$100 MILLION FUND WILL FINANCE JAVA-BASED VENTURES.

Byline: Lawrence M. Fisher The New York Times

A leading venture capital firm has formed a $100 million fund to invest in companies that will create software and related products based on the Java programming language developed by Sun Microsystems Inc.

Kleiner Perkins Caufield & Byers, the Menlo Park, Calif., firm that was the primary backer of Netscape Communications Corp., as well as an early investor in Sun, has attracted a parade of high-technology giants to the fund. Along with Sun Microsystems, other investors are Cisco Systems, Comcast, Compaq Computer, IBM, Itochu, Netscape, Oracle, Tele-Communications Inc., Technology Ventures and US West Media Group.

But most of the capital in the KPCB Java Fund will come from Kleiner Perkins' usual limited partners, which are primarily endowments and institutions.

Shares of Sun rose 50 cents Wednesday, to $53.75, in Nasdaq trading. Plans for the fund were reported in an article in The Wall Street Journal on Wednesday.

``This fund is about investing in companies that are going to build applications,'' John Doerr, a general partner in Kleiner Perkins, said Wednesday in a telephone interview. Those applications need not be written entirely in Java, and the companies are free to use competing products as well, like Microsoft Corp.'s Activex.

``This is not some kind of anti-Microsoft coalition,'' Doerr said. ``Some of Microsoft's strongest partners as well as some of their strongest foes are in the fund.'' He noted that Microsoft was already a co-investor with Kleiner Perkins in four start-up companies.

Still, other venture capitalists said the fund was likely to run up against Microsoft.

``If you're talking about Java with a capital J as the structure for a new operating system, that's a challenge,'' said John Hummer, general partner in Hummer Winblad Venture Partners, a venture capital firm in Emeryville, Calif. ``There's a guy up in Redmond who's not going to look kindly on that,'' he said, referring to Microsoft's headquarters in suburban Seattle.

Part of Java's appeal is that programs created with it can run on a multitude of operating systems, thus weakening, at least in theory, Microsoft's stranglehold on that part of the software market. Java also allows the distribution across the Internet of tiny ``applets,'' small programs that customers could pay for on an as-used or as-needed basis, with the potential to change the economic model of the software industry.

But to date, most programs created with Java have been whimsical bits of animation and other demonstration projects. For Sun, the fund is a way to promote the production of industrial-strength applications using its tools.

``When Java was really taking off, the question was how do you get applications going?'' Eric Schmidt, Sun's chief technical officer, said in a phone interview. ``We could have funded companies ourselves, but we don't have that kind of expertise.''