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The Web gets capitalized
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July 18, 1997: 4:23 p.m. ET
Bay Area firm offers technology mutual fund to investors on the 'Net
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NEW YORK (CNNfn) - A number of brokerages have transformed their Web sites into full-service trading venues, allowing clients to conduct a variety of stock and mutual fund transactions online.
Late Thursday, the Securities and Exchange Commission helped expand those offerings by giving its approval for San Francisco-based Technology Funding to start offering shares of its venture capital fund on the Web.
Tom Toy, a partner at Technology Fund, joined CNNfn's John Defterios on "Digital Jam" Friday to discuss the new effort. Here is a partial transcript of their conversation:
DEFTERIOS: This really is cutting-edge technology and investment coming together, isn't it? It's taken a giant leap forward with this SEC decision.
TOY: It really has. We're real pleased to be offering the first venture capital fund for individual investors fully raised over the Internet. We think it's a real confluence of events, a real interesting set of developments that brings together what's happened in technology and what individual investors are doing with their own money.
DEFTERIOS: Before we go to anything else, how difficult was it to get the SEC to back this concept? One would think it would take years to get them to get their hands around a concept like this.
TOY: It actually wasn't very difficult. It was a very straight-forward process and we think it really happened because of the forward-thinking of the SEC. So we're very pleased with how that process went. We thought it was a very thoughtful process and yet, also a very constructive process.
DEFTERIOS: We should make it clear that you have a long track record in venture capitals. It wasn't like you started this concept and you wanted to present it to the Internet and it's all very, very new to you.
TOY: That's exactly true. We have 11 SEC-registered funds, so this is just one more fund that is doing exactly what we have been doing over a number of years -- almost 20 years in fact. So, the only real new wrinkle here is that we are raising this money and communicating with our investors over the Internet.
DEFTERIOS: OK, take us through it. Say I'm an investor and I could log on to your web site. What is the process? Can I just put in as little as a $1,000 and put money into a fund that you have?
TOY: Right. What the process is, is that you should come to our web site. There you will see our prospectus as well as some information about our firm. But in the prospectus, there will be a very lengthy section about the risks involved and we certainly want people to read through that section. We want people to know what the suitability standards are.
The minimum investment is $1,000 and we will take that investment via the Internet, and credit card.
DEFTERIOS: So what's your track record say, for the other funds. What's the average return for a venture capital fund over a year and then stretching out over five years?
TOY: Well, each fund is a 10-year fund, so we can't talk about really one-year periods or five-year periods without having that be really not as meaningful as it should be. What I would like to do, is point people to our prospectus which has specific performance data in it and it's something that we want to be very specific and very exact on.
We have invested in 50 companies that have gone public and a number of others that have been acquired by larger companies. So we're real pleased with how we performed and think that we'll do a yet better job with this fund, given the delivery mechanism and the low cost that Internet delivery will allow.
DEFTERIOS: Oftentimes, venture capital people have the best insights into the stock market. The market's a bit frothy today, it seems, and we're getting a bit of a sell off because of that even though Microsoft beat expectations. How do you see the markets right now from Silicon Valley's point of view?
TOY: Well, Silicon Valley is doing very, very well. Times are very good in Silicon Valley. By and large, companies are doing very well, competing very effectively on a world-wide basis. So from that standpoint we think companies will continue to prosper.
The stock market is something that clearly has its ups and its downs and we've been on a fortunate very high ride for a very long time. It's kind of hard for me to look at that and predict where we'll be tomorrow. That brings us to what the advantages of technology funding. We will be investing in the next generation of companies. The next generation of success stories, if you will.
So we are less interested in how the market's doing today per se than in how it will be doing in three, five and seven years from now. 
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Technology Funding
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