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NetZero Receives VC Endorsement

Free Internet provider NetZero Inc. Wednesday announced that it has secured multimillion-dollar financing from three California-based venture capital firms.

NetZero did not specify the exact amount of the investment.

The company said the investment is a strong endorsement of its business model. NetZero has also attracted more than 40 national advertisers in just three months.

The second round financing for the advertising-driven free Internet access provider is lead by Draper Fisher Jurvetson. Additional money has been secured from Foundation Capital and Idealab Capital Partners.

Following a business model similar to network television and radio, NetZero offers subscribers free Internet dial-up and e-mail services, underwritten by on-screen advertising revenues. Since its launch in October 1998, more than 300,000 subscribers have signed-up for NetZero access, making it one of the fastest growing Internet providers ever.

NetZero is now delivering more than 300 million page views per month, placing it among the top 16 sites by impressions worldwide, according to figures from NetRatings.

Draper Fisher Jurvetson spearheaded the financing round. Draper has helped finance more than 150 technology and new media companies, including eToys, GoTo and HotMail. Draper associate Jennifer Fonstad will gain a seat on the NetZero board of directors, effective immediately.

"We are strong believers that access to the Web must be free," Fonstad said. "NetZero has developed a powerful merchandising model that makes this possible and profitable. They also have the best team in the business."

Foundation Capital is an experienced provider of financing for emerging companies. Foundation Capital general partner Paul Koontz will join Fonstad as a new member of the NetZero board.

"Internet access will be free for everyone -- there's no question about it," Koontz said. "What sets NetZero apart is its execution of a nationwide rollout of high-quality, free Internet access. A business like this must operate on a national scale, and NetZero is the first to demonstrate its ability to do that."

"This is a ringing endorsement of our model and our strategy," said Ronald T. Burr, NetZero's chief executive officer.

"We've been able to address the needs of our advertisers by providing unprecedented targeting and profiling capabilities -- delivering ads our subscribers want to see," Burr said. "We aim to be a unique gateway to the Internet and the new round of funding will enable us to increase our development efforts and deliver additional value-added features to our service."