While FirstMark executives wouldn't comment, investors say that the group of U.S. and international investors include Welsh, Carson, Anderson & Stowe; Kohlberg Kravis Roberts & Co; the private-equity arm of Morgan Stanley Dean Witter & Co; Goldman Sachs Group; ABN-Amro; Sandler Capital Management; Arnault Group; Suez Lyonnaise des Eaux; a fund sponsored by BNP Paribas; French retailer Rallye Casino Group; Credit Suisse First Boston and NM Rothschild & Sons.

Both Sandler and Rothschild were existing investors in FirstMark. In addition, Deutsche Bank AG is arranging the loan. Most of the financing sources either wouldn't comment for the record or couldn't be reached.

The price tag that investors are participating in gives the company a value of between $1.25 billion and $1.5 billion, meaning early investors such as Sandler, Forester, and Michael J Price, the company's co-chairman, have hit a huge home run, at least on paper.

Then again, as David Lee, a partner at Sandler Capital said, "We're still in the first inning."

Despite the size of the financing, FirstMark's capital-raising comes amid a difficult climate for upstart telecommunications concerns. The rebound in technology stocks hasn't hit certain new telecom companies, many of which trade well off their highs.

In addition, private financing sources are demanding better terms from startups, and the flood of new capital-raising by large, newly public companies such as AT&T Wireless Group could have the effect of leaving fewer dollars for the smaller players.

Nevertheless, wireless is hot, Europe is hot, and there's still billions of dollars in capital chasing deals. Moreover, as evidenced by the collection of investors in FirstMark, besides financial investors such as Welsh Carson and KKR, corporations and strategic partners are pouring money into start-ups as well.

FirstMark's board members include Nathan Myhrvold, the former chief technology officer at Microsoft Corp.; Vernon Jordan; Henry Kissinger; and Sir Evelyn Rothschild, chairman of NM Rothschild.

Now, investors say there will be a separate board for the European subsidiary that will include Juan Luis Cebrian, chief executive of Grupo Prisa; Francois Jaclot, vice chairman at Suez Lyonnaise; Helmut Werner, the former chief executive of Daimler-Benz AG; Edward Gilhuly, managing director at KKR; Alan Goldberg of Morgan Stanley; Lee, a general partner at Sandler; and Lawrence Sorrel, a partner at Welsh Carson.

The funds FirstMark raised will be used to help build its network to deliver voice, data, Internet and video to small and midsize businesses. The company began focusing on fixed wireless, which transmits from base stations to rooftop antennas, and has won licenses in Germany, Spain, Switzerland, Portugal, Luxembourg and Finland.

But its strategy has expanded, and the company now believes it can be a broad-based provider using wireless, fiber optics and other technologies, such as digital subscriber line, or DSL. In addition, FirstMark, through its subsidiary LambdaNet, has completed a nationwide fiber-optic backbone network in Germany, and plans to build a similar one in France. The company's goal is to connect 170 cities in 18 countries. The benefit of such a big financing is obvious: FirstMark won't have to scramble for cash anytime soon. The financing gives FirstMark enough of a cushion until well into 2001, according to one investor.

That's good news, because the public markets are treacherous. While FirstMark certainly hopes to go public in an initial public offering of stock, now isn't an ideal time. Carrier 1 International SA, another European telecom upstart, went public earlier in the year. After an initial rise, it has plummeted in recent months.

US companies such as Teligent Inc, Vienna, Va, and Winstar Communications Inc, New York, are both involved in fixed wireless, and have seen their share prices suffer lately.

With such deep-pocketed investors, FirstMark won't have to go public soon, though when the European IPO market reopens further for telecom concerns it certainly will have a compelling story to tell. In addition, having its impressive array of investors will certainly help future fund-raising. Investors like the FirstMark "story" because of the strong management team, the first-mover advantage FirstMark has in Europe, and the perception that Europe is still ripe for innovation and high-speed Internet access. "They've done a good job looking like a private equity no-brainer," said one banker. "There's still a lot of money around."

The Wall Street Journal