EDGAR Online's VC SECrets Newsletter
Editor: Tim Middleton, EDGAR Online Analyst
editor@edgar-online.com

VC SECrets contributors include EDGAR Online Analyst Tim
Middleton and Venture Capital Contributor Udayan Gupta.

Udayan covered the venture capital industry for more than
a decade as a senior writer for The Wall Street Journal.
He is the author of the forthcoming book "Done Deals" (Harvard
Business School Press, 2000), an inside story of the venture
capital industry.

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*** To the Editor***
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Stock Option Dangers Overstated by the New York Times

Tuesday's (June 13) New York Times featured an extensive
article on the dangers of stock options: "The Hidden Cost
of Stock Options May Soon Come Back to Haunt." As the Times
pointed out, options carry significant costs, especially in
a declining or stagnating stock market. How? Companies must
buy back millions of their own shares to offset the stock
they have dispensed to employees at much lower prices in
options programs. The rationale being that if companies did
not repurchase their stock, there would be so many shares
on the market that the company's earnings, on a per-share
basis, would plunge.

Yes, the nation's largest 140 non-financial companies are
spending about 40% of their earnings on stock buy-back
programs. Yes, Dell and Microsoft spent several billions
dollars apiece last year in stock buyback programs. But in
reality, stock options are not as out-of-control as the New
York Times would have you believe.

Companies need to get shareholder approval for their stock
option grant pools. Institutional investors have been putting
the breaks on excess share dilution and greedy plans. Stock
options will continue to be great tax deals for both companies
and their employees. Without their attractiveness in a tight
job market, salaries would jump and with that inflation, then
interest rates, then economic downturn. We all need to root
for the continued appeal of options, even with its quirky
accounting treatment.

Look at the global spread of stock options. Many countries
now view options as the core of the U.S. economic expansion
and business spirit.

Companies must learn to stop pitching options as a "get rich
quick" scheme. Instead, they should stress the long-term value
of options for employees and the link between personal
performance, company goals, and stock options.

-- Bruce Brumberg is an attorney and the Editor-in-Chief of
myStockOptions.com, a new website that will be publicly
available soon.

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***VC QUESTION OF THE WEEK***
----------------------------------------

QUESTION: How do I value options in a private company?

ANSWER: If your company is private, then you should look at
recent grants of options to new employees or at a recent
financing round. Typically, options are granted at fair market
value so you will be able to figure out the difference between
the exercise price of these recent grants and your exercise
price.  Remember, you  also need to consider the future growth
of the company, which is greater on a percentage basis for
private companies. Valuation of private company stock is much
more of an art than a science.

-- Bruce Brumberg, myStockOptions.com


*** USER NOTE: For public companies, EDGAR Online makes it
easy to find out more about stock option plans, option treatment
and executive compensation.  Here's how you can get started.

Go to http://www.edgar-online.com/fts/search.asp and type
"stock option" into the Search Text box.  You can further
narrow your search by entering "stock option granted" or
"stock option exercised."    You may also choose to limit
results by specifying a company (or ticker symbol) to explore,
(i.e. ticker symbol "DELL") or a form group.  Hint:  Companies
typically disclose stock option grant information in their Proxy
Form (DEF 14A or PRE 14A).

*** Advanced User Tip:  From the Search Text box, change
"stock options" to "stock options" <near/5> granted. NOTE:
the phrase "stock options" must be in quotes. Now you have
told EDGAR that you want to search all DELL documents in
which the phrase "stock options" is within 5 words of the
word "granted." Try changing the word "granted" to "exercised."
You may also modify the number of adjacent words. Try changing
5 to 20 to widen the scope of your search.

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\-----------------------------------------/

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**VENTURE CAPITAL COMPANY PROFILE
----------------------------------------
by Udayan Gupta, Venture Capital Contributor

Biotech Startup Emerging as Leader in Memory Loss Treatment

By jogging the memory, Memory Pharmaceuticals Corp.
(http://www.memorypharm.com) hopes to become a major player
in the biotechnology business. By treating the symptom of
memory loss in diseases such as Alzheimer's and Parkinson's,
the Columbia University start-up could well become the next
industry star.

The population Memory is addressing is huge. Almost half
of all Americans over 85 suffer from Alzheimer's disease,
according to the Chicago-based Alzheimer's Association. And
by the year 2050, the number of Americans afflicted by
Alzheimer's is expected to rise to eight million - double the
number at the end of the 20th century.

Alzheimer's is a slow killer. It can take anywhere from three
to 20 years for a patient to die after being diagnosed, the
Association said. As a result, the cost to the healthcare
system of keeping an Alzheimer's patient alive and functional
can be extremely high. Companies that can help lessen the
impact of Alzheimer's are considered extremely valuable to
the healthcare system and the afflicted patient.

