On Monday, NEA announced it had led a $35 million investment in the specialist VOIP service provider with a $12 million stake (see Vonage Raises $35M). Now Harry Weller, a partner at NEA, says the VC firm will make use of its inside knowledge of Vonage to look at other companies riding the VOIP wave.
"Our investment in Vonage gives us exposure to the sort of infrastructure elements that are needed for VOIP, and because Vonage buys and uses this stuff, we can see what works, and see which companies have the best technologies," says Weller.
An example of such VOIP "elements" are the session controllers that are needed to manage services at IP network interconnection points, although Weller did not say NEA was looking specifically at that sector. The session controller market includes such startups as Acme Packet, Jasomi Networks, Kagoor Networks, Netrake Corp., and NexTone Communications Inc., among others.
NEA is far from the only company pumping cash into the VOIP sector of late:
He does admit, though, that the investment in Vonage is a risk, given the extremely competitive nature of the voice services environment and the potential regulatory issues that may emerge (see FCC Sets Date for VOIP Inquiry and FCC Picks VOIP Experts). But Weller says the potential of the Vonage business model makes this a risk worth taking: "The risks are mitigated by the potential upside. We've been looking at Vonage for about nine months, and there's enough evidence, enough business data, to make this attractive. The costs scale as the business grows – there's no chunky upfront investment in traditional voice network infrastructure – so it's a very capital efficient business. And because the service is decoupled from the infrastructure, it means you can be innovative with the service, and do new things with voice service, which is still a killer app," says the NEA partner.
— Ray Le Maistre, International Editor, Boardwatch