extraordinary explosion of capital flowing into the venture industry in the late 1990s and beyond, the managing partners of the firm decided, contrary to the industry trends, that bigger was not better. We concluded that great returns and rewarding relationships with promising young companies were not likely to be realized with a sizeable institutional venture fund, and we stopped raising such funds. (To read the letter we wrote to our institutional investors explaining our departure from the world of institutional venture capital funds, click here). In effect, we returned to our roots: finding entrepreneurs who have bootstrapped themselves into the post-startup stage of early revenue generation, for whom experienced equity partners, along with half a million to a few million dollars of equity capital, would be attractive. We now make such investments on a very selective basis, using primarily our own funds. We welcome inquiries from entrepreneurs who believe capital should be used efficiently and who think we might be good partners to help them achieve their vision.

While examining the world of opportunities to invest in small growing companies, we also recognized a neglected opportunity to make long-term investments in publicly traded companies with limited trading and small market capitalizations. We characterize these situations as "publicly traded venture opportunities." Some of us have organized Kinderhook Partners, LP, a fund that is actively pursuing opportunities to invest in promising growing micro-cap public companies. We either buy blocks of stock from existing shareholders, shares on the open market, or shares directly from a company in order to provide capital.

The success of our portfolio companies has led to a number of IPOs and profitable acquisitions:

- Autoweb.com is a nationally branded internet-based marketing service for new and used vehicle purchasing. After its IPO it merged with Autobytel (Nasdaq: ABTZ)

- Catalina Marketing (NYSE: POS) provides a wide range of strategic, targeted electronic marketing solutions for consumer goods companies, pharmaceutical manufacturers and their respective retailers.

- Expert Software (Nasdaq: XPRT) provides budget PC software to the education, hobby, home productivity, and finance segments of the consumer market. After its IPO, it was acquired by Activision, Inc.(Nasdaq: ATVI), a leading provider of interactive entertainment software.­

- Homestore.com (Nasdaq: HOMS) is the #1 visited home and real estate-related network on the Internet, providing information, products and services which reflect all aspects of the home life cycle, including buying, selling, moving, renting, remodeling, decorating and shopping.

- Jackson Hewitt operates and franchises a national chain of federal and state tax return preparation and filing services. After its IPO, it was acquired by the Cendant Corporation (NYSE:CD), a global franchisor of real estate brokerage offices, hotels, rental car agencies and tax preparation services.

- Logic Works develops and publishes CASE (computer aided software engineering) software for client/server and RDBMS (relational database management systems) applications. Since its IPO, it was acquired by the Danish IT firm, Platinum which was later acquired by Computer Associates (NYSE:CA).

- MemberWorks (Nasdaq: MBRS) is a leader in bringing value to consumers by designing innovative membership programs that offer services and discounts on everyday needs in healthcare, personal finance, insurance, travel, entertainment, computing, fashion, and personal security.

- Netcom (Nasdaq: NETC) was one of the first ISPs, providing internet access services for individuals and businesses. Since its IPO, Netcom was acquired by Earthlink (Nasdaq: ELNK), the 2nd largest ISP.

- SeaMED (Nasdaq: SEMD) is supplier of contract engineering and manufacturing in the medical device industry. After its IPO, it was acquired by Plexus (Nasdaq: PLXS), a leading contract service provider of design, manufacturing and testing services to the electronics industry.

- ServiceWare (Nasdaq: SVCW) is a leading provider of Web-based solutions for enterprise service and support. The company delivers a comprehensive, integrated family of eService solutions that enable organizations to easily provide customers with fast, accurate answers to inquiries across all touch points: Web, e-mail, phone, fax or in-person.

- SPSS (Nasdaq: SPSS) develops and markets software for statistical data analysis, data validation and presentation graphics. SPSS was on the Forbes 2000 list of the “200 best small companies“ and BusinessWeek's Hot Growth Companies.

- StepStone (LSE:SSO; OSE:STP.OL) is Europe's leading online portal for recruiting and career services.

- VERITAS Software (Nasdaq:VRTS) is a leading provider of essential data availability software solutions that enable customers to protect and access their business-critical data.

- ViaGrafix (Nasdaq: VIAX) provides video-based training to both corporate and home users of PC software applications and network operating systems. It was acquired by Learn2.com (Nasdaq: LTWO).

- 4-Sight develops and sells communications products to the graphic arts, printing and pre-press industries. It has been acquired by WAM!NET.

- Axon Networks provides local area network and wide area network monitoring and management solutions for OEMs and end users. It was acquired by 3Com (Nasdaq: COMS).

- D-Vision Systems provides non-linear digital video editing software solutions to the professional film and video editing community. It has since been acquired by Discreet Logic, an Autodesk (Nasdaq: ADSK) company.

- FA Holdings is a provider of credit and debit card processing services to small merchants. It has since been acquired by National Processing, Inc. (NYSE: NAP), the 2nd largest USA credit card processor.

- Fifth Generation Systems provides utility software for computers. It has since been acquired by Symantec (Nasdaq: SYMC), the leading internet security solutions provider.

- Geneva Technology is a leading international provider of convergent billing software for the telecommunications, IP/Internet, utilities and on-line services marketplaces. Geneva received the World Billing Award for Overall Best Contribution to Billing (2000). In March 2001, Convergys Corporation (NYSE: CVG), the global leader in integrated billing and customer care services, merged with Geneva Technology.

- InterCAP Graphics is a leading supplier of computer graphics software for improving the productivity of professional technical illustrators. It has since been acquired by Micrografx (Nasdaq: MGXI).

- Micro Engineering Solutions designs, develops and markets CAD/CAM systems operating on low-cost hardware platforms. Its primary market is the tooling design and manufacturing sectors. It was acquired by Autodesk (Nasdaq: ADSK), the world's leading PC design software and multimedia tools supplier.

- Milkyway Networks produces and markets an application level Internet firewall software package. It was acquired by SLM Software (TSE: ESP).

- PDA Engineering provides specialized software products and engineering support services to the distributed mechanical computer-aided engineering market. It has since been acquired by MSC Software (NYSE: MNS), the leading company in the space.

- PhotoDisc publishes and sells digital stock photography. It was acquired by Getty Images (Nasdaq: GETY), the leading provider of imagery and related products and services.

- Saladin is the leading software provider for the oil trading market. It was acquired by FAME Energy, the leading energy information solutions provider.