InformationWeek

MyPoints' database infrastructure, which reportedly cost $60 million to develop, will enhance United's existing online direct-marketing strategies, such as targeted E-fares, advertising, and loyalty programs, says Scott Garner, managing director of United NewVentures, the division of United's parent company, UAL Corp., that oversees Internet initiatives and investments. "The acquisition offers a very cost-effective way to have proprietary technology to provide travel-related products and services," Garner says.

United also gets access to MyPoints' 16 million registered users, who earn points, redeemable for gift certificates and other products, by responding to ads and other online marketing efforts from MyPoints business customers. MyPoints users will be able to redeem points for United tickets.

--Elisabeth Goodridge (egoodrid@cmp.com)

Slow But Steady Marks VC Investment Pace
Add Matrix Partners to the growing list of venture-capital firms that have raised billion-dollar funds. That makes 32 since the beginning of 2000, for a total of $43.4 billion, according to Venture Economics and the National Venture Capital Association.

But just because VCs have the money doesn't mean they're doling it out. Matrix, which invests in communications equipment and infrastructure software companies, is no different. It's still investing a $500 million fund raised in January 2000 and won't touch the new money till late summer.

VCs are holding $35 billion to $40 billion earmarked for investment, estimates Mark Heesen, the NVCA's president. Essentially, that's because falling valuations for startups means funding rounds require less capital, he says. And there are few chances to take companies public or complete mergers and acquisitions.

One bright spot may be Charles River Ventures: Since closing a $1.2 billion fund in February, it has made seven investments in the wireless infrastructure, optical networking, and CRM sectors. The fund is earmarked for early-stage companies in the data communications and software and services arenas.

--Christopher T. Heun (cheun@cmp.com)

In It For The Ultra-Long Haul
The Canadian capital of Ottawa is home to a maturing brood of optical-network companies. One of them, year-old Solinet Systems, recently raised $93 million in its second round of funding, Canada's biggest round ever for a telecom.

"That's typical," says CEO Scott Marshall. "You get an area where a lot of expertise develops and spawns companies. There's a lot of optical technology here because Nortel is the big gorilla in the long-haul space," where networks cover several hundred miles.

Solinet has attracted talent from its heavyweight rival as well as another local optical-network firm, Newbridge Networks. What distinguishes Solinet from Nortel, Marshall says, is that its networks can have a reach of thousands of miles, or what's called ultra-long haul.

Because of its flexible modular architecture, Solinet's simple network design is quicker to provision and cheaper to install and operate than existing systems, Marshall says. Future customers such as WorldCom would be able to take a Solinet system and build a core optical network to provide voice, data, and video traffic for long-haul and ultra-long-haul distances.

U.S. Venture Partners led the recent round of funding.

--Christopher T. Heun (cheun@cmp.com)