Bo Peabody and Matt Harris Receive Commitments for $80 MM to Launch Village Ventures.

Business Editors

NORTH ADAMS, Mass.--(BUSINESS WIRE)--June 27, 2000

Bain Capital, Highland Capital Partners, Sandler

Capital Management Lead Round

Bo Peabody, co-founder of Tripod, Inc. and until recently a vice president at Lycos, Inc., and Matt Harris, a venture capitalist who most recently managed The Berkshires Capital Investors, have formed Village Venture Services, Inc. with a commitment of $80 million in funding from a group of investors led by Boston's Bain Capital and Highland Capital Partners and New York's Sandler Capital Management.

Village Ventures (www.villageventures.com) is a new concept for developing technology-driven businesses. It is an operating company that is building and will manage an extensive network of early-stage locally focused venture capital funds and invests directly in the best companies emerging from that network. Village Ventures focuses on establishing local business partnerships in regional markets with strong entrepreneurial resources that traditional venture capital firms have left largely untapped. It plays an active role in managing both the Village Ventures(SM) network and the companies in their investment portfolios.

"Village Ventures is fueling innovation in areas with high densities of intellectual capital that up to now have been ignored by the capital markets," said Village Ventures Chief Executive Officer Harris. "We are building the world's largest network of locally focused early-stage funds to transform how and where technology companies are created and grown."

The Company invests directly into portfolio companies of the fund network. Village Ventures also provides later-stage financing for promising companies that emerge from the portfolio. Presently funds (each targeted at $10 to $15 million) are operating in the Champlain Valley region of Vermont, the Pioneer Valley region of Massachusetts, Berkshire County, MA, Portland, ME and Worcester, MA. Negotiations are underway to open additional funds across the country.

In commenting on his firm's investment in the new company, Paul Maeder, a partner at Highland, said, "Village Ventures is a great new concept that proves innovation, and now venture funding, is everywhere in the United States. Bo and Matt have the expertise to mine the potential inherent in the many geographical regions that will help drive the next wave of the economic revolution. They have the vision and now the resources to make this a reality."

As an operating company, Village Ventures:

-- Identifies communities with high potential for nurturing

start-up technology companies and recruits managers to

oversee an investment fund in each market.

-- Helps its managers raise money from local limited partners

and co-invests its own capital alongside its partner funds

to seed start-up companies.

-- Provides back-office support to the Village Ventures(SM)

network of funds and professional services to the

companies in their portfolios through its New York-based

Venture Services group.

-- Acquires significant interests in the most promising

companies emerging from the Village Ventures network of

funds.

Typically, the communities Village Ventures targets are home to universities and colleges and offer a quality of life and low cost of doing business that many major US cities can't offer. A critical element in the company's success formula is its ability to provide access to later-stage financing for the most successful companies in the Village Ventures network.

"The driving force behind Village Ventures is a conviction that, with the right set of resources, companies can prosper wherever they may be located," said Peabody. "Plenty of attractive communities have the infrastructure to support large successful companies. What they don't have is financing, particularly early-stage financing, and people and services to build companies. Through our network, we can provide it all."

Another key component in Village Ventures' operating model is the professional support it makes available to the funds and the businesses in its portfolio via Venture Services. Venture Services is hiring a staff of world-class consultants who are expert in various fields critical to launching and building technology companies. These consultants are deployed locally to advise fund managers and the entrepreneurs who run their portfolio companies. These services are optional to the companies in the Network and can be paid for or obtained in exchange for equity.

Village Ventures expands the collaboration of Peabody's entrepreneurial talents with Harris' experience in early stage investing. That tandem has given rise to such successful companies as Tripod, which Peabody co-founded, and Harris' Berkshires Capital Investors seeded. In 1998, Lycos acquired Tripod for $58 million. Additional investors in Village Ventures include Bain & Company, FleetBoston Financial Corp., both Boston, and Middlebury College, Middlebury, VT.