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Telecom New Zealand has launched TMT Ventures, a corporate venture capital fund with a target of NZ$150 million to be invested in new growth businesses in the technology, media and telecommunications sectors of New Zealand and Australia.
Telecom will make a cornerstone investment of NZ$40 million in TMT Ventures and has appointed a joint venture between United States-based Advent International and Direct Capital to manage the fund.
Telecom New Zealand Chief Executive Theresa Gattung said: “This fund will put venture capital into the hands of people who are driving the online economy forward in our part of the world.”
Ms Gattung said the decision to seed TMT Ventures was a solid demonstration of Telecom New Zealand’s belief in the talents and skills of entrepreneurs in the region and Telecom would be a catalyst for other like-minded corporates to participate.
“Supporting a healthy, entrepreneurial culture is the best way we could find to support growth in the converging telecommunications, media and technology sectors,” Ms Gattung said.
“Wherever you look around the world, innovation in technologies and products for communicating, sharing information and so on is assuming huge importance as a driver for growth and prosperity. Some of the businesses which develop those technologies, and bring those products to market, have the potential to create huge value,” Ms Gattung.
As a Corporate Venture Capital Fund, TMT Ventures will be distinctive in this part of the world. In the U.S. it is estimated that 38% of funds actually invested in the venture capital industry last year were sourced from corporate investors similar to Telecom. The number of U.S. corporates that have venture capital programmes increased from 49 in 1996 to 203 last year.
Ms Gattung said Telecom’s involvement in TMT Ventures would also provide Telecom with an insight into technology and online business trends as they emerged in the region and globally. “Technical and commercial insight will flow both ways,” she said.
TMT Ventures Executive Chairman Ross George said: “We expect to make our initial investments within weeks, after the first phase of fundraising is complete.”
“We have already identified several very good opportunities that TMT Ventures is likely to support,” Mr George said.
TMT Ventures is seeking participation from other investors as part of a programme to raise a total of NZ$150 million.
Advent International partner David McKenna said recent global volatility in technology stocks should increase the quality of startups and early stage ventures that TMT Ventures was likely to support.
“A lot of the hype has been washed out of the U.S. market. Entrepreneurs know they need solid business plans and realistic projections to attract financial support,” he said.
Advent International is one of the world’s leading venture capitalists, with a proven history of expertise in the telecommunications, media and technology sectors and a history of excellent financial returns. Direct Capital is New Zealand’s largest venture capitalist, having invested NZ $135 million over the last six years.
Mr McKenna said TMT Ventures will be “best of breed” in the region, with exceptionally skilled and experienced management and investment teams drawn from both Advent International and Direct Capital. TMT Ventures would be managed independently and investment decisions would be at the discretion of the fund manager.
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