A year after leaving Nortel Networks Corp. (NYSE/Toronto: NT), Anil Khatod has turned up as a venture capitalist (see Atlas Venture Hires Anil Khatod ). And he's got one word for the opportunity he sees -- software.

Khatod says software, in the form of provisioning, billing, and other "service commerce" tools that support the rollout and maintenance of data networking services, will be key to making the most of telecom gear that's already installed worldwide.

"One of the telecom industry's biggest problems is that it's difficult for carriers to roll out new services," he says. Software that speeds up service rollout is a market begging to be addressed.

Dividing his time as a private angel investor and as a new partner at Atlas Venture, Khatod aims to scout companies that can fill the need for software. But he'll be going at it selectively. He's focusing only on Europe and the U.S. And he's likely to keep his investments conservative.

"The days of people raising $70 million to $100 million to start a company are gone," he asserts. He says startups need solid, believable plans for generating revenue without burning through tons of resources. That usually entails at least one large customer willing to sponsor development and to sign on when it's done.

Why won't Khatod venture in Asia? Isn't that one region where growth in telecom hasn't fallen as drastically as it has stateside? "It's a question of how far you can meaningfully expand. The field [in Asia] is seriously crowded with a few venture firms." Atlas Venture plans to take advantage of its locations throughout Western Europe and the U.S. instead of spinning its wheels against the competition in Asia, he indicates.

Khatod is clear that he doesn't expect his venture efforts to grow the way many startups did in the boom time. Indeed, he doesn't see any meaningful recovery from the present downturn until 2004 at the earliest. By that time, an ongoing shakeup in the carrier market will have helped surviving carriers whittle down their debt and start addressing what he sees as ongoing demand for bigger bandwidth.

Khatod left Nortel in July 2001, just shortly after assuming the post of chief marketing and strategy officer. While he denies any negative feelings about his former workplace, he says he needed a change. Apparently, he'd been chomping at the bit after 19 years at the company. "It wasn't fun anymore."

Khatod's Nortel jobs included president of the Optical Internet, Wireless Internet, and Global Internet Solutions groups; and senior VP, marketing and sales. He says his promotion just four months prior to his departure really was an extension of what he'd been doing for awhile.

In a way, Khatod's returned to what he likes best. Even at Nortel, he invested as an angel in several startups in various parts of the world, albeit in market areas in which he says Nortel didn't compete. He'd rather not specify the startups, but he's on the board of directors of OmniGuide Communications Inc., an air-filled fiber company launched in 2000 by well known optical entrepreneur Mukesh Chatter (see A Fiber Filled With Air, Stealthy Startup Leads With Layoffs, and OmniGuide Puts Khatod on Board). According to SEC documents, he also held shares in Alteon WebSystems (Nasdaq: ATON) prior to that company's purchase by Nortel in 2000.

Khatod started his career as a management consultant in 1976 after graduating from business school in India. He founded a semiconductor module company in 1980 in California and joined Nortel in 1982.

— Mary Jander, Senior Editor, Light Reading
www.lightreading.com