Blueprint Rolls Out the Next Fund

WASHINGTON, D.C. – Despite discussions about telecom turbulence in the financial markets here at the Next Generations Networks (NGN) conference, some venture capitalists are finding that small funds and small firms still have plenty of opportunities in the emerging telecommunications equipment market.

Take San Francisco-based Blueprint Ventures. Early this year it raised enough capital for its first fund, a $150 million project, in just 45 days. This week Blueprint will begin meeting with larger venture firms and other investors to round up money for a second fund, in the $275 million to $300 million range.

Blueprint invests in early-stage companies but isn’t doing any seed funding, says Chris Kersey, a general partner with the firm. Kersey, formerly of Menlo Ventures, says Blueprint’s investments usually range between $5 million and $10 million.

Blueprint’s strategy is to get its money into hot telecom and optical companies before those firms start seeking funds from larger venture capitalists. Its pitch to entrepreneurs is that it can spend more quality time with each firm feeding from its fund.

In turn, the firm’s pitch to larger VCs is that they should invest in Blueprint so they won’t have to get their hands dirty with smaller deals and greener companies.

Running a smaller VC fund has its advantages in such times. Blueprint’s portfolio companies, which include Atreus Corp., CopperCom, Oresis Communications, and ShareGate Inc., don't necessarily have to stage massive IPOs for Blueprint to see a decent return on its investment.

The downside is that Blueprint partners will have to be content with a string of small victories, rather than making their fortunes on one gargantuan initial public offering.

In the meantime, VCs don’t seem to be worried about deals slowing down, despite the market volatility. “We invested more in new deals by the beginning of the summer than we did all of last year,” says Richard Prytula, president of TechnoCap, the Canadian firm that invested in Hyperchip, BigBangwidth, and VIPswitch. “We didn’t invest in dotcoms or CLECs, because we didn’t think their business models were sustainable."

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com

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