LONDON -- IPTV World Forum -- The IPTV sector is a challenging market for venture capital (VC) firms because it's a "sub-scale market" that is "dogged by a lack of standards," according to one experienced investor in the market. (See IPTV's Crowded House.)

Speaking here on an investment-focused panel, Simon Cornwell, a partner at Amadeus Capital Partners Ltd. , said the IPTV market still lacks scale. When examining a proposition related to the IPTV market, he looks for "technologies and solutions that are applicable across the broadband market and not just closed IPTV networks." (See Europe Dominates IPTV Landscape.)

In addition, he noted that the IPTV sector is "dogged by a lack of standards -- it's in danger of being overtaken by open Internet services."

Fellow investor Julie Meyer, CEO of Ariadne Capital Ltd., agrees that startups can't afford to "be constrained by a small market." She pointed to the success of Skype Ltd. when it first launched: "It didn't segment geographically," she noted.

That doesn't mean Cornwell hasn't invested in the IPTV sector at all. Amadeus is one of the backers behind video storage player Edgeware AB , which is growing and launching into North America, and has just raised new funds. It's also an investor at content delivery network Velocix . (See Edgeware, Ericsson Strike VoD Deal, Edgeware Takes On Flash Rivals in US, Verizon Targets CDN Partners, and Virgin Media Weighs CDN Options.)

And Cornwell says he's due to announce a new investment in the telco TV sector in the coming months.

His outlook, though, can't be short term. "This is a very good market for buying companies and buying into companies, but not good for selling."

So what is the Amadeus man looking for in terms of new investment opportunities? He believes no one has yet developed a decent advertising personalization server. "We are looking hard in this area," said Cornwell.

His "dream" investment opportunity would be in a company that develops an ad delivery capability that will work equally well for IPTV, the open Internet, and cable networks.

Cornwell also believes the time is right for companies to develop interactive advertising capabilities, as that particular market is set to take off in the next few years.

He'd also like to see "a good open standards-based device that connects to a TV and provides flexible access to the Internet." Eventually, he expects to see "Web-connected TVs as standard. But we need a common platform – a Web-oriented browser that acts as the front end."

— Ray Le Maistre, International News Editor, Light Reading