November 15, 2000 11:30 AM PST
Napster co-founder swaps one start-up for another
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Ritter, 22, was responsible for creating the back-end server to Napster, a free music-swapping service. He joins Round1 as vice president of technology.
In an interview, Ritter said an ongoing legal battle between Napster and the major record labels over the legality of the service played no part in his decision, saying he left for "purely positive" reasons.
A federal appeals court is weighing whether Napster should be shut down temporarily pending a trial into its role in facilitating the alleged piracy of millions of copyrighted songs.
Round1 is the brainchild of Jamie Cohan, co-founder of Andromedia, a supplier of Web site activity analysis software that was purchased by Macromedia in late 1999. The start-up aims to make networks more efficient in the private finance market.
Cohan said the company has developed technology for putting investors and companies in search of funding in touch with each other in so-called private capital marketplaces. He said Round1's software automates many of the steps required to make private equity and debt placements, promising to give stakeholders greater control over investments and companies greater access to capital.
"Business plans typically pile up on venture capitalists' desks and sit there," Cohan said. "Round1 frees up that data and puts it in front of investors."
The start-up plans to offer its services to marketplace "sponsors" interested in facilitating private placements, leveraged buy-outs and other transactions online. A company like General Electric, for example, could sponsor a private capital marketplace to help fund companies it wants to help foster.
In addition to helping nurture start-ups, companies can use the marketplace to establish relationships with qualified investors--a highly desirable demographic, since U.S. securities law limits investments in unregistered securities to individuals with a net worth of more than $1 million.
Cohan said he hired Ritter to help the company develop technology for linking various private capital marketplaces into deal-swapping networks, although Ritter said the technology he is working on only "minorly" taps peer-to-peer networking techniques that Napster made famous.
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