, there's simply more money out "As long as venture capitalists Burch's Southern Venture Fund in there looking for a home. continue to get good overall returns, Nashville and Boston's OneLiberty "Silicon Valley has evolved to the they will be more willing to invest in Ventures. point where there is too much capital

SUMMER i s s ; 35 digitalsouth cover story

"Silicon Valley has evolved to the ing the next decade, behind Nevada, point where there Arizona and Utah. The South also is too much capital has lower business costs, a generally favorable tax and regulatory climate chasing too few good deals," says chasing too few and warm weather, which "will con- Gene Riechers, a managing director good deals." tinue to attract people and busi- at Friedman, Billings, Ramsey & nesses," the study says. Co., an Arlington, Va., investment The South also is attracting more But there's far more at play here. banking firm. "The Southeast has investment dollars because its econ- "We are seeing much more inter- the opposite problem." omy is strong. A regional economic esting technology stuff than we did Indeed, some VCs on this coast forecast released in late May by in the '80s, and that's a function of have no interest in Silicon Valley. DRI/McGraw-Hill shows states in the maturing of the territory [and] "If the business plan is coming the South and the West will enjoy the infrastructure," says Charles from California, we're not inter- the strongest average gains in popu- Moseley, co-founder of Atlanta's ested," says Ross Martinson, a part- lation, employment and income of all Noro-Moseley partners, which has ner with the Edison Venture Fund, U.S. regions. The South's chief eco- $150 million under management. which has $160 million under man- nomic engine is Florida, which will agement and makes 80 percent of its experience the fourth-largest investments in the Mid-Atlantic. employment growth of any state dur-

$40 million is LIFE BLOOD for this startup

YOU HAPPEN to find yourself in Orlando touring and wellness. One of the network's major sources of Universal Studios Florida, you may wish to stop by a income comes from the sale of various health care certain sound stage. products on the show. There, if you listen carefully, you'll hear millions of America's Health Network made headlines in mid- dollars changing hands. May — after the most recent cash infusion — when That's because Universal Studios is home base for newspaper publisher and broadcaster A.H. Belo sold America's Health Network, a startup medical televi- its controlling interest in the network to Columbia/ sion network that attracted more venture capital than HCA Healthcare Corp. for an undisclosed price. Belo, any other company in the South in 1996 (excluding which publishes six newspapers, including the Dallas and secondary purchases), according to our Morning News, had acquired its stake in AHN when it analysis of the 1996 Price Waterhouse National bought The Providence Journal. Venture Capital Survey. Belo unloaded the property because it was said to be AHN raised $40 million in second-quarter 1996 from unwilling to provide the deep pockets required to fund Medical Innovation Partners, a Minneapolis venture the start-up network. capital firm. In the first quarter of this year, Medical Broadcasting & Cable, an industry trade publica- Innovation Partners pumped an additional $24 million tion, said Belo's investment in the network totaled into AHN about $45 million. Belo will retain a minority stake, Other initial investors included IVI Publishing, the however. electronic publishing arm of The Mayo Clinic, and The The purchase complements Columbia's existing Providence Journal. health care information initiatives, which include a The Journal launched AHN in March 1996 to pro- magazine and a Web site that received 4.5 million hits vide original programming on health and medical in the first quarter of 1997. Columbia will distribute issues round-the-clock. It is currently delivered via AHN's programming in its extensive network of U.S. cable television and direct satellite broadcast to about health care facilities. AHN said it would retain its edi- six million U.S. households in all 50 states. AHN's pro- torial and operational independence from Columbia, gramming includes several viewer call-in shows, such the nations' largest health care provider. s "Ask the Doctor," and news on medicine, nutrition — DANIALLE WEAVER a

