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Prominent analyst launches Net investment firm

A Net investment start-up founded by influential Internet analyst Steve Harmon closes its first round of financing, with high-profile backers such as Netscape co-founder Marc Andreessen.

A Net investment start-up founded by influential Internet analyst Steve Harmon has closed its first round of financing, with high-profile backers such as Netscape co-founder Marc Andreessen and GeoCities founder David Bohnett.

The primary investor in E-harmon.com, which plans to invest in privately held and publicly traded Internet companies, is Hummer Winblad Venture Partners. Other investors include MP3.com founder Michael Robertson, Quote.com founder Chris Cooper, Go2Net founder Russ Horowitz, Xoom.com founder Chris Kitze and On24 CEO Sharat Sharan.

E-harmon, which is based in San Francisco and has eight employees, is different from a typical venture capital firm because it plans to invest in both private and publicly traded Internet companies, Harmon said in an interview today.

"Our focus is unique in that we're offering investment products and services to individual and institutional investors," Harmon said. He declined to reveal the amount of money E-harmon raised in its first financing round.

E-harmon will have two investing arms, one of which is a venture fund available to institutional and corporate investors. The second will offer products and services to "retail," or individual, investors, Harmon said. The company also will continue to publish research and analysis, which Harmon has produced for six years.

"We're trying to provide value in everything we do so that every investor has knowledge when they want to invest in the Internet," Harmon said. He added that one of his goals is to help individual investors keep track of the multitude of Internet stocks. "It's a nightmare for the Lone Ranger investor."

The firm plans to devote just 20 percent of its resources to extremely young companies. "We're not trying to catch the flavor of the week," Harmon said.

E-harmon will be operating in the same arena as some of the heavy hitters of the Internet investment market, including venture firm CMGI and Internet incubator Idealab. But Harmon said that because his firm plans to invest in both public and private companies, it makes it difficult to draw a direct comparison.

"Venture capitalists are usually not public-market investors, and public investors are usually not venture capitalists. We're able to participate across the continuum," he said.

"If the public market is frothy, we can invest in the private market. If the private market is frothy, we can invest in the public market. Dave Wetherell, [chief executive] at CMGI, can't do that, and Bill Gross, [founder] of Idealab, can't do that," he added.

Harmon, who created the first Internet stock indexes in 1995, is an award-winning Internet analyst and author of "Zero Gravity," a book about Internet venture capital investing.

Through E-harmon's Web site, entrepreneurs can submit their business proposals for review. The site says it can provide ideas and funding to companies that bring "passion" and "expertise" to the table.

Site visitors also can sign up to receive an email newsletter featuring Harmon's analysis.

According to its Web site, E-harmon has media partnerships with Silicon Investor, CNBC, America Online and CNET, publisher of News.com.