Quarterly VC survey: More first stage financings

NETWORK WORLD NEWSLETTER: CAROLYN DUFFY MARSAN'S ISP NEWS REPORT
08/31/05
Today's focus: Quarterly VC survey: More first stage financings

Dear networking.world@gmail.com,

In this issue:

* VCs invested more money in first-round financing of telcos
  start-ups in 2005
* Links related to ISP News Report
* Featured reader resource
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This newsletter is sponsored by HP
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Today's focus: Quarterly VC survey: More first stage financings

By Carolyn Duffy Marsan

Venture capital firms have invested more money in first-round
financing of telecommunications start-ups in 2005 than they have
in several years, in what may be a sign of renewal in this
long-troubled segment of the high-tech economy.

In the first half of 2005, venture firms completed 33
first-round telecom deals, according to the quarterly MoneyTree
Survey compiled by PricewaterhouseCoopers, Thomson Financial
Venture Economics and the National Venture Capital Association.
This compares to 23 first-round deals completed in the first
half of 2004, and 21 first-round deals completed in the first
half of 2003.

Kirk Walden, national director of venture capital research with
PricewaterhouseCoopers, says that the venture capital industry's
interest in funding new telecom companies is a good sign.

"VCs have to stay with companies that they've already financed,"
Walden says. "If there's one bright and encouraging sign for
telecom it's that they're making these first-time deals."

The five largest first-round financing deals of 2005 are:

* $30 million invested in CSM Wireless, a Great Falls, Va.,
  provider of wholesale and retail cellular services.

* $15 million invested in GoTV, a Sherman Oaks, Calif., provider
  of on-demand, customized content for wireless phones.

* $15 million invested in Rivulet Communications, a Portsmouth,
  N.H., developer of IP technology.

* $15 million invested in Teledvance Communications, a
  Louisville, Ky., provider of voice, data and video
  communications services.

* $12 million invested in Spanlink Communications, a Brooklyn
  Park, Minn., provider of IP communications solutions for service
  providers and enterprises.

Walden says many of these companies are beyond the start-up
stage, with shipping products and existing companies.

"Some of these are expansion-stage investments in companies that
are getting venture capital financing for the first time,"
Walden says. "The odds of these companies succeeding are greater
than they were in 2000. The companies that get funded now for
the first time have gone through such a level of due diligence
and scrutiny and they are more mature."

Overall, the venture capital industry has invested $926 million
in the telecom segment of the high-tech industry during the
first half of 2005. That includes $562 million invested in the
second quarter of 2005 and $364 million in the first quarter of
2004.

During these two quarters, venture capitalists completed 114
deals in the telecom sector, with 33 of them - or 29% - being
first-round financings.

The reason venture capitalists are interested in first-round
telecom deals is that "the efficiencies of IP are finally being
realized and finally making a difference," Walden says. "There
is an increased interest in first-stage investments in companies
that have profits and positive cash flows. The venture
capitalists are acting a little more like private investors
rather than the risk takers they used to be."

The top 5: Today's most-read stories

1. 2005 salary survey <http://www.networkworld.com/nlisp3854>

2. Google dives deeper into networking
<http://www.networkworld.com/nlisp6163>

3. Cisco aims to simplify switch mgmt.
<http://www.networkworld.com/nlisp6164>

4. VoIP season about to heat up
<http://www.networkworld.com/nlisp6165>

5. A proposal for governing the 'Net
<http://www.networkworld.com/nlisp6166>

Today's most-forwarded story:

VoIP rollouts generate heat, power concerns
<http://www.networkworld.com/nlisp6167>

_______________________________________________________________
To contact: Carolyn Duffy Marsan

Carolyn Duffy Marsan is a senior editor with Network World and
covers emerging Internet technologies and standards. Reach her
at <mailto:cmarsan@nww.com>
_______________________________________________________________
This newsletter is sponsored by HP
FROM THE NETWORK CORE TO THE NETWORK EDGE

Traffic management becomes critical as your network
infrastructure expands to support different types of traffic and
users. Most traffic management solutions have serious
limitations: too expensive, difficult to use, and overly taxing
on bandwidth. However ProCurve Networking by HP addresses these
requirements, overcomes the limitations of other solutions, and
gives you valuable insight into LAN performance.
http://www.fattail.com/redir/redirect.asp?CID=111661
_______________________________________________________________
ARCHIVE LINKS

Archive of the ISP News Report newsletter:
http://www.networkworld.com/newsletters/isp/index.html

Wide Area Network Research Center:
http://www.networkworld.com/topics/wan.html
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WEBCAST: Winning with Endpoint Security

Protecting an enterprise from worms and other attacks is a
struggle. Learn proactive strategies for making sure that no
matter who your users are, or how they access your network, you
are protected.
http://www.fattail.com/redir/redirect.asp?CID=111528
_______________________________________________________________
FEATURED READER RESOURCE
VoIP

For the latest in VoIP, check out NW's Research Center on this
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reviews, product testing results and more all related to keeping
VoIP networks performing at their best. Click here for more:
<http://www.networkworld.com/topics/voip.html>
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