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Volume 6, Number 41 - October 11, 2001 - This Week's Contents:

--1. Can We Talk Strategy Here?
--2. New Investor Forum
--1. Hang The Internet On Your Wall
--2. eLink Phone Home
--3. aTelo's Media Server
--4. Interactive Bio-Terrorism Training For Doctors
--5. Acorn's Network Traffic Management Co-Processor
--6. Corcentric's Auto Industry CRM Product
--7. Quick Hits from Digital Paper, Systems Alliance, Envista,
........Cryptek, and YellowBrix
--1. Dough Raise Me
.....more than $46M for 3 local netpreneur
--2. Life In The Food Chain
.....M&A And Shutdowns Down For Net Firms
.....HSS Acquires eHealthFIRST
.....AT&T Wireless Acquires TeleCorp PCS
.....InPhonic Acquires GadgetSpace
.....ePlus Acquires SourceOne
.....EDO Acquires Dynamic Systems
--1. Telecom Business Plan Competition

I> News About The Program
October's Coffee & DoughNets won't be the first time that Phil Carrai
gives product strategy advice to netpreneurs. Recently, he made a
guest appearance to take member's questions in Talk-the-Talk, our
netpreneurs-only email discussion group. We've collected some of the
questions and answers from that online event in a Discussion Recap,
which you can find on the Netpreneur site, covering topics ranging
from strategic vs. tactical products, to pricing, to international
licensing. Phil and co-panelist Paul Mauritz will continue the
discussion on product strategy and management at C&D on Wednesday,
October 24, 7:00 a.m., at the Improv on Connecticut Avenue in DC.
Sign up now.

Sign up for C&D:
Discussion recap:
Join Talk-the-Talk:
Some of the region's most prominent investors are getting together
with select portfolio companies on Friday, November 9, to explore
investment opportunities, and we managed to snag a few backstage
passes just for you.  Three netpreneurs will get a chance to get
private, 45 minute meetings in which to present their business
opportunities to partners from top-tier venture capital firms
including Peter Barris of New Enterprise Associates, Frank Adams of
Grotech, Kevin Burns of Lazard Technology Partners, and top VCs from
the Venture Group of AOL Time Warner Investments, among others.
To be considered, email a 5-10 page executive summary of your business
opportunity to by November 1. The
group will concentrate on companies with proprietary technology in
areas such as enabling infrastructure for enterprise accounts,
security software, data integration and data delivery solutions, niche
application tools, communication software and wireless solutions.

Lazard Technology Partners:

II> The Region's Netpreneurs
(Washington, DC) A new wall poster reproducing nine historic "first
maps" of the Internet have been published by Peacock Maps, bringing
together some of the original and often hand drawn diagrams and maps
made by the Internet's inventors from 1964 to 1988, charting the
layout of pioneering packet data networks that no longer exist and
documenting  the vision of the Internet's founders.
(Bethesda, MD) eLink Communications, a provider of in-building
broadband Internet access services, has entered the voice services
market as a supplier of local and long distance services for small and
medium businesses. Local toll and long distance services are now
available in approximately 300 eLink-wired buildings in New York City
and Westchester County. The move follows eLink's successful bid to
acquire selected assets of OnSite Access Inc., a New York-based data
and voice services carrier.
(Arlington, VA) aTelo launched its aTelo Media Server (aMS), a
packet-based, software-only media processor that the company says
simplifies the development and deployment of next-generation telephony
services. Functionality includes recording, playback, DTMF, speech
recognition, text-to-speech and conferencing, all of which can be
accessed using standard Web development tools and from major
development environments.
(Falls Church, VA) C2 Technologies released an interactive training
program designed to aid military doctors and the medical community in
the rapid response, diagnosis and treatment of victim exposures to
biological, chemical, and radiological agents. The CD-ROM, called
"Chemical, Biological & Radiological Terrorism Training," developed
for the Naval School of Health Sciences, contains interactive video
scenarios, photographic images and databases on the effects of dozens
of warfare agents. The training is being offered using a variety of
media including CD/DVD-ROM, hand-held devices, laptop and wearable
computers with voice recognition and wireless connectivity to provide
the program anywhere and anytime.
(Reston, VA) Acorn Networks introduced genFlow-2X12c, a dual port
OC-12c traffic management co-processor. Supporting multiprotocol
processing for up to 64K connections, it is a single chip solution for
functions including policing, marking, discard, and shaping for both
packet and cell traffic, protocol conversion and line-rate
segmentation and reassembly, aggregation, and switching. It supports
multiprotocol operation for packets, cells and frames, including IP,
Ethernet, ATM, TDM, FR, and MPLS. Acorn also recently announced the
shipment of genFlow-48c, a multi-function chip that supports wire
speed traffic management.
(McLean, VA) Corcentric, a developer of private online trading
communities for the automotive and heavy-duty truck industry,
announced a new self-service customer service tool that can be
integrated into a manufacturer's CRM system. Corcentric Mp is a
Web-based portal that aftermarket distributors can use access multiple
manufacturers' customer service information, providing the ability to
perform routine inquiries and transactions such as order placement,
inventory availability, track and trace current order status, product
updates, and promotional information. It contains a module interface
for manufacturers who do not currently have a CRM tool installed as
part of their ERP system.

