Steve Perlman is back, and this time around he has $67 million to launch what he calls his most ambitious startup -- Rearden Steel Technologies.
Mr. Perlman shot into the limelight after cofounding WebTV Networks, an Internet access terminal for the couch-potato tribe. He sold the 20-month-old company to Microsoft for $425 million in 1997, then stayed on at Microsoft until 1999.
His new effort, based in Palo Alto, California, received its first round of funding from a lengthy list of heavyweight investors: America Online is the lead, followed by Cisco Systems, EchoStar Communications, Mayfield, Vulcan Ventures, The Barksdale Group, The Washington Post Company, and Macromedia Ventures. Sources close to the transaction say it valued Rearden at more than $250 million.
The whopping first-round funding, which will be announced Monday, and bumper valuation for the 16-month-old startup are impressive in the new era of down rounds and scared venture capitalists.
"It's rare to find an early-stage company with impressive, seasoned management that has both a solid track record and proven success in the consumer market," says Kevin Fong, managing partner at Mayfield, one of Rearden's backers.
The cagey Mr. Perlman won't say exactly what Rearden is up to, except that it's building a combination hardware-software solution for the home entertainment market, and has also developed key networking technologies. The word "incubation," which was part of the Rearden pitch earlier this year, is no longer mentioned.
"The first time around, with WebTV, it was always a race against time, and the product was not robust enough," he says. But now it's different, Mr. Perlman proclaims, for now "I have the credibility with these big companies, and we have all the ducks lined up." Investors like America Online, Cisco Systems, and EchoStar will also be partners for the company, he hints.
"This is not an evolutionary product or a recap of what others are doing, but instead it is a revolutionary approach," Mr. Perlman says. Red Herring sources say Rearden's product could be a next-generation set-top box, with a special focus on data-casting. Data-casting has proved to be the waterloo for more than a few startups, including the defunct Geocast, whose assets were bought by Rearden for less than $2 million dollars.
FUNDING DETAILS -- Location: Palo Alto, CA; Funding: $67 million; Round: 1st; Lead Investor: America Online; Other Investors: Cisco Systems, EchoStar Communications, Mayfield, Vulcan Ventures, The Barksdale Group, The Washington Post Company, and Macromedia Ventures.