Memory is developing a unique drug-profiling platform to
create therapies for learning and memory-related disorders.
Called Cognostics, the platform identifies cell-based and
physiological assays in an effort to treat the symptoms of
mild to moderate dementia - inability to learn and memory
loss - caused by Alzheimer's, Parkinson's, and, potentially,
Down's syndrome and epilepsy. Cognostics identifies drugs
that treat the symptoms, not the disease itself.

Memory plans to develop drugs in-house, and to create others
through partnerships with major pharmaceutical companies.
Memory's larger goal, however, is to develop a product that
will curb or prevent memory loss in the greater population,
a potentially giant market considering the buying power of
the 83 million US baby boomers. It is a market that has not
gone unnoticed by others. Today, many other small companies,
such as American Biogenetic Sciences, Inc. (ABS),
NeoTherapeutics, Inc. (NEOT) and Helicon Therapeutics, and
large pharmaceutical firms, such as Pfizer Inc. (PFE), Shire
Pharmaceuticals Group plc (SHPGY), and Johnson & Johnson (JNJ)
are also looking for similar treatments. But Memory officials
believe that the competitors might become allies - especially
if the company can develop and test its platform first -
selling memory-enhancing drugs to graying populations worldwide.

The technology behind Memory is impeccable. Eric Kandel, a
professor at Columbia University's Center for Neurobiology
and Behavior, and Walter Gilbert, Harvard University professor
and Nobel laureate, started Memory in the mid '90's. Shortly
thereafter Axel Unterbeck, former head of CNS-Dementia
research at Bayer AG (BAYZY), joined as president and chief
scientific officer.  Columbia, which has an equity stake in
the privately-held firm, granted Memory exclusive rights to
develop Kandel's patents, in return for royalties.

The company is well backed.  It has received nearly $15
million in financing from venture capitalists such as Oxford
BioScience, VenRock Associates, HealthCare Ventures, Alta
Partners, and SR One. And it is aggressively pursuing corporate
partners that can provide capital and infrastructure support.

In an investment environment in which biotechnology has
once again regained investor confidence, and companies with
strong backers and technology are sought after, Memory
Pharmaceuticals is well worth watching.

Memory Phamaceuticals Corp.- Key Players

Venture Fund Investors:

Oxford Bioscience Partners
VenRock Associates
HealthCare Ventures LLC
Alta Partners
SR One Ltd.
Life Science Ventures
GIMV Investors

Principal Officers:

Robert S. Cohen  CEO and Director
Joanne M. Leonard  Vice President, CFO and Treasurer
Axel Unterbeck, Ph.D. President and Chief Scientific
Officer, Director, and Co-Founder

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**VC SECTOR PROFILE ****
----------------------------------------

Network Infrastructure and Value-Added Services

Companies profiled:
Flashcom  (www.flashcom.com)
Intira Corporation (www.intira.com)
Jato Communications (www.jato.net)
Quantum Shift (www.quantumshift.com)
ThinkLink (www.thinklink.com)


Most venture capitalists believe in hedging their bets. So,
although they might focus on one broad industry segment,
they tend not to have too many portfolio companies that are
targeting the same customers or the same solutions. But there
are exceptions. The Mayfield Fund, one of the few funds that
continues to focus on computer technology and the life
sciences, is convinced that there is a burgeoning market for
network infrastructure and the value added services around
that infrastructure.

As DSL (Digital Subscriber Line) technology becomes more in
demand because of its ability to replace modems and T1 lines,
and IP (Internet Protocol) technology becomes a standard for
both data and voice transmission, companies that are providing
infrastructure support and value added services for these
technologies can build substantial businesses. And as service
and infrastructure providers these companies may prove to be
more real than many of the Internet shadowcatchers.

***************************
Flashcom  (www.flashcom.com)

Flashcom delivers high-speed DSL access to customers in 48
states through agreements with competitive local exchange
carriers. Additionally, the company has a multi-year agreement
with AT&T to access AT&T's Global Internet system using
AT&T's Managed Internet Service. By focusing exclusively on
DSL, Flashcom has become the leader in the space.

EDGAR INSIGHT: Flashcom filed an S?1 on May 12, 2000.

http://www.edgar-online.com/secrets.asp?d=A-1112437-0000892569-00-000385

NOTE: Before going public (i.e. selling shares on an exchange),
companies must file an S-1 form with the SEC. This extensive
document includes such information as risk factors, financials,
strategy, industry, management bios and more.

Venture Fund Investors:

Mayfield Fund
Communications Ventures
Intel Corporation

Principal Officers:

Richard Rasmus  President and CEO
M. Wayne Boylston  CFO

****************************************
Intira Corporation (www.intira.com)

Intira acts as an outsourcing resource for companies seeking
application hosting, hardware and software OS provisioning,
network connectivity and infrastructure support services.
Through data centers at its headquarters in Pleasanton, CA,
and in St. Louis and New York, and through its nationwide
broadband network of proprietary management services, the
company provides seamless infrastructure performance to
e-businesses, applications service providers and independent
software vendors.

