Interactive Minds, which is morphing into more than a consultant and executive recruiter for technology start-ups, is stepping into the venture capital ring to offer comprehensive services for seed companies.
"We are one-stop shopping for entrepreneurs. Now you get the funding and the expertise," said Randy Haykin, founder and president.
Interactive Mind's first venture fund has raised $5 million from private investors with backgrounds in venture capital, investment banking, business, technology, and interactive media.
Blocks of $100,000 to $500,000 increments will be granted to promising early-stage companies that focus on e-commerce, content, tools, and online services, Haykin said.
Just last week, Interactive Minds doled out some of the funds to Wit Capital, which launched an online investment banking business through its Web site that allows investors to take a stake in future IPOs underwritten by major investment banking firms.
And MediaFlex, an e-commerce company, also received funding.
Interactive Minds used to get a straight consulting fee for its services, but now will be compensated with equity.
An abundance of capital is available in today's market for high-tech growth companies, but most of this money is not earmarked for early-stage companies and concepts, Haykin said.
"Our job is like a prep school. We get them ready for the big round [of financing] by developing enough momentum to develop a product, bring it to market, and make sure the business model works," he said.
And Haykin is no stranger to start-ups.
Interactive Minds also has worked with America Online (AOL), Quote.Com, Pacific Bell, Netscape (NSCP), and NetChannel, handling everything from finding executives to running the company to offering consulting.
Venture funding for information technology companies reached over $3 billion in 1997, representing 60 percent of the overall venture capital pie. Software and communications businesses attracted $956 million, or 36 percent of all dollars invested, according to VentureOne's Q2 1997 report.
The report added that the one significant change in venture investments this year vs. 1996 is the renewal in start-up financings, doubling the rate seen in the first half of last year. Among the most active venture capital firms during the second quarter were Oak Investment Partners, NEA, and Accel Partners.