Oracle details venture capital fund

Oracle's $100 million venture capital fund will invest in start-up companies developing Internet applications or services based on its Oracle 8i software.

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Oracle today announced a $100 million venture capital fund for investing in start-up companies developing Internet applications or services based on its software technology.

Company executives execs outlined details to representatives of some 50 venture capital firms tonight, touting Oracle's ability to help start-ups with technology and marketing. The company is most interested in web portals, e-commerce sites, and software makers focusing on the Internet and content management.

"It is not that we would shy away from another Web site that wants to sell books," said Oracle chief executive Larry Ellison. "We think the next generation of business-to-business [software] applications will be on the Net."

As first reported by CNET News.com, Oracle's goal is to elicit support for its strategy of driving businesses to the Web using its Oracle 8i database software. Redwood Shores, California-based Oracle is betting heavily on the Internet, having predicated its upcoming 8i database on the online medium while recrafting its business application software to be Internet-friendly. The company also has a line of Internet commerce software.

In choosing among funding candidates, Oracle will work with venture capital firms charged to find prospective companies and send proposals to Oracle. The software maker will decide whether to fund the applicants on a case-by-case basis.

Oracle, which called $100 million an initial allocation, said it plans to invest in both start-ups and established companies, assigning between $2 million to $5 million to each startup. The venture capital firms will be expected to sink money into the startup companies too.

John Boyle, general partner of Matrix Partners in Waltham, Massachusetts, said he's normally wary of corporate venture capital funds because of he's fearful of shackling a startup which may need to change its business plan. But "Small companies are not likely to change their products from Oracle to Sybase midway through," he said.

Funding recipients will also receive the benefit of access to Oracle's technology, developers, technical support, and early releases of new software, according to the company.

To be considered by Oracle, the small companies must be Internet-based. "This is to foster people to write for the Oracle platform?to get people to think of Oracle as the Internet platform," according to a source familiar with the company's plans.

"It's similar in scope to what others like Intel, Novell, and Adobe are doing. It's like what Sun did with the Java fund."

The company has been touting the Internet's capabilities for years, and taken its own advice. As part of its plan to boost sagging sales in its applications division and flat sales in its database division, Oracle last year launched plans to transfer, or port, all of its products to the Web.

Specifically, Oracle is hoping its much-anticipated Oracle 8i database--recently delayed until the end of February--will play an integral role in rejuvenating sales. The outspoken Ellison claims Oracle 8i will be the only product companies need to build business applications accessible via a Web browser.

The flagship database will feature an "Internet file system" for storing and managing Web pages as well as word processing files, spreadsheets, and multimedia data.