The nearly half-billion dollar fund isn't an exorbitant amount for a VC fund these days, but it's quite a leap for Sevin Rosen. Its previous fund in 1998 totaled $177 million, and 1995's fund came to $108 million, according to Venture Economics, a VC market research firm.

The reason for the significant rise in fund money is that startup companies now require more money to get off the ground, according to Steve Dow, a general partner at Sevin Rosen. VC firms are taking larger stakes in startup companies to increase their chances of a bigger return on investment, and that requires the firms to have deeper pockets, Mr. Dow says.

Sevin Rosen distributed the previous fund over 18 months, and the new fund, despite its increased amount, probably will last a similar length of time, the venture capitalist says. The firm's average investment will double from an average of about $5 million to about $10 million.

LIFE IS UNFAIR

Sevin Rosen will continue its practice of investing almost exclusively in businesses dealing in communications technology and software companies that enable businesses to buy and sell to one another over the Internet, known as business-to-business (B2B) electronic commerce. The firm looks for companies developing a technology that gives them an "unfair advantage" over others in the field, says Mr. Dow.

Four startups have already benefited from Sevin Rosen's largest fund, including Ichoose, which has technology that notifies consumers of the best online deals, and Everypath, which hosts Web site content and applications in a data center.

Two Sevin Rosen investments in the telecommunications field that paid off were in Ciena and Monterey Networks.

Ciena, of Linthicum, Maryland, makes optical networking equipment for telecommunications service providers. The company went public in 1997, and its stock price fell precipitously in mid-1998. Since then, share prices have steadily risen, and the company now has a $11 billion market cap.

Monterey Networks of Richardson, Texas, was acquired by Cisco last August for $500 million. Cisco was also an early investor in Monterey Networks, which made optical networking technology that allows telecommunications carriers to deploy high-bandwidth services. At the time of the sale, Monterey Networks didn't have a customer, Mr. Dow says. The acquisition came on the same day Cisco bought Cerent of Petaluma, California, for a whopping $6.9 billion.

GOLDEN TOUCH

Sevin Rosen's founding partners, Ben Rosen and L.J. Sevin, were founding investors in Compaq. Mr. Rosen is a founding investor in Lotus Development, which IBM acquired, and he is chairman of Compaq's board of directors.

Since its inception in 1981, Sevin Rosen has invested primarily in California companies. Investments in the Golden State so far total $182 million, followed by Texas with $103 million and Massachusetts with $37 million, according to Venture Economics.

All of Sevin Rosen's previous limited partners and 10 new limited partners participated in this seventh fund, Mr. Dow says. Sevin Rosen doesn't disclose the names of its investors.

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