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HEDGESTREET SECURES FUNDING FROM NORWEST VENTURE PARTNERS
NEW INVESTMENT AND STRATEGIC ALLIANCE WITH CBOE ENHANCES HEDGESTREET'S DISTRIBUTION, PRODUCT AND OPERATIONAL CAPACITIES
San Mateo/Palo Alto, CA, March 27, 2006 -- HedgeStreet® Inc., the nation's first government-regulated online exchange for binary options and futures, today announced that it has secured $12.5 million from Norwest Venture Partners (NVP), a leading Silicon Valley venture capital firm. The funds will be used to bring new innovative products to market, increase liquidity, and accelerate customer acquisition by promoting the exchange to retail and institutional investors as well as hedge funds. This is HedgeStreet's third round of financing, bringing the company's total amount of capital raised to date to $24.9 million.
HedgeStreet and the Chicago Board Options Exchange (CBOE) also recently announced a strategic alliance for the development of new products, technology sharing, distribution, marketing and other initiatives. The alliance also includes an investment in HedgeStreet by CBOE.
An all-electronic marketplace, HedgeStreet allows individuals to buy and sell inexpensive, innovative financial contracts called Hedgelets®, which are based on the outcomes of economic events and price movements in commodities, currencies, real estate and economic indicators. HedgeStreet is a secure, fully-transparent marketplace, subject to regulatory oversight by the Commodity Futures Trading Commission (CFTC).
HedgeStreet CEO Steve Race said: "NVP is a valued investment partner and we are thrilled to be working with such a high-caliber firm. Coupled with our recent alliance with CBOE, the investment positions HedgeStreet to initiate a new level of marketing, distribution and innovation that will fuel our growth. We look forward to working closely with both of these partners and taking HedgeStreet to the next level."
"HedgeStreet has the opportunity to become a major player in the multi-trillion dollar derivatives market, and the company's strategic alliance with CBOE will play a key role in helping HedgeStreet realize its full potential," said Jim Lussier, venture partner at NVP and HedgeStreet board member. "HedgeStreet's innovative contracts offer a new set of investment opportunities and strategies, as well as more cost efficient and direct hedging mechanisms for both individuals and institutions. We believe HedgeStreet will change the way the world invests and manages risk."
HedgeStreet's Binary Option Hedgelet is an all-or-nothing option with a fixed payout of either $10 or $0, depending on the final value of the underlying asset (for example, oil) or event (for example, rise in the Fed Funds interest rate). It consist of one contract that can be either bought or sold short, allowing traders to profit from short-term fluctuations in market movements and economic events. Each contract is defined by the price of the underlying asset, the strike price agreed upon by the buyer and seller, the expiration date of the contract and the payoff. For example, traders would BUY if they believe the market price for crude oil will rise or a specific economic event will occur. Traders would SELL if they believe the opposite will happen. If their insight is correct at the expiration date, they make $10. For more sophisticated traders, HedgeStreet also offers Futures Hedgelets, stop-loss futures with a variable pay-out between $0 - $50, depending on incremental movements in the underlying asset.
About HedgeStreet
HedgeStreet Inc., launched in 2004, is the only U.S. designated market that lets online investors trade innovative instruments based on economic events. A designated contract market (DCM) and a registered clearing organization (DCO), HedgeStreet is subject to regulatory oversight by the Commodity Futures Trading Commission (CFTC). For more information on HedgeStreet visit www.hedgestreet.com.
About Norwest Venture Partners
Norwest Venture Partners (NVP) has actively partnered with entrepreneurs to build great businesses for more than 45 years. NVP focuses on investments in information technology including: semiconductor and components, systems, software, services and consumer/Internet technologies. The firm currently manages more than $1.8 billion in venture capital out of its office in Palo Alto, California, USA.
NVP has funded over 350 companies since inception. Recent NVP transactions include Airespace (acquired by Cisco Systems), Resonext Communications (acquired by RF Micro Devices), Spinnaker Networks (acquired by Network Appliance) and Winphoria Networks (acquired by Motorola). NVP has also funded such market leaders as Actel Corporation, Brocade Communications, Cerent (acquired by Cisco Systems), Documentum, Extreme Networks, Forte Software (acquired by Sun Microsystems), PeopleSoft and Tivoli Systems (acquired by IBM). Additional information on Norwest Venture Partners is available at www.nvp.com.
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