New Telecom Fund Launched

Denver-based Telecom Partners closed a new $500 million venture capital fund last week. It will focus on start-up and early-stage telecoms - companies developing broadband last mile networks, Internet applications and wireless networks both domestically and abroad.

"We work with an anticipated demand strategy: watch changes in the communications arena and watch where demand pockets are created, and then quickly build those companies," said Mark Adolph, Telecom Partners' chief operating officer and a member of the firm.

The fund is the third communications venture capital fund to be launched by Telecom Partners. Its investments will closely mirror the previous two funds, said managing member and general partner William Elsner. That translates into identifying a market niche, assembling a top-tier management team, developing a business plan and holding onto equity stakes as a company matures.

"It's impact investing - large-scale companies that require large amounts of capital to roll them out," said Adolph.

After an initial round of venture capital financing, many of Telecom Partners' start-ups have been funded through private equity augmented by vendor debt and often followed by an initial public offering.

Could this pattern rule out the possibility of future high yield issues?

"High yield, in the telecom arena, has opened up to top-name players and brand-name guys," said Adolph. "It hasn't opened up to [young] operations and smaller people. But, we're constantly looking for access to capital."

Most of Telecom Partners' companies have an equity capitalization between $80 million and $250 million.

Start-ups launched by Telecom Partners in the past include high yield names like Verio Inc., VeloCom, a competitor of Brazil's Telebras and competitive local exchange carrier Gabriel Communications.

Investors in Telecom Partners' third venture capital fund include the Washington State Investment Board, Massachusetts Institute of Technology, Norwest Equity Capital and the Virginia Retirement System.