SUMMM iss; 37 digitalsouth cover story

bears his name; these days, he's urge, established involved in another technology start- technology companies such as Harris up in Charlotte, Sonata Systems. Corp. in Melbourne, Fla., and Meanwhile, Bill Neal, former CEO of Scientific-Atlanta in Atlanta certain- Broadway & Seymour, recently ly have contributed to this matura- teamed up with two former Wall "The South has tion process. And don't discount the Street investment bankers to start a been planting and spinoffs from defense projects in venture capital fund in Charlotte fertilizing for quite places such as Huntsville, Ala. and called Piedmont Venture Partners. Florida's Space Coast. Such activity, relatively new to the some time. Now "The South has some very strong region, is commonplace in Silicon we're beginning to universities and some large corpo- Valley. rate research efforts," says Monro see the FRUITS of this Lanier, vice president of Hickory The Q U a l l L y of business growth." Venture Capital, a $90-million, VC plans coming across the desks of VCs firm based in Huntsville, Ala. also is improving. That's because the An increase in experienced man- region has acquired a heightened AH j o k i n g aside, agement talent also helps — people awareness of the need to school Fleming added: "A Web surfer who have started one company, younger entrepreneurs in building a doesn't care where you're located. He cashed out and started all over good business plan. Also, more edu- just cares that you have a fast server, again. "I think that's one of the cational institutions or entrepre- a high-bandwidth pipe to the Net things that we're seeing change neurial clubs are explaining the nuts and a site that's worth his time. Our around here," Moseley says. His firm and bolts of venture investing and lonely basement hacker can't com- has invested in several companies providing entrepreneurs with the pete with Intel on microprocessors ... precisely because it had dealt with opportunity to network with service but he can compete against the their managers before. "That makes providers such as lawyers, accoun- whole world with a new Java applet." it easier because you know each tants, investment bankers and The VC made one more point other well, and you're dealing with others. worth repeating here. "This is not a more experienced management." "The South has been planting and zero-sum game Silicon Valley doesn't "Managers who have been there fertilizing for quite some time," says need to lose in order for the South to and done that before are a hot com- Hickory Venture's Lanier. "Now win," Fleming told the gathering. modity — that's especially true of the we're beginning to see the fruits of "We believe we have some unique Southeast," adds Intersouth this growth." strengths, but our success won't take Partners general partner Mitch At least one other factor is at work. place in a vacuum. Just as the rising Mumm a. And you can thank Silicon Valley for tide floats all boats, we believe that Intersouth, based in Durham, that. the new digital economy will flourish NC, has $50 million under manage- When it comes to deciding where everywhere — not just in traditional ment and focuses on the Southeast to base a start-up, advances in net- high-tech strongholds." •• and Mid-Atlantic. working and communications tech- Witness Richard Holcomb in nologies — essentially the growth of Raleigh or Olin Broadway in the Internet — pretty much have Charlotte. Holcomb started and built leveled the playing field. Q+E Software before selling it to In a speech last February to Red Intersolv in 1994. Now he is founder Herring's Venture Market South in and CEO of HAHT software, a Atlanta, which drew nearly 500 VCs, Triangle software firm that has bankers and technology executives, drawn lots of national interest as Fleming made precisely that point. well as venture dollars; Broadway co- "As predicted for years in science fic- founded a software firm that still tion, the Internet explodes the tyran- ny of geography. They say that on the Internet no one knows you're a dog. Well, no one knows you're a Southerner, either!"

SUMMER i 9 s 7 39 digitalsouth ATV's Portfolio ALLIANCE TECHNOLOGY VENTURES has invested in nine com- panies since its formation in 1994. As we went to press, were pending for two of the companies. Here's a brief look: LIFE SCIENCES ATHEROGENICS, an Atlanta company that detects and treats coronary artery dis- ease. DISCOVERY THERAPEUTICS of Richmond, VA, which dev- elops new treatments for Parkinson's Disease and other disorders. NEOCRIN. an Irvine, CA, start-up that is developing a biohybrid pancreatic tis- sue transplant process as a cure for diabetes. RENALOGICS. an Atlanta firm that is developing new treatments for kidney disease. INFORMATION TECHNOLOGY RF MICRO DEVICES, of Greensboro, NC, which designs and develops sophisticated integrated circuits for wireless appli- cations (RF MICRO went pub- lic in early June). SYNCHROLOGIC, an Atlanta firm that builds client/ server middleware and development tools for the Internet and other net- works. SPORTSLINE USA of Fort Lauderdale (now, CBS SportsLine) an online sports news and informa- tion publisher (IPO pend- ing). VIDEO NETWORKS, an Atlanta firm that distributes video programming. CARE CENTRIC SOLUTIONS of Atlanta, which is develop- ing tablet-based client/serv- er solutions for home health care and other skilled-nursing applica- tions. digitalsouth coverstory

alliance tech partner STEPHEN FLEMING talks about venture money in the south new. kid

