DEALFLOW DASHBOARD/ August 7

INTERNET: Openauto,$2MINTERNET SERVICES: Advertising.com, $57MSOFTWARE: ePropose, $16.2MNEW VENTURE FUNDS: Goldman Sachs, $5.25B; Greenfield Ventures, $5MPEOPLE: David Aronson Arrives at Charter GrowthDEALFLOW DIGEST: Buyag.com, $1M; Cognigine, $14.5M; DI/DT'S, $3M; Ethnicgrocer.com, $34M; Health2health.com, $1.6M; Stockaccess, $100KDEALFLOW DISH: Yazam keeps on buyingELEVATOR PITCH: Yube, $5M

DEAL OF THE DAY: BOATS.COM, $21M

"We are all boaters, and enjoy talking to each other about boats," says Boats.com CEO Rolando Esteverena of his staff. Mr. Esteverena just reeled in $21 million from investors who believe the nautically-inclined will drop anchor at the site, which will be launched sometime this summer. Boats.com (www.boats.com) lands revenues primarily by listing boats for sale on its site. It also takes a cut of transaction fees for services such as insuring and financing boats, as well as providing boat accessories. Other revenue streams will include fees for syndicating content and for advertising and sponsorships.

San Francisco's Boats.com has the potential to net a large number of customers because of the behemoth market it is targeting. According to the National Marine Manufacturers Association, overall U.S. spending for recreational boating, including new and used boats, motors and engines, accessories, and other associated costs was approximately $23 billion in 1999. Mr. Esteverena expects his startup to pull in $1.5 million in revenues this year and is confident the new funding will last through December. The company has signed up around 1,200 customers, including brokers and dealers.

Boats.com is betting its exclusive partnerships with two of the most established associations in the industry (it has yet to announce these) as well as its recent acquisition of online yachting marketplace Yachtworld.com will keep its business model afloat. But there are others in the space who could take the wind out of its sails. One of Boat.com's competitors, Sailnet, plans to buy another online destination site for boaters, the CMGI-backed Boatscape.com. Marine B2B exchange Marex.com could also start trolling in Boats.com's waters.

INVESTORS: Mayfield Fund; Trident Capital

--Karie Atkinson

INTERNET

OPENAUTO www.openauto.com Walnut Creek, CA FUNDING: $2M PRIOR FUNDING: "Over $2 million." ROUND: Bridge loan CATEGORY: ASP DESCRIPTION: Touts themselves as an "automotive e-commerce configurator." LEAD INVESTOR: CS Private Equity Fund THE HERRING TAKE: When pressed for funding amounts, and a timeframe for profitability, the refrain from Openauto.com was this: "we don't disclose that information." So, what exactly did CEO and cofounder John Truchard have to say? Not much. But he did allow he'll use this bridge loan to hire more people, ramp up the technology and do some marketing. Meanwhile, the reticent Mr. Truchard is looking for a second round of funding in the $7 to $10 million range, a sum he's confident he'll secure. By shifting its business strategy, going from a B2B to an ASP, Openauto hopes it has devised a formula that will be a hit. Openauto allows consumers to virtually "build" their own cars to matching specifications before even stepping foot in the showroom. Users to the site can also view inventories of dealers in addition to working out payment plans upon purchase. Revenue is purely ASP: licensing fees. The trouble is that consumers are still shying from buying autos online. Despite a myriad of competitors, and having to secure a bridge loan rather the more traditional VC funding route, Mr. Truchard is an optimist. After steadfastly refusing to disclose burn rates or how much he is paying himself, the closest we came to any revelation was a cryptic "we are very cautious." He'll presumably get over his shyness once, and if, there's good news to report.

INTERNET SERVICES

ADVERTISING.COMwww.advertising.comBaltimore, MDFUNDING: $57MPRIOR FUNDING: $12.5MROUND: 5thCATEGORY: Internet Services/ ASP DESCRIPTION: Provides online advertising technologies for the Web, e-mails, desktop, and wireless devices.LEAD INVESTOR: Reuters GroupOTHER INVESTORS: America Online; WPP Group; WorldCom Venture Fund; Grotech Capital Group; New Enterprise Associates; Blue Chip Venture Capital Company; Wheatley Partners; Credit Suisse First Boston Private Equity; Access Technology PartnersTHE HERRING TAKE: CEO Scott Ferber, 31, lives 11 stories below his 26-year-old "chief Internet officer," but there are no hard feelings -- it's his younger brother, John Ferber. The duo founded Advertising.com two years ago, and it's evolved into a well-established business serving ads on the Web, in e-mails, and on wireless devices. What separates Advertising.com from other online ad firms such as Doubleclick, says the younger Mr. Ferber, is that it can deliver ads to multiple platforms, track how well the ads are working and reallocate banners based on performance. Currently, Advertising.com has a network of 5,200 Web sites on which it serves ads. That translates to 3 billion banners per month. The brothers are mum about IPO plans, but valuation has grown from around $30 million in the company's third round to about $300 million in the current. Hope that last fact doesn't cause the siblings too much strife.

