Re: VC firm to announce $100 million 'Java Fund'

Rohit Khare (
Wed, 21 Aug 96 10:59:48 -0400

All we need now is an idea... RK

see also:

Big High-Tech Players Back Java Internet Venture Fund


NEW YORK -- Ten of the most powerful high-technology companies are investing
in a venture fund to support start-ups developing Internet software using the
touted Java programming language.

_International Business Machines_ Corp., _Sun Microsystems_ Inc., _Compaq
Computer_ Corp., _U S West_ Inc., _Tele-Communications_ Inc., _Netscape
Communications_ Corp. and _Oracle_ Corp. are among the investors in the Java
Fund, a fund of $100 million that will be administered by venture-capital
powerhouse Kleiner Perkins Caulfield & Byers. The widespread and ringing
endorsement for the Java Fund, which also includes investments from
network-gear company _Cisco Systems_ Inc., cable giant _Comcast_ Corp. and
Japanese trading giant Itochu Corp., marks an unprecedented rate of adoption
for a single technology across a wide range of high-tech industries.

"Nothing like this level of adoption and endorsement has ever happened in
computing," said John Doerr, a partner at Kleiner Perkins. Beyond financial
investment, companies also are planning on putting their weight behind new
technologies in return for getting early access to any breakthroughs.

John O'Farrell, president of U S West's Interactive services group, said the
fund "combines a set of world-class corporations, which can contribute
marketing muscle, distribution and technology with Kleiner Perkins's expertise
in identifying promising Internet companies."

Java has been hailed as a revolutionary technology because of its ability to
create multimedia computer programs that work on all operating systems,
whether _Apple Computer_ Inc.'s MacOS or _Microsoft_ Corp.'s Windows. Many
industry watchers believe that may help put an end to Microsoft's dominance of
the software industry, which has long relied on the Windows platform that
Microsoft controls.

But Mr. Doerr said the fund isn't an attempt to thwart Microsoft's Internet
efforts, which include a push to make a versatile multimedia technology known
as ActiveX an Internet standard. "Java isn't in competition with ActiveX.
That's not what this fund is about. It's about encouraging entrepreneurs,"
said Mr. Doerr, who added that Microsoft has been one of the most staunch
supporters of Java technology. Added Bob Stearns, senior vice president at
Compaq: "If Microsoft wasn't a licensee of Java, I don't think I would be
interested. They become a major driver of Java themselves." Mr. Stearns noted
that the investment opportunities allow Compaq to get an early look at
emerging technologies that can be incorporated into the company's products.

Greg Maffei, vice president of corporate development said Microsoft welcomed
the fund "because it furthers Web applications" but noted that the company has
never invested in venture funds.

While Java, which was introduced by Sun Microsystems more than a year ago,
has taken the Internet industry by storm, relatively few computer programs
have been created with the programming language. Most users are more familiar
with goofy Java programs such as tic-tac-toe and on-line Rubik's cubes than
mission-critical business software.

"It would be nice if some of these applications were more than charm
bracelets or just little trinkets," said Richard Shaffer, founder of high-tech
publisher Technologic Partners. "This is to make sure Java gets plenty of
funding from the highest level and plenty of visibility," he said. Jerry
Michalski, managing editor of high-tech newsletter Release 1.0, said Java
"still has a ways to go before making this thing robust and fool proof." Java
"applets," as they are called, still won't allow users to print off the screen
or take advantage of simple mouse commands. The fund, he said, "is a nice way
of creating credibility, momentum and some additional weight behind Java."

Sponsors of the fund hope to accelerate the development of such programs by
investing in about 25 start-ups that plan to use the Java language. "We've got
to jump-start the development of these applications," said Eric Schmidt,
chief technology officer of Sun Microsystems, which is the second-largest
investor in the fund after Kleiner Perkins. "The Java fund will find the next
killer app," he said, referring to the kinds of computer applications such as
Lotus 1-2-3 that helped ignite the fortunes of the PC industry.

Mr. Schmidt said Java programs could soon provide users with programs that
take real-time stock quotes from the Internet and determine, according to a
user's criteria, whether to buy or sell a stock. Java programs could also run
collaborative applications similar to Lotus Development Corp.'s Notes products
to allow employees world-wide to share information in new, and still
unconceived ways. Moreover, Java could create software for future cell phones
to send and receive e-mail or help companies pull information from various
incompatible systems, Mr. Schmidt said.

Kleiner Perkins will be the largest investor in the Java Fund, followed by
Sun Microsystems. All other companies are said to have invested between $4
million and $7 million. The plan is to take start-ups public and pay stock out
to the fund's investors over a period of time.

Three companies have already received funding, including Marimba Inc., which
was founded by some of Java's original developers at Sun. Start-up Active
Software Inc. is developing a Java application that allows companies to
present information from their older incompatible business-software programs
out onto the Internet's World Wide Web, while Calico Technology is developing
software to enable a sales force to quote and order complex products and