A Massachusetts based venture capital firm recently announced it has launched a $40 million investment fund dedicated to the convergence movement.
The Convergence Fund is the name of the new venture capital fund, put together by Battery Ventures, which includes: service providers Ameritech, Bell Atlantic and Williams Communications; Nortel Networks; Novell; and Corning. The company said it plans to fund firms that can integrate packet and circuit technologies.
Directors of the fund plan to make investments of $1 million to $3 million in about 20 or 30 companies in the convergence space.
Investments could be made to companies in a variety of service and technology categories, including those specialising in sending voice signals across networks based on the Internet Protocol (IP), integrated access, quality of service management, operational support systems, electronic commerce systems and value added network services.
Battery Ventures partner Todd Dagres said the initial firms that have been funded are in the online commerce market. One, which has not been named, is developing software for setting up online brokerages that would trade in any number of commodities and the other, Petstore.com will sell pet products on the Internet, although Dagres said, "this will not be the typical Convergence Fund investment."
Petstore.com closed its $10.5 million in venture funding from Battery Ventures and Advanced Technology Ventures just a week after the Amazon.Pets.com announcement.
"There was a lot of introspection and discussion and there was a definite opportunity not to close the financing," said Joshua Newman, chief executive of Petstore.com. He added that the funders and management team felt we have a great opportunity and that, "we should move forward."
Once the startups have been financed by the fund and have products, Dagres said the established companies contributing to the fund will become test sites, as well as buyers, for the new products.
He also said that Battery will manage the flow of information between the startups and the investors so the new companies do not risk losing the intellectual property that makes them valuable. And if the startups need help from the outside, "fund members can come to their aid. We have a good way for them to find partners."
Battery Ventures has provided startup capital to several high tech companies including Fore Systems and Packet Engines. The company is also affiliated with market researcher, The Yankee Group. The company said this association further enhances Battery's research capabilities and market expertise.
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