Few Dot-Coms Stay Private Long Enough to Make List.

LOOKING up and down the Business Journal's list of fastest growing private companies, one red-hot segment has few entries: the dot-coms.

There is an explanation. Before a company can get on the list, it has to be at least three years old, which is several lifetimes in cyberspace. Plus, fast-growing private technology companies often don't stay private for long. They either go public or are acquired by another company.

From an investor's standpoint, it's bad form to stay out of the capital markets for too long.

Online retailer eToys Inc. listed its initial public offering in May, slightly more than two years after its founding. In September, the two-year-old free Internet service provider NetZero Inc. also went public. Internet portal GoTo.com Inc. became a public company in June, about 18 months after it started.

"I don't know of any interesting private companies that are three years old," said Michael Guttentag, senior vice president for strategy at eCompanies, the tech-company incubator started earlier this year by Earth-Link Network Inc. founder Sky Dayton and Walt Disney Co.'s former Internet guru Jake Weinbaum. "I'm more interested if they're three months old. For us, building a company from the ground up is more important than having it hang around for a long time."

Investors flush with cash and looking for opportunities certainly have lots of choices.

"If the economy is considered healthy when it's growing by 3 percent or 4 percent a year, a company that's growing 3 percent or 4 percent a week will get investors' attention," said Bill Elkus, managing partner of Idealab Capital Partners, the venture capital arm of tech incubator Idealab.

So what private companies are investors looking at?

BizBuyer.com Inc., the Santa Monica-based business-services company, is high on many lists. BizBuyer.com is a business-to-business Web site that lets companies purchase everything from office supplies to legal services by putting out bids over the Internet. More than 9,000 vendors in 39 categories offer products and services on the site.

BizBuyer.com's typical customers are small companies - businesses with fewer than 100 employees. "About 65 percent of small businesses use the Internet, and about 85 percent of those use it to find business services," said the founder and chief executive, Bernard Louvat. "We're reaping the benefits of being a pioneer in the business-to-business space."

The company started operations in September of last year, received angel investment in January, landed venture capital funding in May, launched its Web site in July, and could go public next year. That's a rapid trajectory even in the dot-coin world.

Another hot contender is Cooking.com, an e-commerce business that sells kitchen gear and has links to Fine Cooking and Food & Wine magazines, along with product reviews.

Others to watch include X:drive, a company that lets computer users store data on a Web site rather than on their PCs; CarDirect.com, an online auto dealer; PetsMart.com, the e-commerce link to the "terrestrial" PetsMart retail pet stores; and PeopleSupport.com, which provides customer service for e-commerce consumers.

The last three were started at Idealab, which also spawned eToys, NetZero and GoTo.com. Idealab founder Bill Gross "has a great business model that leads to the development of a lot of good companies," said Cliff Numark, program director at the Los Angeles Regional Technology Alliance.

Elkus says there's no real secret to Idealab's success in launching dot-com companies. "Every business has its own model," Elkus said. "I guess what's consistent about the companies that we invest in is that there is a business model. We've been at this for three years, which is a long time (in the Internet world). We get the pick of the litter of the business plans."