IN JUST THREE YEARS Alliance Technology Ventures has carved a niche for itself as a regional player in the venture capital industry. Based in Atlanta, Alliance now has $35 mil- lion under management and expects online sports information publisher to close on a second fund — this one that received a $100 million invest- about $80 million — early next year. ment from CBS this winter. As we Alliance (www.atv.com) specializes went to press, the company, renamed in life sciences and information tech- CBS SportsLine, was preparing for a nology deals and has invested in closely watched initial public offer- nine companies — eight of which are ing. Another Alliance deal, RF Micro based in the South. That's not sur- Devices, a Greensboro, N.C., com- prising. The firm looks first to pany, sold 3 million shares at $14 regional companies seeking venture each the first week of June. dollars. Corporate and institutional Alliance's investments include a investors in Alliance represent a piece of Fort Lauderdale-based Who's Who of the South's power SportsLine USA, the high-profile, structure. Those investors are Cox

SUMMED 1997 41 digitalsouth cover story

Communications, Georgia Power, BellSouth, UPS, NationsBank, Emory University and Georgia Tech. The fund's two general partners are Michael Henos, an experienced "The growth of venture capitalist who, prior to form- VENTURE INVESTMENT in ing Alliance, was a general partner with Aspen Ventures; and Stephen the South is going Fleming, who has an operations to continue. Save background in telecommunications, your Confederate working for companies such as AT&T, Bell Laboratories, Northern dollars, mama, the Telecom and LICOM, a venture- South is gonna rise backed start-up. Fleming, an Atlanta native and again!" Georgia Tech graduate who has Q. What's driving this infusion of become a spokesman of sorts for the technology investment dollars into regional VC industry, recently spoke the region? A. People, p e O p l e , peo- with digitalsouth about the move- ple. We've invested without a busi- ment of venture money into the A. I think it's the gI*OWtil ness plan before and will do it again South. of the Sunbelt in general. This is a in a heartbeat when we find the better place to live — weather, cost right entrepreneur. Q. We've heard entrepreneurs and of living. It's a better place to build After people comes (1) a large, political types complain that there's a companies — friendlier legislative fast-growing market, and (2) innova- lack of venture capital in the South. climate. It's a new frontier in many tive and proprietary technology. Get Yet we've heard others say that good respects. The growth of venture those three factors together, and we deals get funded, regardless of loca- investment in the South is going to can probably figure out a deal. tion. What are your thoughts? continue. Save your Confederate dol- lars, mama, the South is gonna rise Q. What disadvantages, if any, are A Not au g o o d deals again! faced by Southeast-based tech com- get funded, and geography is some- panies? To what degree does being in times the killer factor. But a grain of Q. Alliance Technology Ventures Silicon Valley help (or hurt?) a tech truth can be expanded to an entire was formed to pay special attention company? loaf of nonsense. No, there isn't to opportunities in the Southeast and enough venture capital in the South. Georgia. Are you finding good A. It's a lot harder to hire CEOs. That just means entrepreneurs need enough deals? Usually, you want someone who's to compete harder for it. They com- been around the block before. By and pete by tightening up their deals and A. Yes. Michael Henos focuses on large, that means we're targeting working harder to find investors. biotechnology and medical devices. Silicon Valley and Route 128 execu- A relative lack of capital doesn't He's pulling deals out of academic tives. They're worried about relocat- mean a complete lack ... after all, environments and doing quite well. I ing down here, since they don't have over a billion dollars was invested in focus on telecommunications and as many options for their next job as venture deals in the Southeast in information technology, and I'm just they would back home. •• 1996, according to the annual swamped. There are lots of good Coopers & Lybrand Money Tree sur- ideas out there, backed by smart vey. That means there's enough for entrepreneurs. any one entrepreneur's company, if he or she will go out and find it! Q. What do you look for in a deal? Which is more important, a business plan or the people behind it?

digitalsouth 42 SUMMER I s 9 7 venture DEALS

Venture capitalists poured about $1.3 billion into the region in 1996. We've culled these deals from a national database compiled by Price Waterhouse, which identified nearly 200 venture investments involving companies based in the South. This list is a sampling of the deals, focusing on technology and life sciences. The deals included on this list do not include buyouts or .

