The fallout from the meltdown of the Nasdaq and the collapse of venture capital backing Internet plays is making itself felt in the fund industry. MetaMarkets, the sponsor of the Open Fund and the IPO & New Era Fund has put itself on the block. The firm has retained Allen & Company in its search for a buyer. It is also liquidating its two mutual funds.

Principals of MetaMarkets revealed that they are already involved in discussions with possible acquirers. They characterized those firms as being in the online financial services and financial content sectors.

MetaMarkets was one of the first funds to leverage the Net to reach investors in new ways when it was founded in 1998 by Barclays Global Investors vets Donald L. Luskin and H. Davis Nadig. The firm lists trades in its funds in real time and put Web cameras on its portfolio managers so investors could watch them while they work. Still, the innovative ideas did not translate into overwhelming asset flows.

Backers of the 27-employee company included Weeden & Company, TD Waterhouse's TDi Capital and Europ@Web. Angel investors include high profile futurist Nicholas Negroponte of the MIT Media Lab; Sanford Robertson, founder of Robertson Stephens; Charles Crocker of BEI Technologies and Peter Sprague of Wave Systems.

The firm's principals are characterizing the move as a shift in business models, a familiar spin to those who follow startups. Rather than continue to sponsor the funds, the firm will concentrate on providing daily columns and continuous market commentary from portfolio managers and traders.

"We regret that MetaMarkets.com's funds, the first to offer real time disclosure to investors, will no longer be available. However, we look forward to building a larger, more diversified business employing the same distinctive elements of manager commentary, shareholder discussion, buy-side research and investment transparency," said Don Luskin, CEO of MetaMarkets.com in a statement.

"We continue to believe that investors and advisors who are armed with current portfolio information are empowered to make better investment decisions, and investment management businesses that foster highly informational, interactive relationships with their clients are likely to be enduringly successful," he added.  

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