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July 20, 2001
Investor calls start-up Fios a money magnet
The Portland-based electronic documents company is expected to announce a $10.1 million round of financing
By Steve Woodward of The Oregonian staff
If venture capitalists are cats, then Portland-based Fios is catnip, says one of the cats.
Investors have pounced on the electronic documents company with $10.1 million in new investment, Fios planned to announce today. That's $2 million more than Fios was looking for.
Fios investor David Billstrom, a Seattle venture capitalist, said Fios exists in a category of tech companies that are "like catnip to investors" -- and not just because of Fios's technology that can scour huge quantities of e-mail and other electronic documents for use as evidence in lawsuits, mergers and acquisitions, and antitrust reviews.
First, Billstrom said, Fios has paying customers. Witness the growing list of legal cases in which Fios computers catalog, sort and analyze thousands of e-mails, regulatory filings, spreadsheets and other documents for use during the pre-trial discovery phase of lawsuits. Revenue for those cases has ranged as high as seven figures, said Terrance Murphy, vice president of marketing and business development.
Second, Fios has experienced managers who have created one of the nation's biggest electronic discovery firms out of a mere $3.75 million in start-up capital and two years of development time. Averaging 20-plus years each in law, technology and business management, Fios executives expect to hit profitability by year-end, Murphy said.
Fios is one of 16 Silicon Forest technology companies that have picked up new investment this year from venture capitalists, institutional investors and corporate partners. This year to date, companies in Oregon and Southwest Washington have raised a total of $357 million in equity financing, according to data collected by The Oregonian. The first three quarters of last year saw 51 companies raise more than $630 million.
"We are delighted with the interest and support received from investors in this round," Richard A. Lazar, president and chief executive officer of Fios, said in a statement. "In a difficult capital market where many companies are finding it hard to raise needed capital, Fios received more interest from investors than it could accommodate and an increase in valuation."
Billstrom added that companies like Fios have advantages today that didn't exist at the height of the Internet investment frenzy.
Nowadays, only the most promising companies are receiving funding, meaning that weak but well-funded competitors no longer are muddying the market. Also, layoffs and closures have put many talented business people into the job market, helping beef up staffs for the likes of Fios, which expects its employment to jump 25 percent, to about 50, in the next few weeks.
"The get-rich-quick kids have been weeded out, so you've got the people who are going to do it anyway," Billstrom said, referring to the diehard entrepreneurs who intend to start companies, with or without venture capital.
Billstrom, a longtime entrepreneur himself, is the Seattle-based managing partner of FBR CoMotion Venture Capital, which participated in Fios's latest financing round and in a $3 million round a year ago. FBR CoMotion also led a $5.1 million early-stage investment in Vendaria, a Seattle streaming media company, the venture firm announced earlier this month.
"It's a good time to be a new fund," Billstrom said of FBR CoMotion, which was formed little more than a year ago.
Fluke Venture Partners of Bellevue, Wash., led the latest round of funding for Fios. Fluke was joined by other first-timer investors 3i Technology Partners, London; Banyan Capital Partners, Vancouver, British Columbia; and Velocity Capital Partners, Seattle. FBR CoMotion and Digital Partners of Seattle were repeat investors.
Visit the Fios site - http://www.fiosinc.com
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