New ASP Off to a Fast Start

BOSTON (05/23/2000) - Startup Inc. adds new meaning to the phrase "hit the ground running." The Englewood, Colorado, application service provider (ASP) launched March 1 with a war chest of $45 million, a seasoned management team and customers in hand. is a spinoff from consulting firm CIBER, which had an outsourcing arm that served home furnishings retailer Heilig-Meyers, among others. used its existing outsourcing business to attract $30 million from Web hosting giant Verio and $15 million from Centennial Ventures. Now is introducing a suite of hosted enterprise applications and value-added services built on Verio's Internet infrastructure.

"We believe there is a big opportunity [in]," says David Hull, general partner at Centennial Ventures. "We were particularly attracted to the opportunity to join with CIBER and Verio as partners. That's an important aspect of being able to create a national footprint quickly." is among dozens of ASPs that launched last quarter with large investments from the venture capital community. What differentiates is its depth of experience in hosting and integrating enterprise applications and its proven ability to manage complex relationships with its customers. is using those distinctions to seek a second round of financing, despite recent stock market volatility and a slowdown in the market for initial public offerings.

"The volatility that we're seeing in the market has raised the bar, so the scrutiny is much more challenging and much more substantive," says Tommy Holt, chief technical officer at "Investors are asking if there is really a rational business plan and people who can carry it off and a structure that can take it to the customer and, over time, drive profitability ....

Fortunately, we pass those tests with flying colors."

Holt says the next round of financing will likely be oversubscribed. "There's clearly tremendous interest in the investing community in the ASP model," he says.

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