Sunday, September 03, 2000
Millions thrown at start-ups
The article in last Sunday's paper about Procter & Gamble Co.'s groundbreaking (for them) Internet Ventures Fund shouldn't leave the impression P&G is the only big local company making venture investments.
My phone was rung early Monday by Kevin Kushman, co-mananging director of Cinergy Ventures LLC, which has invested $50 million in energy-related start-ups.
At E.W. Scripps Co., Scripps Ventures I placed $50 million in 19 start-ups by last fall, and the new Scripps Ventures II fund has invested $35 million of its $100 million.
Great American Insurance Co. invested in Synchrony Communications.
Broadwing Co. also is taking positions in technology start-ups.
The reasons why are varied. One big one is helping technology partners become successful companies. That's a big reason for Great American's investment in Synchrony, which produces a sophisticated electronic customer relationship management software system.
The other big reason is synergy: The start-up is engaged in a related business. That fits Scripps' investments in eTang.com, a Chinese portal, and garden.com, a garden supply site that fits nicely with Scripps' HGTV network.
But there's always the money motive. Spokesman Tim Stautberg said Scripps's venture investments aren't limited to media companies, because doing so would limit the number of investment opportunities it sees. Investing has provided us a front row seat in the unfolding media landscape, he said.
Since the first Tuesday of the month is the day after Labor Day, the next First Tuesday meeting will take place on the second Tuesday of September.
First Tuesday is an international networking organization designed to help high-tech start-ups find the money and services they need to grow. Its first local meeting/happy hour Aug. 1 was a smash, with many wannabes turned away.
The next Cincinnati meeting is scheduled for 6 p.m. Sept. 12 at Jillian's in Covington. Sponsors this month are Frost & Jacobs, Bowne & Co. and Hewlett-Packard.
Entrepreneurs and service providers need invitations to get in and can register online. Go to http://www.firsttuesday.com and head for the Cincinnati section. Venture capitalists should also get an invitation, but at last month's meeting, several showed up uninvited and were welcomed in.
News like this can only be good for Cincinnati's high-tech community: Online pharmacy PlanetRx.com announced last week it's moving its headquarters from San Francisco to Memphis, Tenn. Like many Internet companies, Planet Rx's expenses far exceed its revenues. The company said the move will allow it to cut its burn rate (how fast it uses cash) in half. With lower costs for rent, communications, travel and labor, its expenses will fall to $6.5 million in the third quarter from $13 million in the first quarter.
I see that as a strong signal that there is opportunity for this community, said George Molinsky of Main Street Ventures.
E-mail John Byczkowski at firstname.lastname@example.org or call 768-8377. Find a list of local New Economy companies at http://enquirer.com/neweconomy/.
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