Yazam described itself as a provider of seed-stage funding and
business development services, to emerging Internet and technology
start-ups. The company declared its business strategy as a,
"Predictable Time to Money" funding model that targets closing within
45 days of initial contact for projects accepted. It was made
available to entrepreneurs through the Internet, and deemed an
exciting new business idea. Yazam created the impression that it
could process requests for funding "faster" than anyone else.
Yazam aggressively pursued its goal and expanded its activities.
However, its founding came late in the boom cycle of Internet
companies, heavily dependent on the reputation of Dr. Shlomo Kalish,
founder of Jerusalem Global. The company began to falter in early
2001, when investors in Yazam were reported to have expressed grave
dissatisfaction, and raised the prospect of a return of uninvested
funds still available in Yazam's coffers.
Subsequently, newspaper reports stated that the American incubator
U.S. Technology, is ready to buy Yazam, for $22 million in cash and
$9 million in shares. Under the terms of the sale, Yazam shareholders
will be able to realize U.S. Technology shares amounting to $2
million within 20 working days of the deal being closed. U.S.
Technology is traded on the Nasdaq at a value of $36 million and owns
seven active portfolio companies. The American firm will take over
Yazam's holdings in 30 portfolio companies in Israel and the United
States, as well as the capital that remains in the coffers of the
investment company.
Yazam decided to accept the U.S. Technology offer rather than go into
liquidation after shareholders in the investment company concluded
that it would be too costly. While the thud of imploding Internet
companies is still being heard, Oracle Corp., comes along and
launches a Web-based initiative that is part business-to-business
marketplace, and part online incubator for technology start-ups. The
Oracle VentureNetwork aims to place start-ups in touch with venture
capital and provides professional services to help ventures develop
and promote themselves. VentureNetwork will be funded by Oracle's
$400 million annual worldwide marketing budget.
Unlike the company's Venture Fund, established with $500 million for
strategic investments in start-ups developing technologies based on
Oracle products, the network unit invests in companies that already
use its services. VentureNetwork unit, like the Oracle Venture Fund,
is looking to draw business to its parent company. Oracle has
traditionally targeted its sales to big business. It is now seeking
a way to drive its brand to small business.
Outside the U.S., Oracle is rolling out local versions of the program
in a number of European countries, Brazil, China, Hong Kong, Taiwan
and the Philippines. The portal has already signed up about 3,000
entrepreneurs and start-ups receiving 1,800 business plans from a
pilot program started last spring in Europe.
Oracle, not unlike Yazam, has signed 50 financial institutions as
members, along with a 100 professional service companies. Investors
have been especially interested in how the Web portal aims to build a
community for entrepreneurs and funding sources.
On the surface, Oracle's initiative, appears to be strictly profit
oriented, looking to extend the outreach for its products into
companies in the pre-business stage. Undoubtedly, partner-investors
will be seeking to gain a profit by going with the industry giant.
Will Oracle, which advertises that it saved $1.0 billion by
streamlining its own software, be able to produce profitable results
as it moves along a path somewhat reminiscent of Yozma and other dot
coms of the recent past? However, one thing is sure that Oracle will
not run out of funds.
Yazam was launched in July 1999 in Jerusalem and then opened
additional offices in New York, San Francisco, and Washington, D.C.
The company's funding policy was also aimed at expanding Yazam's
presence, in London and Tokyo.