COMPANY STATE DESCRIPTION AMOUNT ROUND" INVESTORS America's Health Network Fla. Cable TV network $40,000,000 second Medical Innovation Fund Firearms Training Sys. Ga. Supplier of small arms simulators $36,000,000 not disclosed Centre Partners, NationsBank Leveraged Capital Group First Marketing Co. Fla. Customer newsletter publisher $33,000,000 Summit Partners SportsLine USA Fla. Online sports information $27,000,000 second, third1 Reuters, Alliance Technology Ventures, TCI Lightspan, US West, N Y Life Ventures, Kleiner Perkins Caufield & Byers, Antares Capital Civic Communications Miss. TV broadcasting $25,000,000 third Alta Communications, Burr Eagan Deleague & Co., BancBoston Capital/BancBoston Ventures Fairchild Industrial Prod. NX. Industrial controls, transmissions $23,500,000 Provident Bank, Allied Capital CompuCare Co. Va. Software/info systems for hospitals $22,300,000 follow-on* Morgan Stanley Ventures, Trident Capital

U.S. One Communications Miss. Telecommunications provider $22,040,568 first Fleet Equity Partners, Burr Eagan (local exchange) Deleague & C o . Global Telesystems Va. International telecommunications 520,000,000 fourth, beyond GCC Investments Park 'n View Fla. Cable, phone hookups for $19,379,000 second, third* Patricof & Co., state of Michigan truck cabs at truck stops , Eurosuez Cap. M g t . CKS Ventures, Benefit Cap.

Production Group Int. Va. Event, destination mgmt.; $18,400,000 follow-on* Merifin Capital, Sierra Ventures, video/multimedia Trident Capital Triton Systems Miss. Manufactures low-cost ATM machines $17.000,000 Summit Partners Intellon Fla. Electronics & instrumentation $12,000.000 first Boston Venture Capital Group, Arete Ventures

Communications Sys. Md. Telecommunications equipment $8,020,000 bridge/mezz. Spectrum Equity Investors, and software Falcon Ventures, Tritech Ptrs., Japan Associated Finance, Hancock Venture Ptrs., Triad Investors Group

Cardiologie Systems Md. Manufacturers automatic CPR vest $8,000,000 BKP Partners, Berjaya, Horn Venture Ptrs., Anthem Capital, Allstate Venture Capital

Netlink Communications N.C. Frame relay internetworking products $8,000,000 folio Bay Ventures — Moore Cap., Accel Ptrs., ABS Ventures, St. Paul Capital, One Liberty Ventures, Institutional Venture Partners

InterZine Productions Fla. Online sports publications $7.660,000 second Southern Venture Fund, America Online, TCI Lightspan, Trans- National Group Venture Capital, Roman Arch Fund, Draper Fisher Associates

T/R Systems Ga. High-performance color computers $7,552,000 second Crown Associates III, Aperture Associates, Crown-Glynn, Noro- Moseley Partners

Telecorp Holdings Va. PCS provider $7,500,000 initial/seed Chase Venture Capital, Northwood Ventures, OneLiberty Ventures, Media Communications Partners

digitalsouth 34 s " H M ' " ' 9 > ' DEALS

PictureVision Va. Internet photography-related $6,300,000 first* Aperture Associates, Plaza Create, Oak Investment Ptrs., Benchmark Capital ISR Global Telecom Fla. Telecommunications software $6,000,000 second Weiss Peck & Greer Venture Partners, Vertex Management, Och-Ziff Capital Management

Phoenix Wireless Fla. Wireless local-loop $6,000,000 bridge/mezz. Battery Ventures, BancBoston Capital/BancBoston Ventures

Sentient Networks Fla. Network information technologies $6,000,000 follow-on Sevin Rosen Funds, Sequioa Capital, Odyssey Capital Group, Accel Ptrs.

©Plan Tenn. Advertising/market research $5,774,000 initial/seed Southern Venture Fund II, follow-on* Richland Ventures, Massey Burch Investment Group. Brunswick Biomedical Md. Critical care & emergency $5,750,000 fourth & Clarendon Capital, Morningside life support devices beyond Group, Commonwealth Bioventures, BancBoston Capital, BancBoston Ventures, Dillon Read Capital

CareCentric Solutions Ga. Point-of-care information processing $5,700,000 second Afta V, Biotech Investments, Axiom Venture Partners, Tech. Funding Venture Partners, Domain Partners III, Capital Health Venture Partners, American Healthcare Fund

PathNet Md. Broadband PCS $5,500,000 initial/seed, German Foundation, Spectrum bridge/mezz.' Equity Investors, Onset Ventures, New Enterprise Associates, I A I Venture Capital Group Lightspeed International Va. Manufactures long-distance telco. $5,500,000 initial/seed Vanguard Venture Partners, equipment JAFCO America Ventures, Sevin Rosen Funds Lynk Systems ATM/POS transaction processing $5,250,000 fourth & Robinson Humphrey, Technology beyond Crossover Ventures, Cordova Capital Prts., Sutter Hill Ventures

