Follow the Money – The Bill and Jim Show
London calling While in London, I had breakfast with a group of British financiers. The consensus seemed to be that while European start-ups face many fund-raising obstacles that don't plague their US counterparts, Europe is becoming more receptive to the idea of early-stage venture capital and taking young technology companies public.
Historically, the stodgy European VCs have focused most of their attention on large companies and leveraged buyouts. In addition, the European public markets suffer from a lack of qualified technology security analysts, a weak retail market hampered by high brokerage fees, and a conservative institutional investment community, all of which lead to a less-than-receptive environment for any start-up looking to make some cash on an IPO.
But while the past has been discouraging, the future is looking brighter for new companies in Europe. Carolyn Hayman of Rutherford Ventures Ltd. (+44 171 490 3809), a VC firm in the process of closing a US$45 million seed-capital fund, noted that there are more than 600 new technology companies in the Cambridge, England, area alone. She also said that Europe boasts more than $6 billion in available venture capital, which slightly exceeds the amount available in the US.
Hyper active The hottest private company I visited while in Europe was a small British firm called HyperCast Services Ltd. (+44 171 637 6990). HyperCast earns its living producing teletext and subscription data broadcasting services for CNN Text, Movie Text, Toon Text, and the Reuters 1000 Financial Data Services.
In a nutshell, HyperCast consists of a cadre of former BBC engineers who have taken the concept of vertical blanking interval transmission – the transmission of bits in the dead space between frames on your television – and applied it to satellite broadcasts. Any person with a TV or a computer that has a PC-TV card can receive HyperCast's transmissions. Ovid Santoro, HyperCast's head of business development, says the company is seeking cable TV partners in the United States and content partners from around the world.
Public picks This month, I am loading up on stock from semiconductor manufacturer LSI Logic Corporation and Jackson, Mississippi-based Mobile Telecommunication Technologies. Mobile Telecom's subsidiary, SkyTel, is finally launching its much-ballyhooed two-way paging network. For its part, LSI Logic has suddenly scrambled into the big leagues with its new G10 process, which can fit five times as many transistors on a chip as the Pentium Pro. I'm also getting some more Sun Microsystems stock, because of the company's solid footing in the electronic commerce market.
To finance these buys, I'm going to dump my holdings in Apple, Oracle, and Sybase. All have either plateaued or dropped in recent months, and it's time to make room for more promising stocks.
The Wired Interactive Technology Fund (TWIT$)
Company Primary Business Symbol Shares Price Oct 1 Since Sept 1 Action
Mobile Telecommunications Technologies Corp. | Mobile computing | MTEL | 3,300 | 30 | – 1 7/8
Cisco Systems Inc. | Connectivity | CSCO | 2,500 | 66 | + 5/8 | buy 6,400
Microsoft Corporation | Software | MSFT | 1,000 | 88 1/4 | – 1 1/2 | hold
Apple Computer Inc. | Hw/sw | AAPL | 6,000 | 37 5/8 | – 5 5/16 | hold short
Oracle Systems Corporatino | Database sw | ORCL | 6,000 | 37 21/32 | – 1 19/32 | sell
Netcom Online Communications Service Inc. | Internet provider | NETC | 15,000 | 43 1/2 | + 6 1/8 | hold short
Global Village Communications Inc. | Communications hw/sw | GVIL | 3,800 | 12 1/8 | – 3 1/4 | hold
General Magic Inc. | PDA sw | GMGC | 4,500 | 14 5/8 | – 1 1/4 | hold short
Sun Microsystems Inc. | Hw/sw | SUNW | 4,200 | 61 1/2 | + 3 15/16 | buy 3,100
Sybase Inc. | Database sw | SYBS | 4,000 | 30 7/8 | – 1 1/8 | sell
3COM Corporation | Networking | COMS | 1,900 | 43 13/16 | + 5 7/16 | hold
LSI Logic Corporation | Semiconductors | LSI | 4,500 | 58 1/2 | + 10 | buy 3,300
Applied Materials Inc. | Semiconductor equip. | AMAT | 2,000 | 100 1/4 | – 4 1/4 | hold
The Walt Disney Company | Entertainment | DIS | 1,500 | 57 | + 1 | hold
Portfolio Value $1,509,012.50 (+50.90% overall) | – 5.20%
Legend: This fund started with US$1 million on December 1, 1994. We are trading on a monthly basis, so profits and losses will be reflected monthly, with profits reinvested in the fund or in new stocks.
Information provided here is based on a combination of insights and gossip overheard while talking with Bill Gates and Jim Clark in Madrid, chatting up investment bankers in London's financial district, and smoking cigars at San Francisco's Bohemian Club.
The TWIT$ fund is a model established by Wired, not an official traded portfolio. Wired readers who use this information for investment decisions do so at their own risk.
Anthony B. Perkins (tony@herring.com) is editor and publisher of The Red Herring (http://www.herring.com),,) a monthly investment magazine.
