Collar Capital CEO Jeremy Collar sees opportunity in technology development where many corporations have failed. “They set up these incubators, which have turned into incinerators,” says Collar. Such was the opportunity when Collar Capital purchased investment portfolio of Lucent in late 2001 for about $100 million. Collar holds an 80% share of Bell Lab’s venture portfolio, currently being managed by New Venture Partners (formally know as Lucent New Ventures).
Collar sees the same opportunity now as Collar Capital joins with New Venture Partners and BTexact Technologies, the research and technology development unit of British Telecom (BT) to form NVP Brightstar.
NVP Brightstar, an independent corporate partnership based in Ipswich, England, is 77% owned by Collar Capital and 23% owned by BT. NVP Brightstar will begin operations in March by buying the majority of the portfolio companies of Brightstar, BTexact’s incubator. New Venture Partners will manage NVP Brightstar’s investments and fund new companies. Capital committed to the new group totals approximately $100 million.
Since its founding as an in-house incubator for BTexact in 2000, Brightstar has spun out nine companies and raised $55 million in venture capital.
NVP Brightstar will have the right of first refusal on any entity that BTexact wants to spin out of its labs. So far the new venture group has taken control of four such embryonic companies: a.p.solve, a provider of intelligent management software and serivces; telecom revenue assurance provider Azure; Evolved Networks, a creator of artificial intelligence-based software that automates telecom network design and provisioning; and the Microwave Photonics, which develops technology for Wi-Fi and mobile cellular infrastructure.
“Our particular experience over time is being able to spot opportunities in the labs and find the business opportunities there,” says Andrew Garman, managing director of New Venture Partners, which was doing just that for Bell Labs, where it started 35 companies and exited from eight. New Venture Partners plans to start new companies at the rate of two or three a year and eventually bring them to market in the United States. “We’ll be putting in a lot of frequent flyer miles flying back and forth to help them get set up,” Garman says.
“The biggest challenge for NVP Brightstar is that it learn to handle its independence with maturity,” says Collar, who adds that it will soon be ramping up with the addition of a chief executive and a marketing staff.
New Venture Partners hopes NVP Brightstar will be the first in a series of such entities. “Over the next few years it’s our goal to put together a few more of these and end up with a worldwide network of these funds,” says Garman. New Venture Partners is in discussions with companies in Europe and the United States to start additional groups, but expects to create fewer than 10 in total.
“For us the general state of the marketplace is pretty depressing,” says Garman. “It’s not a great time to be growing companies at a fast rate. So we’ll be looking to consolidate the companies in the portfolio that we have. There aren’t going to be a great number of exit opportunities this year.” Instead, New Venture Partners and NVP Brightstar will be looking to broker partnerships between companies and through M&A activity.
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