NORTHWEST SETS A DIZZYING PACE OF HIGH-TECH STARTUPS

SEATTLE (AP) -- The pace of high-tech business startups in thePuget Sound area shows so sign of slowing. And they're drawing moneyto the region as investors scramble to pick the winners.

The ventures are in a range of hot new fields -- electroniccommerce, Internet gaming, wireless telephones and more.

And there to offer them capital to grow on are investment banksand venture firms.Venture funding in the Northwest increased by 87 percent lastyear, according to the Price Waterhouse accounting firm. That's abigger gain than the national 26 percent increase -- and it tops the35 percent rise in California's Silicon Valley, though on a muchsmaller base."The flow of good deals is picking up," said Stephen Arnold, whoheads the new Bellevue office of Boston-based Polaris VenturePartners, an $85 million fund that began investing last year."We believe (Seattle) is going to be one of the very strongmarkets in the next phase of technology development," Arnold said."That's part of the reason we're now headquartered here."Silicon Valley Bank also opened a Bellevue office about a yearago.Some of the most interesting new ventures were presented at aninvestment forum Tuesday and Wednesday organized by the WashingtonSoftware and Digital Media Alliance. Competition for time and spaceat the forum was so fierce that the group had to turn away threecompanies for every one it accepted, said its president, KathyWilcox.The area's higher profile drew 200 potential investors to thisyear's forum from as far away as Singapore and Paris."There's a recognition by the capitalists themselves that this isthe place to be," Wilcox said.The enterprises are getting bigger. Two years ago, 80 percent ofWashington software companies had 10 or fewer employees. Today only64 percent are that small, Wilcox said."These people are looking for very large sums compared to prioryears," she said."And the companies themselves are more sophisticated. They havemanagement teams that have been around the block."For example, there's David Pool, who founded Spry Inc. in Seattleand in 1994 launched a product called Internet in a Box, which letpeople instantly connect to the Internet. CompuServe bought Spry in1995.Six months ago, Pool started DataChannel Corp. to help companiesbetter manage the flow of information from inside and outside.The Red Herring, a technology business magazine, just named Poolone of the "Top 20 Entrepreneurs in Digital Technology," along withNews Corp.'s Rupert Murdoch and Jeff Bezos of amazon.com.Another example is RTIME Inc., a Seattle company with a softwareengine that lets hundreds, even thousands, of people play anInternetgame simultaneously. The software to play RTIME's spaceship game,which demonstrates the technology, can be downloaded free off theInternet at www.rtimeinc.com.RTIME is headed by Chip Overstreet, a veteran of more than 10years in software marketing who just received $1.5 million infundingfrom a group led by the Seattle venture firm Pacific HorizonVentures.Microsoft's growth over the last 20 years is a factor in all thisactivity, but not the only one.Research at the University of Washington and the Fred HutchinsonCancer Research Center has led to new companies, in biotechnology aswell as computer hardware and software.Redmond-based Nintendo of America is one of the top names in videogames.And three local companies -- WRQ, Attachmate and Wall Data -- leadthe world market in linking various types of computers intonetworks.The area also has many telecommunications start-ups that tracetheir roots to McCaw Cellular, now AT&T Wireless.The region's blend of money, talent and experience now supportsmore new ventures than in the past."I suppose it's called moving out of adolescence and intoadulthood," said George Klute, a principal in Olympic VenturePartners and chairman of this year's investment forum."What's changed here is that we've got enough examples or rolemodels for entrepreneurs to see how this (venture funding) works,"Klute said. "They can talk to folks who have done it before, get anunderstanding, and feel comfortable that they can take a shot at itthemselves."And the growth brings more money."Venture capital is extremely intelligent about where to go next,"said Tony Naughtin, CEO of a Seattle company called InterNAP thatboosts Internet performance for access providers and operators ofWorld Wide Web sites.