HAHT Software N.C. Internet/intranet application $5,045,000 second Hummer Winbald Partners, High development tools Technology Associates, JMI Inc. Visual Networks Md. Frame relay and WAN network $5,024,000 second** Tritech Partners, Venrock test and mgt. equipt. Associates, Edison Venture Fund, NEPA Venture Funds

Visteon Fla. Medical management software $5,000,000 first Canaan Partners, InterWest Prts. Mercury PSC Miss. Wireless voice and service $5,000,000 bridge/mezz Alta Communications, Burr Eagan provider Deleague & Co. BPM Technology S.C. CAD rapid prototyping machines $4,740,000 second* VAXA Corp., Cordova Capital Ptrs., Richland Ventures, Palmetto Seed Capital Corp.

Communications Site Int'l. Va. Wireless communications $4,000,000 third UST Fund, Edison transmission Venture Fund, Lawrence Tyrrell Ortale and Smith Battery Ventures Export Software Va. Software for exporters $4,000,000 first Southern Venture Fund Advent Digital Express Md. Communications $3,750,000 second Int'l., Menlo Ventures, TA Net Edge N.C. Data networking equipment $3,679,000 Associates, Foundation Capital Spinnaker Fund, Sierra Ventures, Avatar Solutions Va. Software tools for legacy $3,600,000 initial/seed Soundview systems/Year 2000 NPRI Communications Va. Customer interactive software $3,500,000 initial/seed Noro-Moseley Partners, Edison Venture Fund

digitalsouth 36 SUMMER I I g J DEALS

Picture Network Int'l. Va. Software and information $3,500,000 * Marquette Venture Partners, MVP Affiliates Fund Versatility Communications Va. Interaction software/telephone $3.500,000 Noro-Moseley Partners, Edison integration Venture Fund Monitoring Technology Va. Signal processing technology $3,100,000 first TDH III First Mortgage Network Fla. Software & network support for $3,000,000 bridge/mezz.* Canaan Partners, Dominion real etate lending Ventures Data Labs Md. Communications $3,000,000 first Edison Venture Fund, Bessemer Venture Partners Performance Awareness N.C. Load-testing software for $3,000,000 first NationsBank Leveraged distributed computing Capital Group Interactive Media Fla. Home electronics controls $2,750,000 follow-on* TL Ventures PCS Development Corp. S.C. Narrowband wireless personal $2,418,000 first* Marquette Venture Partners communications II and MVP II Affiliates Fund MDT Advisers Synchrologic Ga. Client-server software $2,350.000 first Gray Ventures, Imlay Investments, Alliance Technology Ventures, Noro-Moseley Partners Internet Security Systems Ga. Security analysis software $2,050,000 Greylock Ltd. InTek Ga. Client-server software, modeling tools $2,000,000 first Edison Venture Fund Sequoia Software Md. Document imaging and mgt. $2,000,000 first NEPA Funds, Anthem Capital Campus America Tenn. Educational software $2,000,000 third Cordova Capital Partners Database Solutions Va. Database tools $1,900,000 first Edison Venture Fund Intelligent Interacting Va. Advertising technology in $1,800,000 initial/seed Zero Stage Capital, Trinity interactive media Ventures NetStart Va. Internet software for $1,510,000 first New Enterprise Associates, employment screening 21st Century Investors Systems Techniques Ga. Information technology consulting $1,500,000 first Cordova Capital Partners Form Maker Software Ga. Electronic forms and imaging software $1,461,000 third TL Ventures NetSolve Md. Information Technology asset $1,250,000 first Draper-Richards, Tritech Ptrs., management software NEPA Venture Funds CogniTech Ga. Personal productivity software $1,200,000 second. Cordova Capital Partners Circuit Board Assemblers N.C. Electronics mfg. for telecom. $1,000,000 third Blue Ridge Investors Enterprise Network Apps. Ga. Security technology $912,000 follow-on* CIP Capital, unspecified others Seagull Business Software Ga. GUI-400 grapher user interface $827,000 Advanced Technology Ventures Nurse On Call Ga. Telephone-based nursing software $750,000 third Plantinum Venture Partners, New Enterprise Assoc, Frotenac Co., Franklin Venture Capital XL Vision Fla. GI5 scanners, medical imaging $713,000 third TL Ventures AirNet Communications Fla. Wireless base stations for telecom. S700.000 Line Capital Partners Sawgrass Electronics Fla. Integrated circuits $700,000 follow-on Antares Capital Lambda Technologies N.C. Advanced materials processing $620,000 Intersouth Partners Accipiter N.C. Internet advertising and software $500,000 initial/seed* Intersouth Partners InfoPartners Tenn. Health care info, systems m g t . $500,000 third Nelson Capital Corp. Cypress Communications Ga. Electronic communications for tenants $485,000 initial/seed Centennial Fund Imagination Software Md. Software for document management $450,000 first Clarion Capital Corp. NAT Systems International Va. Enterprise client-server tools $282,000 third Technology Crossover Ventures, Integral Capital Partners, Kleiner Perkins Caufield & Byers

