USinternetworking Inc, based in Annapolis, Maryland, has secured a massive $62m for its second round of financing which closed late in December. The first $33m round it raised earlier in the year takes its total up to $95m for 1998, one of the top two or three largest rounds of funding raised last year. Only one year old, USinternetworking is nevertheless working in one of the hottest new business areas to emerge recently: application service provision. Forrester Research Inc says the market for branded application outsourcing services is set to grow to over $21bn by 2001. The company has built up its data center infrastructure with centers in Minneapolis, Silicon Valley, Amsterdam and Tokyo, using hardware from Compaq Computer Corp, Hewlett-Packard Co and Sun Microsystems Inc, and set up its network infrastructure by taking out contracts with all the major providers. (The company tried, but failed to buy out struggling internet service provider PSINet Inc last year – CI No 3,355). US West Inc has a minority stake as part of a deal for network capacity. USinternetworking now employs around 370 people, and has begun signing up customers, agreeing to host and manage human resources, ecommerce and customer relationship applications to three year contracts through a monthly fee. According to company president Steve McManus, the company has extended the model of companies such as Exodus Communications Inc, which doesn’t offer applications integration or client support, and expects to get an average monthly fee of around $30,000 from its customers, compared with the $10,000 average Exodus gets. It has relationships with Peoplesoft Inc for HR, Broadvision Inc and Microsoft Corp for e-commerce, Siebel Systems Inc for front office software and Sagent Technology Inc for data warehousing. It plans to add financial services and supply chain applications to its portfolio during this year, but won’t currently say which. McManus says his aim is to see the company profitable by some time next year, and says the new funding, which will be used to grow its infrastructure as customers sign up, should last until then. He won’t comment on plans to take the company public.á