VC firm Kleiner Perkins Caufield & Byers makes formal announcement of its 'Java Fund'
It’s official: On Wednesday, August 21, the venture capital firm Kleiner Perkins Caufield & Byers (KPCB) formally announced the 00 million Java Fund and its ten corporate partners: Cisco Systems, Comcast, Compaq, IBM, Itochu, Netscape, Oracle, Sun Microsystems, Tele-Communications Inc. (TCI), and US West Media Group. The fund, which was first covered in JavaWorld‘s News & Views section August 9 (see “JavaWorld exclusive: VC firm to announce 00 million ‘Java Fund'”), already has invested in three companies, according to KPCB: Active Software, Calico Technology, and Marimba.
Reports indicate KPCB contributed about 0 million to the fund, Sun approximately 5 million, and the remaining nine companies somewhere between million and million each. The three companies that have received funds so far got million each. This means a significant portion of the Java Fund remains for other start-up companies that are developing Java-related tools and technologies.
In a press release, KPCB described the Java Fund as focusing “on Java technology-based companies and related Internet, intranet, networking, and communications companies.” Over the next four years, about 25 companies are expected to receive monies from the fund.
Active Software, a Mountain View, CA-based company, provides software-oriented communications systems that connect Java applets with databases and will evolve to connect Java with database applications, ActiveX, and other enterprise information sources. On July 1, Active Software introduced ActiveWeb, an application development tool that combines the features of an enterprise-class development tool with comprehensive Web application development functions.
Marimba, located in Palo Alto, CA, has been vague about its products. The KPCB press release notes: “Marimba provides next-generation technologies for developing and deploying network-aware Java applications.” One industry analyst suggested that the company formed by four former JavaSoft employees is working on, among other things, a way to provide persistence to Java on the desktop, provisions for letting applets operate securely outside of the Java “sandbox” (the area in which a Java applet can freely function, and whose boundaries, or restrictions, prevent applets from accessing a user’s local hardware and operating system), and providing foundation classes for multimedia.
Calico has developed software that automates the process of configuring and quoting complex products and services; its products enhance productivity and quality between sales and order-entry departments by linking manufacturing and sales applications with configuration capabilities. Calico’s software, originally written in Visual Basic, is in the process of being reimplemented in Java and ActiveX.
Now you see it, now you don’t
On the eve of the formal announcement of the fund, JavaWorld noticed that the page on KPCB’s Web site describing the Java Fund included the logos of 12, not 10, contributing partners. Apple Computer and Cox Communications were the two companies included with the ten listed above. A short time later, the two logos disappeared from the Web page.
JavaWorld spoke with Michael Palmer at KPCB about the presence of, and subsequent removal of, the Apple and Cox logos on KPCB’s Web site. “That was a mistake,” said Palmer. “Our Web hosting service had an old page up there….Our Web designers are one step behind us….” Asked whether Apple and Cox were investing in the Fund, Palmer said no. “That was purely a snafu in the process,” he said. The brief existence of these two logos on KPCB’s Web site indicates that perhaps Apple and Cox were, at one point, considered likely participants in the Java Fund, a possibility that KPCB partner John Doerr has denied.
Why the fund?
The Java Fund is expected to have a great impact on tools and technology development. “It’s always exciting when somebody puts some money where their mouth is,” said Don DePalma, senior analyst at Forrester Research Inc. in Cambridge, MA. “The number of suppliers — all the contributors to the fund — have decided that their work alone in providing tools and technologies in the Java space isn’t going to be enough. They need some of the innovation that can only come from smaller, undercapitalized vendors….There’s money in the pipeline…for the smaller vendors. But what’s really essential here is that it’s the potentially innovative, `we-haven’t-thought-of-it-yet’ kind of applications that Kleiner Perkins is looking for….That’s not going to come out of SunSoft or IBM or even Borland.”
While some equate Java solely with applets for fun and games, real-world applications exist now and, spurred on by efforts like the Java Fund, more applications soon will be rolled out by small startup companies. “I think that these technologies are going to be critical to Internet client/server applications,” said David Rome, Calico Technology’s vice president of marketing, speaking of products like CalicoQuote. “The ability to download the client technology into a browser…is very critical to business-to-business and business-to-consumer applications,” An example of a “real-world” Java applet is the stock quote applet featured in JavaWorld and provided by Quote.com that provides current, real-time securities pricing. And there’s Cadis Inc.’s Krakatoa, a content management and search technology that enables content publishers to offer fast and intuitive access to information on the Web.
The Java Fund obviously will help finance the Java projects in development at Active Software, Calico Technology, and Marimba. But it has had an unexpected impact on the three companies. “What is interesting now is that as a result of Java Fund, all three of the initial companies have got some kind of discussions going on now about leveraging each other,” remarked Paul Koenig, vice president of marketing for Active Software. At ObjectWorld, held August 18 to 22 in San Jose, CA, recipients of the Java Fund met to discuss future projects.
Longer term, the fund’s success will be measured in large part based on its ability to promote Java and further its real-world use. “The Java Fund will provide a very important leverage for developers who are focusing in on Java”, said Marimba’s Kim Polese. “In other words, this is a good source for the funding people to locate the best-of-breed applications and tools companies in the Java space, and it’s a great way of getting the developers in touch with the investors…it really validates Java as not only a programming language but clearly a platform, and will provide a very important leverage for Java in the developer community.”
Kleiner Perkins Caufield & Byers isn’t the only venture capital firm with an eye toward funding Java-focused companies. In a recent announcement, Bessemer Venture Partners, a VC firm located, like KPCB, in Menlo Park, CA, contributed funds to the cofounders of VeriSign and a team of engineers made up of former employees of Apple, JavaSoft, and Oracle. The funding has helped launch an Internet startup company currently named Internet Startup; this company is using Java to build software infrastructure that makes networked applications ubiquitous. Bessemer Venture Partners invests in private, high-tech startups.
The announcement of KPCB’s Java Fund, and of at least one other venture capital firm supporting a Java startup, bodes well for the future of this new programming language. “The Java objective is ubiquity,” said Eric Schmidt, Sun Microsystems’ chief technology officer. “We can measure that by the number of Java platforms available to end users at any time — and it’s a big number because of the browser volumes. The fund will be measured primarily by its financial success and its ability to generate at least a few ‘killer applications.’ It’s a rule in the VC industry that the killer applications come from surprises.”
