Investors Bullish On Telecom Start-Ups Despite Skittishness
TeleTech Financing Week
10/21/01
Taron Wade
Venture capital firms are investing in telecom start-ups, and the move is a direct result of cost-cutting by large telecom equipment manufacturers. VCs say the spending cuts are a de facto outsourcing of research and development and provide opportunities for start-ups. When telecom equipment vendors lift their spending restrictions and are looking for state-of-the-art technology in a few years, they will not be able to look within their own labs because they will not have been spending on R&D, venture investors said. "They will go shopping," said George Phipps, partner at Apax Partners, noting the potential exit strategy for current early stage telecom investors.
Phipps said his group is focusing on telecom and networking companies that will sell to carriers, the enterprise space and also to consumers, although he noted that the consumer market is still developing as they adopt new technology.
Kanata, Ontario-based Skypoint Capital Corp. will dedicate a large portion of its new $100 million fund to telecom start-ups. Andrew Katz, partner, said the firm is taking a technical assessment of the market, speaking to large telecom equipment manufacturers and carriers, because their needs are what drive Skypoint's investments. Katz explained that the firm will look to exit those investments in four to five years, at which time many of the companies could be sold to large telecom equipment manufacturers.
Specifically, Skypoint is seeking new investments in the edge access areas of telecom networks. Katz said that part of the fund will focus on the network core, but a lot of the network structure already has been built up and it is important to focus on who will be using the network and how it will be done. "We are looking to explore access, including wireless," Katz said.
The optimism of venture capitalists in this sector of telecom may run counter to the pessimism seen throughout the VC community. Phipps said that remaining optimistic about new investments is difficult when so many funds are still distracted by existing portfolio companies. But, as VCs sell, fund or shut down current investments, they will clear their plates to make new investments and within the telecom space, the opportunities are enormous, he said. Jim Robinson IV, general partner and founder at RRE Ventures, said that the quality of technical engineers that are involved in new start-ups is adding to their attractiveness. "Five years ago you couldn't have recruited them out of [Lucent Technologies'] Bell Labs," he said.
© Copyright Institutional Investor, Inc. 2001
***
Guten Morgen Ariva!
Telcos und Artverwandte gibt es ja einige am NM --> Good News!
mfg,airest
TeleTech Financing Week
10/21/01
Taron Wade
Venture capital firms are investing in telecom start-ups, and the move is a direct result of cost-cutting by large telecom equipment manufacturers. VCs say the spending cuts are a de facto outsourcing of research and development and provide opportunities for start-ups. When telecom equipment vendors lift their spending restrictions and are looking for state-of-the-art technology in a few years, they will not be able to look within their own labs because they will not have been spending on R&D, venture investors said. "They will go shopping," said George Phipps, partner at Apax Partners, noting the potential exit strategy for current early stage telecom investors.
Phipps said his group is focusing on telecom and networking companies that will sell to carriers, the enterprise space and also to consumers, although he noted that the consumer market is still developing as they adopt new technology.
Kanata, Ontario-based Skypoint Capital Corp. will dedicate a large portion of its new $100 million fund to telecom start-ups. Andrew Katz, partner, said the firm is taking a technical assessment of the market, speaking to large telecom equipment manufacturers and carriers, because their needs are what drive Skypoint's investments. Katz explained that the firm will look to exit those investments in four to five years, at which time many of the companies could be sold to large telecom equipment manufacturers.
Specifically, Skypoint is seeking new investments in the edge access areas of telecom networks. Katz said that part of the fund will focus on the network core, but a lot of the network structure already has been built up and it is important to focus on who will be using the network and how it will be done. "We are looking to explore access, including wireless," Katz said.
The optimism of venture capitalists in this sector of telecom may run counter to the pessimism seen throughout the VC community. Phipps said that remaining optimistic about new investments is difficult when so many funds are still distracted by existing portfolio companies. But, as VCs sell, fund or shut down current investments, they will clear their plates to make new investments and within the telecom space, the opportunities are enormous, he said. Jim Robinson IV, general partner and founder at RRE Ventures, said that the quality of technical engineers that are involved in new start-ups is adding to their attractiveness. "Five years ago you couldn't have recruited them out of [Lucent Technologies'] Bell Labs," he said.
© Copyright Institutional Investor, Inc. 2001
***
Guten Morgen Ariva!
Telcos und Artverwandte gibt es ja einige am NM --> Good News!
mfg,airest