Cell Call Ky. Wireless communications networks $281,000 bridge/mezz. OneLiberty Ventures, Media Communications Ptrs., Massey Burch, Charles River Ventures

TelePresent Md. Internet service $150,000 initial/seed Calvert Social Venture Partners Source Price Waterhouse LLP National Venture Capital Survey, 1996. * Indicates two or more investments during the year. For more information, visit the Price Waterhouse Venture Capital Web site at www.pw.com/vc

digitalsouth 38 SUMMER I ) 9 7 digitalsouth capital Venture Deals

Venture capital partnerships continued their aggressive pursuit of deals in the South in the first quarter of this year. Here's a look at technology-oriented investments, according to data compiled by Price Waterhouse.

company state description amount round investors

SBA Communications Fla. Wireless site acquisition $30,000,000 first TA Associates, ABS Ventures, Hillman Ventures Telebanc Financial Va. Branchless banking $30,000,000 second Intersouth Partners America's Health Network Fla. Health care info TV network $24,500,000 second Medical Innovation Fund Witness Systems Ga. Call-center monitoring software $6,800,000 first Battery Ventures Charter Communications Ga. Telecommunications $5,700,000 first Sanders Morros Mundy, Cordova Capital Partners Universal Tax Systems Ga. Tax s o f t w a r e , electronic $5,000,000 fourth & bey filing services Picture Vision Va. Digitizing Internet application $5,000,000 n/c Aperture Associates, Benchmark Capital, Oak I n v e s t m e n t Partners Online Resources Va. Online home banking $4,500,000 first Apex Investment Partners Eclipsys Fia. Write & outsource hospital $3,600,000 other St.Paul Venture Capital software T/R Systems Ga. Low-cost desktop printers $2,500,000 third Aperture Associates, InterWest Partners PaySys International Fla. Credit card, transaction $2,000,000 n/c Oak Investment Partners processing software Internet Security Sys. Ga. Network security monitoring $1,400,000 first Sigman Partners, Kleiner, Perkins, software Caufield & Byers, Greylock ISR Global Telecom Fla. Communications network $1,038,000 second Bessemer Ventures Partners management Interactive Media Sys. Fla. Interactive residential electronic $1,000,000 n/e TL Ventures monitors Grant Television Fla. Startup TV s t a t i o n in Buffalo $1,000,000 other Alta Communications, Burr Egan Deleage & Co., Allied Capital First Mortgage Network Fla. Real estate loan software $1,000,000 follow-on Dominion Ventures, Canaan Partners and network NeuralMed N.C. Neural network software $1,000,000 second Edgewater Private Equity Fund, Equity Dynamics BPM Technology S.C. Portable 3-D rapid prototyping $1,000,000 follow-on Cordova Capital Partners machine CyberSystem Technologies Md. Health care network, $700,000 first Anthem Capital electronic commerce Comm Site International Va. Wireless communications $700,000 second U.S. Trust, Tyrrell Ortale and Smith, transmission facilities Edison Ventures Davis Broadcasting Ga. Radio station $650,000 second MESBIC Venture Holding Co., Medallion Funding Corp. IntraSoft N.C. Network management software $600,000 initial/seed CI Partners Picture Network Inter. Va. Internet content $518,000 n/c Marquette Venture Partners & MVP Affiliates Fund CelCore Tenn. Wireless local loops $463,000 n/c Bessemer Venture Partners Sawgrass Electronics Fla. Hybrid and application-specific ICs $400,000 bridge/mezz. Kislak Capital Corp., Antares Capital Corp. Seasafe La. Manufacture fiberglass gratings, $200,000 n/c BancOne Equity Partners cable trays Thermo Info. Solutions Ala. IT products and services $90,000 second Walnut Capital Group

Notes: n/c means investment not classified; all information from Price Waterhouse National Venture Capital Survey, First Quarter 1997

SUMMER I s 9 7 31 digitalsouth