SOFTWARE

EPROPOSESan Francisco FUNDING: $16.2MPRIOR FUNDING: $1MROUND: 2ndCATEGORY: Internet SoftwareDESCRIPTION: Provides a Java-based software platform for B2B exchanges that enables sellers and buyers to propose, negotiate, shop around, conclude, and fulfill deals.LEAD INVESTOR: Crosspoint Venture PartnersOTHER INVESTORS: Cargill eVentures; Sippl McDonald Ventures; Edge Net Fund IITHE HERRING TAKE: CEO Bill Leckonby ran three software companies before founding ePropose. But, he says, nothing compares to the size of the market that's available to his new firm, which sells B2B exchange software. Mr. Leckonby claims there will be $2.3 trillion worth of transactions pumping through B2B exchanges by 2003. If he's right, ePropose is in a good position. The company's Java-based B2B exchange platform uses "object" technology to create highly specialized rules that support numerous types of exchanges and heavy collaboration amongst users. "It does it all, from RFQ [request for quote] to shipping and fulfillment," he says. ePropose has already built an application for Detroit Edison which supports 40,000 transactions per day. Four more customers are in the pipe, Mr. Leckonby says. ePropose's target customers include dot-com B2B exchange upstarts and large corporate consortia.

NEW VENTURE FUNDS

GOLDMAN SACHSwww.goldmansachs.com New York FUND: Goldman Sachs Capital Partners 2000FUND SIZE: $5.25BPRIOR FUND: $2.8BFOCUS: Technology and telecom firms, as well as leveraged buyouts. THE HERRING TAKE: Goldman Sachs' official word on its new, and largest fund to date, was mum. The investment bank is straightjacketed by an SEC imposed quiet period related to its secondary stock offering, which priced last week. However, a source close to the company says Goldman will put half of the $5.25 billion into North American deals. The rest will be split between Europe and Asia. The fund will be fully invested within three to five years, the source says. Goldman's initial target for the new fund was $4 billion, but after becoming oversubscribed, the cap was raised. The bank's employees contributed $1.6 billion. Goldman should be more forthcoming after Labor Day, the source says.

GREENFIELD VENTURESLondon, EnglandFUND: Greenfield CapitalMANAGING PARTNER: Tim Taylor FUND SIZE: $5MFOCUS: Lead investor at stage and co-investor in first and second round investments. Interest will focus on enabling technologies, middleware, application software and web development technologies. AVERAGE INVESTMENT: 50,000 - 500,000 GBP ($75,000-$750,000) THE HERRING TAKE: Tim Taylor was an IT recruiter before he set up Greenfield Ventures four years ago. Now he's betting his experience and contacts on Greenfield Capital, a fund management vehicle. Mr. Taylor believes that technology companies are people-driven and that IT recruitment is key in creating successful new economy businesses. Greenfield Ventures has amassed equity stakes in 30 firms including two listed on the Nasdaq. Mr. Taylor's career contacts and Greenfield's experienced advisory board should attract investor interest. But the number of early stage investors crowding around opportunities in enabling technologies, middleware, application software and Web development technologies will make it increasingly tough to attract the best deals.

PEOPLE

DAVID ARONSON ARRIVES AT CHARTER GROWTHNEW PARTNER: David Aronson, general partner and chief executive officer of Charter Growth Capital (CGC)(www.charterventures.com/html/growth_cap.html)FOCUS: Focuses on pre-IPO investments in areas including communications, electronic commerce, and business software. BACKGROUND: At the end of June, CGC closed a second $465 million venture fund raised from institutional investors in the United States and Asia. The firm's first fund closed in October 1997 and participated in 13 IPOs, including Commerce One and Niku. The fund typically invests between $5 million and $10 million, and has about a dozen portfolio companies. According to general partner and CEO David Aronson, the fund is "one quarter to one third vested." THE HERRING TAKE: David Aronson moves to Charter Growth Capital (CGC) from the Fremont Group, where he served as the investment and venture capital firm's treasurer. Mr. Aronson also has experience as a CFO at startups including Redwood Microsystems and Nelson Analytical. He took the new position because he believes the timing is right for making investments in the late-stage venture industry. The 50-year old Mr. Aronson says one of the challenges for CGC will be "not to lose sight of its niche."PITCH EMAIL: david@chartergrowth.com