(Alexandria, VA) Digital Paper released Version 5.0 of its docQuest
product for exchange and collaboration on complex technical content
such as blueprints. New features enhance productivity, speed
collaboration with partners.

(Sparks, MD) Systems Alliance released Version 2.0 of its enterprise
content management system, Site Executive.

(Washington, DC) Envista created the site for Greenbridge Group, a
Greenwich, CT-based provider of equity investments and advisory
services to companies in the telecom, Internet, media, and technology
industries. ;

(Sterling, VA) Cryptek Secure Communications, a provider of access
management systems for protecting information assets, has created a
new network security consulting business, the Cryptek Consulting
Group, offering services that include network risk analysis, network
penetration testing and secure network design and consulting.

(Alexandria, VA) YellowBrix has a new deal to integrate its ArchiText
content infrastructure technology with Bethlehem, PA-based Active Data
Exchange's Active Data Syndicator to offer publishers a solution for
delivering customized and targeted information to subscribers. ;

III> Funding & Finance News

$8 million in a second round for Chantilly-based Blue Ridge Networks,
a provider of outsourced Virtual Private Networking solutions. The
round was led by SpaceVest, with participation by North Atlantic
Venture Fund and Knickerbocker Capital. In addition, PNC Bank provided
a $2 million line of credit.

$38 million in a Series B round for Germantown-based Megisto Systems,
a developer of carrier-class mobile Internet infrastructure equipment.
Norwest Venture Partners led the round, with participation by New
Enterprise Associates and current investors Columbia Capital, Bessemer
Venture Partners, and Lucent Venture Partners. The company says that
it has closed on $21.6 million already and has commitments for the
remaining $17.7 million. Matthew Howard of Norwest and Peter Barris of
NEA will join the company's board of directors.

An undisclosed angel investment for Roanoke-based Rock Solutions
Group, a Web based provider of engineering simulations. The money
comes from Dr. John Swanson, the retired founder of Ansys Inc. Rock's
primary offering, ePDSM, allows manufacturers who use computer
simulations in the design of their product to convert these
simulations for intranets or Internet accessible servers.

