Zero Stage Capital –

CAMBRIDGE, Mass. – Zero Stage Capital invests in early- and late-stage health-care, bio-technical and telecommunications companies in the Northeastern United States.

Founded in 1981, Zero Stage has about $225 million under management spread across six funds and has invested in more than 90 companies.

Zero Stage Capital VI held a $125 million close in October (VCJ, December 1998, page 17), of which $9 million already is invested. Zero Stage Capital V, closed in early 1994 at an estimated $48 million. The firm prefers to invest between $500,000 and $5 million per round, totaling an average of $5 million to $6 million over the life of an investment.

The firm’s managing directors are Gordon Baty, Stanley Fung, Brian Johnson and Paul Kelly.

The firm’s investors include corporations, banks, pension funds and entrepreneurs. Zero Stage co-invests with other venture firms with similar investment strategies in an effort to add further value to its portfolio companies, Mr. Fung said.

Select Zero Stage Capital companies follow:

24/7 Media Inc. (New York, N.Y.) is a publicly traded Internet-based advertising network.

Apex Medical (East Walpole, Mass.) develops a left ventricular assistance device, which is fully implantable and effectively replaces the functions of an ailing heart.

VIMAC is a co-investor.

Be Inc. (Menlo Park, Calif.) develops and markets the BeOS, the only operating system designed for the new digital multimedia environment and the Internet.

Co-investors include August Capital, New Enterprise Associates and Alta California Partner.

Imaging Automation Inc. (Bedford, N.H.) provides components and systems for the automation of documents, with a focus on picture and biometric identification.

Keystone Venture Capital is a co-investor.

ImproveNet Inc. (Redwood City, Calif.) is an Internet-based home improvement site for contractors, architects and designers, homeowners and suppliers.

Co-investors include Alta Partners, Arch Venture Fund, Allstate Insurance Company, August Capital Management and Hambrecht & Quist.

Kinetix Pharmaceuticals Inc. (Medford, Mass.) specializes in the discovery and development of small molecular-weight pharmaceuticals.

Co-investors include JAFCO America, Novartis and Lombard Odier & Cie.

Limitrader (New York, N.Y.) uses proprietary software to provide principal-to-principal trading in corporate bonds and other securities.

Softbank Technology Ventures is a co-investor. Inc. (New York, N.Y.) is a leading Internet news, information and entertainment service that hosts more than 600 Web sites.

Co-investors include Doll Capital Management, Walden International, Crystal Internet Venture Fund, Big Flower Holdings, C-Max Capital and Prospect Street. Inc. (Acton, Mass.) is a leading online retailer of vitamins, supplements and minerals products.

Co-investors include Bessemer Venture Partners, CMG @Ventures, Morgenthaler Ventures, Commonwealth Capital Ventures and North Castle Ventures.

Mosaic Technologies (Boston, Mass.) develops and manufactures blood screening equipment.

Co-investors include Advanced Technology Ventures, Oxford Biosciences, Solstice Capital and G&G Diagnositcs.

Powercell Inc. (Cambridge, Mass.) develops advanced rechargeable batteries utilizing patented Zinc-Flow technology.

Co-investors include Eurobrom, B.V., Young Poong Corp. and BTI Corp.

RoweCom Inc. (Cambridge, Mass.) is a publicly traded Internet-based corporate subscription management service for books and periodicals.

Silknet Software Inc. (Manchester, N.H.) provides software that allows companies to offer personalized marketing, sales, electronic commerce and customer support services through a Web site interface.

Co-investors include CMG @Ventures, BancBoston Ventures, Vertex Management, JAFCO America, Intel Corp., The Goldman Group, KPMG and Cambridge Technology Capital Fund.

Syncra Software (Cambridge, Mass.) provides Internet-based software to facilitate supply chain collaborative planning, forecasting and replenishment.

Co-investors include Internet Capital Group, TL Ventures, Prism Ventures, Pequot Capital Management and Cambridge Technology Partners.

USCareLink (Waltham, Mass.) provides an integrated Internet/Intranet ambulatory care management system.

Co-investor includes Seaflower Associates.

Xiox Corporation (Manchester, N.H.) manufactures and distributes a line of telephone management support and control systems and is currently developing a next generation product.

Co-investors include Intel Corp. and Flanders Language Valley Fund.

Zero Stage Capital can be contacted at 1 Portland Square, P.O. Box 15480, Portland, Maine 04112-5480, tel. (617) 876-5355, fax. (617) 876-1248. Additional information about the firm can be found on the Web at

Correction: A portfolio profile in the March issue of VCJ on Friedman Billings Ramsey Group should have listed Olympic Capital Partners as a co-investor in the firm’s portfolio company, XYPOINT Corp.