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PlanetOut closes $3 million in funding from American Online, Sequoia Capital and Silicon Valley leaders.

SAN FRANCISCO--(BUSINESS WIRE)--Sept. 5, 1996--PlanetOut, a worldwide online community of lesbian, gay, bi and trans people, has closed its first round of outside equity investment, acquired two large Internet sites and partnered with several leading Internet firms.

The $3 million minority share investments in the company will be used to staff and market the new service, which debuts Thursday on the World Wide Web and America Online (AOL), adding to its 1995 foray on the Microsoft Network (MSN).

Financing

PlanetOut marks an important turning point for the financing of gay-oriented businesses, which until now have been funded exclusively by private individuals. The company is both the first venture capital-backed and the first corporate-backed gay market startup, with investments from Sequoia Capital and America Online.

Sequoia Capital

Sequoia Capital is a $700 million series of venture capital partnerships which, since 1972, has financed more than 350 companies, including Cisco Systems, Yahoo, Oracle, LSI Logic and Electronic Arts.

"Sequoia bets on markets and we believe the gay and lesbian market is ready to break out," said Sequoia partner Mike Moritz, who serves on PlanetOut's board of directors. "Online is the first medium that meets the unique needs of lesbian and gay consumers and their straight friends and families," he added.

America Online

America Online, one of PNO's distribution partners, is investing in PNO through its innovative Greenhouse program, which nurtures promising content startups. Ted Leonsis, president of America Online Services and PlanetOut board member, supported PlanetOut in its first phase through advances against royalties. PNO is available on AOL at Keyword: PlanetOut.

"America Online is investing in PlanetOut because it combines a great team with a proven market, and possesses a deep understanding of community, perhaps the hardest thing to attain in this business," said Leonsis. "AOL is proud to be the first company to invest in a startup targeting gay men and lesbians," he added.

Private Investors

In addition to Sequoia and AOL, PNO is backed by a small group of Silicon Valley founders and leaders from Netscape, Yahoo!, Sun Microsystems, Global Village, Farallon, SuperMac, Xerox, General Magic, Macromedia, Against All Odds Productions/24 Hours in Cyberspace and Poppe.com advertising.

Distribution Deals

Yahoo

Yahoo and PlanetOut announced Thursday that PlanetOut will produce daily gay and lesbian news for Yahoo's gay and lesbian listings (http://www.yahoo.com/Society and Culture/Lesbians, Gays and Bisexuals).

Written by five veteran public radio journalists based in San Francisco and Los Angeles, PlanetOut Gay and Lesbian News will appear "above the line" seven days a week with news and breaking stories from around the world. Yahoo users can then link directly to PlanetOut from the news pages.

Microsoft

PlanetOut continues to produce a successful area for The Microsoft Network. PNO/MSN received Virtual City's Cyberstar of 1995 award and features PNO Java Joint, A Virtual Chat World featuring avatars created by cartoonist Alison Bechdel (www.msn.com).

Acquisitions and Licensing

Queer Resources Directory -- Library

PlanetOut has acquired the oldest and largest gay and lesbian Internet entity, the Queer Resources Directory, founded in 1992 by Dr. Ron Buckmire, then a math Ph.D at Renssaeler Polytechnic Institute in Troy, N.Y. Begun as an archive for Queer Nation, the QRD quickly grew into the de facto Internet repository for lesbian and gay information.

QRD senior staff includes Internet wizard David Casti, consultant to Digex Corp. in Herndon, Va., and QRD ontologist Tina Wood, of Providence, R.I. The recipient of numerous awards, the QRD today contains more than 16,000 documents of interest to the queer community organized by subject. Buckmire and PlanetOut have redesigned the user interface to make it easier to navigate and use.

Buckmire now serves on the PNO board of directors and is associate professor of applied mathematics at Occidental College in Eagle Rock, Calif. QRD is available at www.planetout.com or www.qrd.com.

NetQueery, formerly Queer Infoservers

PlanetOut has also purchased Queer Infoservers, the first comprehensive gay Internet directory founded by then-University of California, Berkeley freshman David Stazer. Since he created it in 1994, QIS has grown into the leading directory of lesbian, gay, bisexual and transgender online sites.

Stazer joined the PNO staff in 1995 and has re-architected and redesigned QIS to be more scaleable, faster and easier to use. Renamed NetQueery, the former QIS is now available at www.planetout.com or www.netqueery.com.