Venture Fund Investors:

Mayfield Fund
Chase
Spectrum Equity
NEA

Principal Officers:

Bernie Schneider  CEO
David S. Boone  CFO
John Steensen  Vice President, Chief Technology Officer

****************************************
Jato Communications (www.jato.net)

Jato provides business grade DSL service to small and
medium-sized companies in secondary markets directly,
and through Internet service providers and value added
resellers. Business grade DSL has been proven to be faster
and more reliable than residential grade DSL and cable modems.

EDGAR INSIGHT: Jato filed an S-1 on December 23, 1999 and
filed a request to withdraw its S-1 May 12, 2000.

http://www.edgar-online.com/secrets.asp?d=A-1073715-0000912057-99-010533

Venture Fund Investors:

Mayfield Fund
Crest Communications Partners, L.P.
CEA Capital Partners USA, L.P.
ABN AMRO Capital (USA), Inc.
Access Technologies partners
Qwest Communications
Microsoft

Principal Officers:

Gerald K. Dinsmore  President and CEO
Terri Compton Executive Vice President and COO
William D. Myers Senior Vice President, Finance and
Strategic Planning, CFO
Rex A. Humston Senior Vice President, Engineering and
Chief Technology Officer

****************************************
Quantum Shift (www.quantumshift.com)
formerly MVX.com

On May 8, 2000, MVX.COM changed its name to QuantumShift
to better reflect the wide-ranging changes it is bringing
to the telecommunications industry. The company offers
businesses one-stop-shopping for telecommunications solutions
and implementation strategies. Through alliances with U.S.
-based and international companies, it provides an array of
communications services from local and long distance, to
frame relay and ISDN.

Venture Fund Investors:

Mayfield Fund
Texas Pacific Group
Francisco Partners

Principal Officers:

Scott Schaefer  President and CEO
Edward A. Brinskele Co-Founder and Chief Technology Officer

****************************************
 ThinkLink (www.thinklink.com)


ThinkLink is a telecommunications applications service
provider offering unified messaging. Users are assigned a
local number and an 800 number. All calls, faxes and emails
made to the user's home, office, or other locations can be
accessed by the user over the phone. The service can be bundled
and branded by ISPs, Internet portals, and other companies
who want to provide customers with the latest communication
technology.

Venture Fund Investors:

Mayfield Fund
Softbank Technology Ventures

Principal Officers:

David B. Ward  President and CEO

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**COMPANIES MENTIONED IN THIS ISSUE***
----------------------------------------

ABN AMRO Capital (USA), Inc.
Access Technologies partners
Alta Partners
American Biogenetic Sciences, Inc.
AT&T,
Bayer AG
BioScience
CEA Capital Partners USA, L.P.
Chase
Communications Ventures
Crest Communications Partners, L.P.
Dell
Flashcom
Francisco Partners
GIMV Investors
HealthCare Ventures
Helicon Therapeutics
Intel Corporation
Intira Corporation
Jato Communications
Johnson & Johnson
Life Science Ventures
Mayfield Fund
Memory Pharmaceuticals Corp.
Microsoft
MVX.COM
NEA
NeoTherapeutics, Inc.
Oxford Bioscience Partners
Pfizer Inc.
Quantum Shift
QuantumShift
Qwest Communications
Shire Pharmaceuticals Group plc
Softbank Technology Ventures
Spectrum Equity
SR One
Texas Pacific Group
The Mayfield Fund
ThinkLink
VenRock Associates

----------------------------------------
***PEOPLE MENTIONED IN THIS ISSUE***

Edward A. Brinskele
David S. Boone
M. Wayne Boylston
Robert S. Cohen
Terri Compton
Gerald K. Dinsmore
Walter Gilbert
Rex A. Humston
Eric Kandel
Joanne M. Leonard
William D. Myers
Richard Rasmus
Scott Schaefer
Bernie Schneider
John Steensen
Axel Unterbeck
David B. Ward

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Copyright 2000, EDGAR Online
http://www.edgar-online.com
-----------------------------------------
DISCLAIMER: The EDGAR Online report
contains observations of its editor
Tim Middleton, a consultant of EDGAR
Online and is for informational purposes
only.  These statements and expressions
are the sole opinions of Mr. Middleton and
EDGAR Online does not endorse nor
necessarily agree on such statements
and expressions.  Factual statements in
this report are made as of the date
stated and are subject to change without notice.
Nothing contained herein shall be deemed to be
recommendations to buy, hold or sell securities
nor shall it purport to be a
complete analysis of the companies
mentioned.  While the information
contained in this Report and the opinions
contained herein are based on sources believed
to be reliable, neither Mr. Middleton nor EDGAR
Online have independently verified the facts,
assumptions and/or estimates that may
be contained in this Report. Accordingly, no
representation or warranty, expressed or implied,
is made as to, and no reliance should be placed
on, the fairness, accuracy, completeness or
correctness of the information and opinions
contained in this Report.
----------------------------------------