LONDON -- Telefónica SA (NYSE: TEF) has shown itself to be in the vanguard of traditional telecom operators investing in alternate strategies and new business models. Its Digital division has clearly articulated its strategy, part of which involves setting up Wayra, which provides funding for applications startups. (See Telefónica: A New Breed of Telco, Telefónica: Digital Dreamer? and Telefónica to Hatch Startups .)

Here are the pictures from our visit to give you a flavor of the environment the Wayra team has created for its startups:



Telefónica Digital, of course, isn't just investing in startups -- it's providing them with advice, contacts and the physical resources they need to get started at a number of startup incubator offices in Europe and Latin America.

During a recent visit to the central London office on Capper Street, Gonzalo Martin-Villa, the global director at Wayra, provided Light Reading with an update on Wayra's progress, some insight into how it is nurturing fledgling companies. (See Why Gonzalo Martin-Villa Is Kissing Frogs.)

He told a visiting group of industry analysts that Wayra has received more than 14,000 pitches from startups. "Filtering those has not been easy," noted Martin-Villa, though he explained that the load had been lifted from the Wayra team by inviting Telefónica staff around the world to provide an initial assessment of the pitches. More than 5,000 responded: "They want to be in touch with innovation," he noted.

So far, Wayra has taken on 180 startups in 12 academies located in 11 countries in Europe and Latin America, with each startup getting an angel investment of up to €50,000 (for a stake of up to 10 percent), plus unquantifiable support in the form of office space, facilities and mentoring.

Of the startups housed in Wayra academies, 80 percent are in commercial mode and about 40 percent are working with part of the Telefónica group, either in joint product development or as a commercial partner (either for internal or external deployment). For example, one startup from the Barcelona academy has had its artificial intelligence application for team management deployed by the carrier for internal operational purposes while others have their services in trial with part of the global carrier.

"We are trying a lot of things, a lot of things that Telefónica has never done before. Our main focus, though, is always to do what's best for the startups," noted Martin-Villa, who ultimately has to run Wayra as a commercial unit that provides the parent company with financial returns.

Martin-Villa reveals more on Page 2.

London calling
Things are moving quickly. The London academy, which received more than 1,000 applications, opened its doors in June and has 19 of its 20 "pods" filled. Simon Devonshire, director of Wayra Europe, noted that the London academy opened just four months after it was given the green light, with the process of finding and securing a location, fitting out the offices and choosing initial startups all happening during that short time period. "It darned near killed me, but it's been the most amazing journey of my career," said Devonshire.

Ann Parker, Wayra Europe's head of operations, said three of the London startups secured additional external investment within three months of being in the academy. She also stressed the diversity of the fledgling companies, who are working on all manner of consumer and business-related applications (retail platforms, digital security, Wi-Fi access, multimedia messaging) and staffed by people of all ages and nationalities.

Elsewhere in Europe there are academies in Dublin and Munich, and the hunt is on the way for premises in Prague and Bratislava on continental Europe.

Synchronous relationship
Critical to Wayra's success is its corporate culture: The focus is very much on discovering, working with and learning from new talent. Eventually some of the startups may end up as Telefoncia group partners or provide applications that are used internally by the operator.

Martin-Villa hopes that the incubators will provide Telefonica staff with unique and beneficial insight. He says the startups are asking their Telefonica mentors whether they are doing the right thing and whether their ideas and developments are relevant and/or useful. In time, he wants to see that role reversed: He expects Telefonica staff to be seeking out the startups to ask what sort of services the operator should be providing to its customers.

Multiple disciplines, video highlights
The London Wayra office, just upstairs from the new offices housing Telefónica (UK) O2's Wi-Fi team, is populated by people with many different backgrounds and visions. And as the pictures below show, it has many of the trappings of hot-housing environments (a ping pong table, giant bean-bags, funky fridges, and so on).

Of the London hopefuls, a few stand out as having plans that fit the needs of modern communications service providers. One of those is Six3, a video messaging startup that is the brainchild of Tim Grimsditch.

He's developed the Six3 Video Messenger, a hosted service that, ultimately, will allow people to record and send public or private video messages of up to 63 seconds duration to and from any smartphone (any make, any operating system) over 3G, 4G or Wi-Fi connections. He already has a beta service, being put through its paces by 12,000 trialists, developed for Apple's iOS and is now working on Android capabilities. His idea has clearly resonated with people beyond Wayra: Grimsditch recently picked up a check for $10,000 from Cisco Systems Inc. (Nasdaq: CSCO), having won third prize in the IP equipment giant's British Innovation Gateway Awards.

Why 63 seconds? Grimsditch says that a minute is the optimum attention span for a video message and, well, there needed to be a limit on the length of each message. Why not 62 or 64 seconds? He liked the sound of 63 -- as good a reason as any!

Grimsditch and his London cohabitants share many things, not least the undivided attention of the Wayra team and it's clear from one relatively short visit that the likes of Simon Devonshire, Ann Parker and Wayra London Academy director Ashley Stockwell are dedicated to the success of the startups under their wing. There's a buzz, an air of excitement on Capper Street, and it's one that's not normally associated with a global telecom giant.

— Ray Le Maistre, International Managing Editor, Light Reading