Light Reading

Cable Vets Launch VC Firm

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
12/22/2008
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Instead of joining forces to create, develop, and grow a single new company, three cable veterans with deep technology and business ties have decided to apply their collective knowledge toward the funding of a wide range of early stage startups.

Jeffrey Binder, Vin Bisceglia, and David Fellows, whose combined executive and entrepreneurial experience span both the vendor and the cable operator arenas, founded Genovation Capital LLC , a new venture capital firm, during the summer and are now seeking the next big thing in the communications industry.

Binder, many might recall, founded Broadbus Technologies, a video server acquired by Motorola Inc. (NYSE: MOT) in 2007 for nearly $200 million. (See Motorola Scoops Up Broadbus.)

Bisceglia, the former chairman and CEO of Broadbus, ran regional metro optical services player Neon Communications from 1998 to 2000 and took telecom equipment supplier TSG Inc. public.

Fellows, meanwhile, most recently served as the chief technology officer of Comcast Corp. (Nasdaq: CMCSA, CMCSK), a role that also got him involved in Comcast Interactive Capital , the MSO’s venture arm. Among other recent moves, Fellows also served as principal for Pilot House Ventures .

The investment “theme” of the new, Waltham, Mass.-based VC is centered on the media, communications, and Internet sectors, a combination that “amounts to a second wave of the Internet,” according to Binder.

For Genovation, that will mean sprinkling its attention on a relatively wide swath of technology areas, including entertainment downloads, media management, social networking, targeted advertising, massively multiplayer gaming, cloud computing, and advanced storage systems, to name but a few.

“The fund is certainly more than cable by any stretch,” notes Binder.

But Genovation does plan to invest in ventures that are targeted to cable MSOs and other broadband carriers that happen to operate vast, legacy systems. The firm believes its experience will help, because “it’s difficult for young companies to navigate telco and cable,” Bisceglia says.

Although Genovation is entering a relatively crowded field, the VC hopes to stand out with what Bisceglia refers to as the firm’s “proprietary deal flow” -- its access to entrepreneurs as well as senior level executives at corporations.

The hope is that Genovation, thanks to its combination of entrepreneurial and corporate-level operational experience, will allow it to get good looks at the cream of the crop.

“It’s that whole aspect of deal flow [that will enable] Genovation to see the best deals first,” Bisceglia claims. “Those investments will give us a competitive leg up. We think Genovation will be a Tier 1 fund.”

Genovation also believes its combination at the principal level will enable the firm to cut through the clutter and make smart investment choices in the sectors of the Internet, media, and communications -- areas that are rife with buzzwords and jargon.

“Where these things overlap, traditional VCs tend to get confused,” Fellows says. “We have background and subject knowledge to [navigate] ourselves through these markets and these opportunities.”

Genovation, however, has yet to pull the trigger on any such investments. Those should start in earnest during the first half of 2009. “We expect to make a number of bets,” Binder says of the firm’s plans for next year.

Genovation’s leaders declined to discuss specific funding plans, but the VC firm reportedly expects to start fundraising in a big way next year.

According to the company’s own Website, Genovation will look at “seed” funding opportunities in the range of $100,000 to $1 million, as well as “early stage” investments in the range of $1 million to $10 million.

Economic timing?
But, given the rotten state of the economy, is this really a great time to be ramping up a new fund? The principals of Genovation think so.

They acknowledge that a bleak-looking economy has created a challenging environment to raise capital, but counter that the wheels of innovation continue to turn nonetheless.

“It’s a terrific time, because I think there certainly is capital in the marketplace in all quarters, whether you’re a fund or a company,” Binder insists. He believes there are still plenty of investment opportunities among early stage companies, even during a cool-down period. “The rules are different and the challenges are more significant.”

And the firm thinks its timing should be viewed as an advantage. While other firms are conducting triage on their investments, “we are a new fund, so we don’t have a legacy portfolio to nurse,” Binder says.

“We also believe that the mark of a great venture firm is one that can make money... in any investment cycle -- a bull or a bear market,” adds Bisceglia.

Binder, meanwhile, hopes recent history falls in his favor again, recalling that Broadbus was founded in 1999 and was successful at raising capital during the “depths of the tech bust.”

— Jeff Baumgartner, Site Editor, Cable Digital News

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TCOM41
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TCOM41,
User Rank: Light Beer
12/5/2012 | 4:15:06 PM
re: Cable Vets Launch VC Firm
I've heard the fund is in the 150-200M range. Their credentials are top tier, but they are going to have one hell of a time raising money in this market. If anybody can pull it off, it would be these guys.

Hoping they are successful, as I am certain there are bunch of folks in the telecom space that would love to have access to relationships these guys have and that includes me.
rahat.hussain
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rahat.hussain,
User Rank: Light Beer
12/5/2012 | 3:24:36 PM
re: Cable Vets Launch VC Firm
... how big?

odo
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 3:24:34 PM
re: Cable Vets Launch VC Firm
At this point, they've declined to disclose the present size of the fund as well as the fund size they are shooting for. Indications are that they will be in fund-raising mode next year, though it appears they will be making a few bets before they complete the building of the fund. Jeff
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