Web start-ups find that money is
getting harder
to find
From Correspondent Casey Wian
July 25, 1996: 7:49 p.m. ET
Tech sector in cyber
sell-off - July
16,1996
Internet IPO's remain
hot - June 3, 1996
PictureTalk
InterTrust
LONG BEACH, Calif. (CNNfn) - It's been tough for
publicly-traded Internet companies lately. Until last
month,
they were the darlings of Wall Street, but since then
they've
fallen on hard times.
That hasn't stopped Internet start-up companies with
big plans from going ahead with raising money from
investors.
PictureTalk is one of the two-dozen Internet firms
invited to Venturenet, a conference introducing private
start-ups to investors.
Publicly-traded Internet companies have, on average,
lost more than 20 percent of their value since June.
Companies such as PictureTalk, which makes
video-conferencing software, need private money more
than ever because the market for initial public
offerings has
cooled.
"We were considering a public offering this year.
Given the undulations of the market, part of the reason
we're here is to look at other ways of funding that growth
in the interim." said PictureTalk's President and CEO
Joseph Salesky.
InterTrust is another company hoping to raise
capital to
finance its business. The developer's software allows
other
businesses to collect money from Internet customers, even
those who pass programs or documents to others.
InterTrust hopes that this will solve the major
problem
of software sharing, (118K WAV) or (118K AIFF) said
Chief Financial Officer Erwin Lenowitz.
There are nearly 1.5 million businesses on the
Internet
and big players like Microsoft and Netscape are
threatening
to crush their smaller rivals. That's made venture
capitalists
nervous.
"Private money is there by the boatloads, but it
is very
selective. It is looking for business models that have
enduring capabilities," said John Morris, managing
director
of Wedbush Morgan. "The rate of change in Internet
software is so dramatic that it's hard to really see
how all
these companies are going to find funding at any sensible
valuation."
One company at the conference told potential investors
the average transaction on the Internet will be less
than $5
and it wants a lot of that business. Some have larger
targets. Another company said it's going after
transactions
of $10,000 or more.
The bottom line is no one is sure what's the best
way to
make money on the Internet, and that helps explain
investor
uncertainty.
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