Telegasm :To bandwidth or not to bandwidth.
siliconinvestor.com
Monday, January 22, 2001
Venture stats show dollars in, but don't show coordinated efforts: telegasm
To bandwidth or not to bandwidth. That is the question.
Statistics compiled by an industry group called the National Venture Capital Association showed that through third quarter 2000, which ended in September, the Internet sector continued to dominate funding, despite the sour and dour attitude toward dot-coms. Yet the stats don't show what's lacking in venture: more coordinated efforts to build broadband fiber.
For the first nine months of 2000, more than 700 deals were funded, totaling more than $11 billion. Part of the drive behind this was the simple fact that for several reasons Internet startups continued to be one of the more attractive arenas:
it's cheaper to launch a Net company (vs. telecom or semiconductor)
the Net continues to disintermediate old-line companies
the Net provides a bridge between bricks and online, what I call "bricks to clicks"
For three reasons, that capital may best be invested deploying fiberoptic networks:
(1) fiber is the long-term technology foundation,
(2) fiber requires large amounts of capital, and
(3) a fiberoptic foundation will change technology for the
next 100 years and could be a window opener on Wall Street
for a wave of new initial public offerings.
What the numbers don't show. . . One of the main problems with venture capital is that it's random. Firms hunt copycat deals and cannibalize each other's success. With broadband fiber networks yet to be built requiring tens of billions of fresh capital, it would be pleasing to see venture firms band together and get the job done right, building out the platform for the next 25 years in some coordinated fashion.
For technology and telecom are becoming dependent on each other as never before. It's not telecosm, it's telegasm.
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Steve Harmon is one of the Internet and technology industry's most-recognized analysts and investors. He authored a venture capital guide for entrepreneurs "Zero Gravity," now available in eight languages. Harmon was named by WORTH magazine (1999) to its list of 15 top Internet visionaries; named by CBS.MarketWatch (1998) one of four analysts to "Best of Wall Street" and featured in Smart Money magazine (2000) as one of three rising stars in technology investing. He has spearheaded investment funds in technology, as well as futures and options contracts on Internet stocks on a major U.S. stock exchange. He can be reached at AskHighVelocity@aol.com
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