Telecom New Zealand has launched a new corporate venture capital fund for Australia and New Zealand with a $32 million seed investment.
Known as TMT Ventures, the fund is seeking to raise a total of $120 million from other corporate and institutional investors for local technology, media and telecommunications startup businesses.
According to John Bell, TNZ business development manager, the fund will be managed by US venture capitalist Advent International and New Zealand-based Direct Capital in a fifty-fifty joint venture.
Investment from TNZ and other investors, which already includes an $8 million boost from Lucent Technologies, will not give the investors any direct involvement in the management of the fund but they will be represented on an advisory board, Bell said.
The fund plans to focus on Australian and New Zealand startups in areas including IT infrastructure, software development, data networking and wireless and fixed line telecommunications, Bell said.
"We see this as being an exciting way to drive the online economies in Australia and New Zealand," he said. "We plan to help businesses develop technology and bring products to market."
According to Ross George, executive chairman of TMT and managing director of Direct Capital, TMT will differentiate itself from other VC organisations through its corporate model. "The VC market has become more competitive. We've taken the corporate route after seeing what's happened in the US," he said.
According to George, TMT is already in discussion with other corporates and institutional investors to finalise its fundraising and is talking with four Australian-based organisations for initial investments.
Bell and George are unconcerned by the recent so-called market correction on the Nasdaq and local exchanges. "We are not discouraged that there has been a correction or that the speculated internet bubble may have burst," Bell said. The recent market shakeout is more an "adjustment" rather than a correction, and future growth is expected, he added.
Said George: "For a VC fund to have a startup operation . . . it is a brilliant time to be operating. Some speculative hype might have been taken out of the market, but now we are able to get an idea of the (real) numbers.
"What's happened in North America has been a huge boon for the VC industry."