DEALFLOW DIGEST

BUYAG.COMwww.buyag.comEagan, MNFUNDING: $1MROUND: 1stCATEGORY: B2BDESCRIPTION: Operates an online agricultural equipment parts exchange.LEAD INVESTOR: Primedia

COGNIGINE www.cognigine.com Fremont, CA FUNDING: $14.5M CATEGORY: Semiconductors DESCRIPTION: Produces semiconductors for broadband and optical networking applications. LEAD INVESTOR: Wasserstein Adelson Ventures OTHER INVESTORS: Lucent Venture Partners; Stanford University; Draper Fisher Jurvetson; and Wasatch Venture Fund MORE INFORMATION: Cognigine

DI/DT'S Camarillo, CA and Fremont, CA FUNDING: $3M CATEGORY: B2B DESCRIPTION: Produces power conversion equipment for Internet infrastructure components. LEAD INVESTOR: Power-OneMORE INFORMATION: Bizwire

ETHNICGROCER.COMwww.ethnicgrocer.comChicagoFUNDING: $34MROUND: 3rdCATEGORY: B2CDESCRIPTION: Online provider of authentic ethnic products.INVESTORS: Integral Capital Partners; Kleiner Perkins Caufield & Byers; Amerindo Investment Advisors; Merrill Lynch; Benchmark Capital; KB Partner

HEALTH2HEALTH.COMwww.health2health.comDenver, COFUNDING: $1.6MPRIOR FUNDING: $300KROUND: 2ndCATEGORY: B2BDESCRIPTION: Provider of an online health care information exchange connecting physicians, hospitals, payers, and other business partners.LEAD INVESTOR: Epoch PartnersOTHER INVESTORS: Individuals

STOCKACCESS.COMVienna, AustriaFUNDING: $100K for a 5% stakeROUND: 1stCATEGORY: Financial ServicesDESCRIPTION: An online provider of financial information on pre-IPO Eastern European high technology companies.LEAD INVESTOR: Kremlin AGOTHER INVESTORS: Red-Stars.com data AG; ITEM Solutions LLC; Siemens

DEALFLOW DISH

YAZAM FOLLOWS UP WITH 2 NEW ACQUISITIONSBusiness accelerator Yazam liked its PR firm so much it bought them, and an investor relations firm, too, combining them into a new affiliate. Gregory Communications and Financial Communications Associates (FCA) have now become Gregory FCA, and will operate independently of Yazam. Of course, Yazam's companies will have Gregory FCA at their disposal if they choose, but the firm will also take on independent clients. Gregory executive VP Tony DeFazio says he expects Yazam's dealflow to increase as Gregory FCA takes on new clients. "The more publicity we do for them, the more buzz they get, the closer they get to Yazam," he says. Gregory FCA is already getting friendly with Yazam's companies -- Mr. DeFazio is meeting with American execs at First Tuesday, the U.K.-based networking organization that Yazam bought last month, to discuss revving up their stateside PR.

ELEVATOR PITCH

YUBE, $5MSanta Clara, CAwww.yube.comTHE PITCH: Yube develops and hosts a set of integrated applications that enable companies to easily manage customer service operations through the Internet and stay focused on their core business. This built-in expertise creates the workflow for a complete post-sales solution, enabling our customers to go live within a week. Our applications are currently in Beta, and customer interest is booming! First release includes field service, support, conference call, events and training. Defect tracking, billing and voice management will be available soon. We are currently looking to raise $5 million in additional funding for the next level of growth. Our initial funding came from Labrador Ventures in March 2000.WHY WE LIKE IT: Targets medium-sized companies who can't afford big CRM solutions that companies like SAP offer; served up on ASP model for easy implementation.WHAT THEY'RE UP AGAINST: Other CRM companies have pieces of what Yube offers, large players like SAP could introduce ASP offering for smaller companies.CONTACT: Taraneh Derak, CEO/President, tderak@yube.com

(Looking for funding? Drop us a line at elevator@redherring.com. Let us know who you are, how much you're seeking, the funding sources you're targeting, your contact info, and, of course, your pitch. Please keep the pitch to no more than 100 words. Do not send attachments. One tip: pretend you're actually pitching a VC in an elevator. Submissions should have "Seeking Funding" in the subject line.)

Dealflow is reported and written by Karie Atkinson, Richard Byrne Reilly, Steve Silverman, Jarret Adams, and Juliana Koranteng. The Elevator Pitch is selected and written by Julie Landry.

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