Jeong Kim, the Korean-born immigrant who last year walked away with a half-billion dollars when he sold his advanced communications equipment company, is now investing in other high-tech ventures that he thinks hold promise.
One firm that caught the eye of the 39-year-old Kim is Neocera, a former University of Maryland incubator company that is producing a magnetic-scanning microscope called Magma C-1. It's a $372,000 piece of equipment that can see through the silicon and packaging layers surrounding computer chips to analyze whether there are circuitry shorts without detroying the chips.
Kim said he thinks so highly of the technology behind the Magma C-1 and Neocera's management that he handed the Beltsville firm the entire $4.5 million it was seeking this past summer, at a time when Neocera had six other venture capital firms interested in investing in it. The firm plans to use the money for working capital, marketing and distribution expenses.
"I will invest as much as possible to help them be successful or help them raise the money," Kim said in a Thanksgiving weekend telephone interview conducted while he was waiting to ski down a mountain at the Beaver Creek resort in Colorado.
Kim's investment gives him nearly a quarter ownership of Neocera, a 10-year-old company founded by Thirumalai "Venky" Venkatesan, a Maryland physics and electrical engineering professor who is Neocera's chief executive and board chairman.
Kim said he was introduced to Neocera by Herbert Rabin, dean of Maryland's engineering school and a board member at Yurie Systems Inc. That's the company Kim founded to produce what became known as the "Yurie box," an electronic device much sought after by firms searching for cheaper ways to transmit voice and data transmissions. Kim sold the firm to Lucent Technologies Inc. for $1.1 billion a year ago last April, personally reaping $510 million. He now is president of Lucent's broad-band carrier networks division, which includes the former Yurie operation.
As it turned out, Kim said he was "very familiar" with the key element of the Magma microscope -- something known as a Squid, a superconducting quantum interference device -- from his days as a U.S. naval officer aboard a nuclear submarine, where a Squid was used to inspect underwater mines.
"It's very, very sensitive technology," Kim said. "There isn't anybody that's using this technology or perfected it as Neocera. It's a technology that will dominate the next generation of detection instrumentation."
But Kim said he made the investment not just because of Neocera's application of the technology, but also because "the management is really building the company. I was impressed with their track record. I like the entire team."
He said he would remain as a passive investor at Neocera, but Sara Harris, Kim's controller at Yurie and now his personal chief financial officer, joined Neocera's board as part of the deal.
Harris said Kim has invested in a variety of high-tech ventures in the last year, some by himself and a handful through SJJ, a limited-liability company with initials that stand for the first names of Harris; John J. McDonnell, Yurie's general counsel and Kim's investment lawyer; and Kim. She said SJJ has invested $10 million so far in four technology ventures, with Kim putting up 98 percent of the money and the two others 1 percent apiece.
With Kim's wealth not exactly a state secret, Harris said she receives three unsolicited venture capital requests in a typical week. But she said more typically Kim has learned about the technology firms that he has invested in from word of mouth -- "from someone who knows someone who knows someone.
"We do due diligence," Harris said. "We meet the people and get to know the top management. They [usually] don't have a revenue stream. You have to believe in the people, making sure they've done what they've said they'd do in the past.
"A lot of it is a dart throw -- a scientific dart throw," she said.
Neocera founder Venkatesan, 50, who emigrated from India to the United States in 1971, said the Magma microscope was invented by another Maryland physics professor, Fred Wellstood, and the university has a 5 percent stake in Neocera.
The Magma, which is about 10 feet long, two feet wide and four feet tall, "is just like an optical microscope, except that looking at light, you're looking at magnetic fields coming from an object," Venkatesan said. "The beauty of this technology is that we can pick up the shorts without destroying the chips. It's detective work."
Neocera has sold two of the microscopes so far, to an undisclosed "major semiconductor manufacturer," company spokesman Brad Kinslow said.
Perhaps like chief executives of all fledgling firms, Venkatesan said he has great hopes for the product and the firm. "This instrument is at the right place at the right time," he said.
With Kim's funding in hand, Neocera hopes to sell 15 to 20 of the Magmas in 2000, and eventually it will seek to increase production to six to eight of the microscopes a month. At the moment, with an overall staff of 30, it takes the firm 12 to 16 weeks to build each Magma. Three are currently under construction.
"We have the product and we have the market," Venkatesan said. Nonetheless, he noted that Neocera is "investigating whether our patent is being violated" by a Japanese firm he declined to name that has produced a research and development version of Magma.
Venkatesan said the privately held Neocera will have more than $4 million in revenue this year and has been profitable since 1991. He said he could see his firm doing as much as $1 billion in business within five to seven years, assuming Magma is adopted for new uses, such as checking for faults in such diverse items as medical equipment or bridge construction. He said the firm is negotiating to buy two other firms "whose products would complement ours" and that the deals might be completed next year.
Venkatesan said he expects to "do another round of [venture capital] funding" in the next six to eight months, this time seeking $12 million to $15 million.
And then, like seemingly every other entrepreneur these days, Venkatesan envisions that Neocera will make an initial public stock offering, possibly next year or in 2001.
"I'd love to do that," he concluded.
A Look at ...
CEO: Thirumalai "Venky" Venkatesan
Business: Microelectronics and sensor based instrumentation
Promising product: Magma C-1, a magnetic scanning microscope (shown above)