-- M&A And Shutdowns Down For Net Firms
(San Francisco, CA) Internet-related mergers and acquisition spending
fell sharply, but total deal activity stayed relatively strong in Q3
as buyers snapped up bargains, according to the newest quarterly
report from Acquirers spent $7.4 billion to acquire
300 Internet companies in the quarter for an average deal size of
about $25 million. Compared with Q2, total spending declined 38%, but
the number of deals declined only 7%. Only four deals hit the $250
million-plus category in the quarter, compared to nine in Q2 and 12 in
Q1. Deal announcements, not surprisingly, plummeted in the week of
September 11, but rebounded somewhat, with the last two weeks of
September accounting for 75% of all M&A spending, and half of total
deals for the month. Buyers spent $3.4 billion, about 47% of total
spending, to acquire 130 companies that provide infrastructure such as
eBusiness software, network "plumbing," tools and other enabling
technology. Internet destinations (websites, ASPs, marketplaces, etc.)
also continued to be active, with acquirers spending $2.6 billion to
buy 128 properties. Internet-related professional services and
consulting firms tallied 30 deals for just under a billion dollars,
while access providers saw a dozen deals for about $470 million.
Webmergers is predicting that a convergence of several factors could
contribute to a flurry of deal making in Q4 at valuations that are
likely to be unfavorable to sellers. The reasons? Depressed stock
prices and the potential for VCs to further cut back their funding
activity. In other numbers, Webmergers says that Internet shutdowns
and bankruptcies reached a 12-month low in September as the closures
continue to slow among consumer-oriented properties. By the end of the
month, 28 companies had announced they were closing their doors, the
lowest month-end low since September, 2000, when 22 dot-coms folded.
It brings the year's total closures to 452 and the total since January
2000 to 677.

--HSS Acquires eHealthFIRST
(Columbia, MD) Hamden, CT-based HSS, a developer of software and
eCommerce solutions for the healthcare marketplace, announced the
acquisition of eHealthFIRST, an information and analytical services
company that delivers market research and performance information to
healthcare providers. eHealthFIRST's Hospital INSIGHT product is a
Web-based performance monitoring solution that evaluates improves
compliance, reimbursement and outcomes performance. ;

--AT&T Wireless Acquires TeleCorp PCS
(Arlington, VA) AT&T Wireless will acquire TeleCorp PCS in an
all-stock transaction valued at $4.7 billion. Arlington-based TeleCorp
is AT&T Wireless' largest affiliate, offering digital wireless
services in selected markets in fourteen states and Puerto Rico. AT&T
Wireless already owns 23% of the company and will acquire the rest for
$2.4 billion as well as assuming $2.1 billion in net debt and
approximately $221 million in preferred securities. ;

--InPhonic Acquires GadgetSpace
(Washington, DC) InPhonic, a provider of wireless communications
technology and networks, signed a letter of intent to acquire Cary,
NC-based GadgetSpace, a developer of wireless data access software.
The stock deal is valued at $10 million. GadgetSpace develops software
and services that extend large-scale corporate applications to
wireless devices, which will enhance InPhonic's capability to provide
solutions to its corporate and enterprise customers. GadgetSpace's
principle investors, Harbinger/Aurora Ventures and Cordova Ventures,
will make an additional undisclosed equity investment in the combined
company. ;

--ePlus Acquires SourceOne
(Herndon, VA) ePlus, a provider of Internet-based procurement, asset
management, and business process services, acquired SourceOne Computer
Corporation, a technology sales and services company located in
Silicon Valley. The acquisition gives ePlus a stronger sales presence
in the western US and adds approximately 100 customers to its customer

--EDO Acquires Dynamic Systems
(Alexandria, VA) NYC-based EDO Corporation, a provider of highly
engineered products including advanced electronic, electromechanical
and information systems, acquired Dynamic Systems, Inc., a provider of
professional and IT services primarily to the Department of Defense
and other government agencies. Dynamic Systems will become part of
EDO's Systems and Analysis Group.

IV> Resources & Opportunities
(McLean, VA) Five finalists will be chosen to compete for more than
$70K in services in the First Annual Virginia Telecom Business Plan
Challenge. The prize package includes legal and business consulting
services from Akin Gump Technology Ventures, business consulting
services from CIT and the Tech Venture Partnership, tax consulting
services from PricewaterhouseCoopers, and strategic business
structuring advice from Columbia Capital. Early-stage telecom
companies that have not received any institutional funding are
eligible, with applications due by November 1 for consideration.
Presentations will be judged in an open forum at Virginia's CIT on
December 4. Get more info and an application at:


Thanks for your interest in and support of the Morino Institute's
Netpreneur News is copyright 2001, Morino Institute, all rights
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