PopcornQ, Lesbian and Gay Film Directory

PlanetOut has also licensed the electronic rights to filmmaker and archivist Jenni Olson's book, "The Ultimate Guide to Lesbian & Gay Film and Video" (Serpent's Tail, 1996). Olson has joined PlanetOut to produce PopcornQ, the ultimate online home for the queer moving image, a critically acclaimed gay and lesbian film site which PNO launched in June 1996 (www.popcornq.com).

In the first three months, PopcornQ has been visited by more than 100,000 people from more than 75 countries. Later in September, customers will be able to purchase videos online, through a partnership with TLA Video of Philadelphia.

"With Queer Resources Directory, NetQueery and PopcornQ, PlanetOut unites under one roof some of the richest information and the finest talent in the lesbian and gay communities. We can offer these vital entities the resources they need to grow and prosper," said Tom Rielly, founder and president of PlanetOut.

Management

Rielly worked for the last ten years in senior marketing positions at SuperMac/Radius, Farallon and Voyager. He is also founder of Digital Queers, a non-profit group that raises money to equip lesbian and gay non-profits with modern digital technology.

Jon Huggett, former president of Pilkington Barnes Hines International, serves as chief executive officer. Before Pilkington, Huggett worked at the Boston Consulting Group and Proctor & Gamble. Huggett is also president of the Stop AIDS Project board of directors.

Executive producer, Karen Wickre, has more than ten years editorial and technology publishing experience including IDG, Addison-Wesley and 3DO. She is also an Internet author and columnist. Her books include, "Atlas to the World Wide Web," "Yahoo! Unplugged," and "The Official Guide to Netscape Navigator." Karen co-founded Digital Queers and served as acting executive director for the last three years.

Megan Smith, formerly European sales manager for General Magic, is director of operations. Smith, a former board member of the Massachusetts Institute of Technology, worked previously at Apple Computer Japan, was named by the New York Times as one of the most important young women in technology.

Technology director, Christian Williams, wrote FABIO, PNO's kernel technology. Previously he worked as webmaster at Sun Microsystems Labs in California. Community director, Darren Nye, is PlanetOut's first staff, running PNO on Microsoft Network for the last year. He has 15 years experience running online bulletin board systems (BBSs). He previously worked eight years in MIS at the Wakefern Corp. in New Jersey.

Board of Directors

In addition to Moritz, Leonsis, Buckmire, Rielly and Huggett, PlanetOut's board of directors includes David Ring, private investor and Sequoia technology partner, and Rosanne Siino, director of communications for Netscape Corp.

Business Model

PlanetOut earns money from five revenue streams: royalties, advertising, transactions, merchandising and licensing. PNO earns royalties based on connect time members spend on AOL. Advertisers include Adobe, America Online, Atlantic Records, American Airlines, Curve Magazine, Microsoft, Netscape, Macromedia, Quarterdeck, Strand Releasing, TLA Video, Tzabaco, Verity, XY Magazine, Yahoo and PIAAnetRSVP Travel, a joint venture of American Airlines and RSVP Travel, the largest gay travel tour company.

PlanetOut will earn transaction fees based on the sales of its retail partners: Tzabaco General Store, a gay catalog retailer of apparel, gifts and accessories; Alison Bechdel's Dykes to Watch Out For Schlockmart logowear and books based on the renowned lesbian cartoon strip; and Curve Store, reseller of fine gifts, books, music and video for a lesbian clientele.

PlanetOut will also sell its own merchandise in the PNO Shop, including T-shirts, watches, boxer shorts, mugs and mousepads. Finally, PNO will license its technology and content to appropriate partners.

Founded in 1995, PlanetOut Corp. (PNO) is a worldwide online community of lesbian, gay, bi and trans people. Available on the World Wide Web (www.planetout.com), America Online (Keyword: PlanetOut) and the Microsoft Network (Go Word: PlanetOut), PNO has a staff of 25 in San Francisco, Los Angeles, New York and 150 remote staff in ten countries.

PlanetOut, 965 Mission St., Suite 730, San Francisco, Calif., 415/547-2800; 415/547-2801 (fax); press@planetout.com or info@planetout.com. -0-

Note: PlanetOut, PNO and the PNO logo, NewsPlanet, Shout Magazine, NetQueery, Shout and PopcornQ are trademarks and/or servicemarks of PlanetOut Corp., which may be registered in certain jurisdictions. All other trademarks belong to their respective owners. Copyright 1996 PlanetOut.

CONTACT: PlanetOut

Summer Lopez, 415/547-2800, ext. 305

summer@planetout.com

or

Stephen Rivers & Associates (Publicist)

310/395-2993

rivers@planetout.com
COPYRIGHT 1996 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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