Deutsche Telekom Setting Up Big Venture Capital Fund

Deutsche Telekom is setting up a new venture capital fund to be funded at EUR 500 million for a five-year period, supplementing investments already being made as part of T-Venture, which has funded 100 companies.

Deutsche Telekom Capital Partners will be one of the largest investment funds in Europe, Deutsche Telekom says.

DTCP will also advise Deutsche Telekom on existing investments in STRATO, Interactive Media, Scout, Deutsche Telekom Innovation Pool (TIP) and T-Venture.

Such efforts aim to help start-ups create new apps and services that are complementary to the core communications network and its features, but also potential services that could extend beyond the core business.

It is the latter that poses the greatest number of questions. As some now urge Apple to buy Tesla to fuel a new stage of growth, the point is that growth might require getting into related businesses (adjacencies) or even entirely separate businesses.

Comcast buying Universal NBC provides an example of getting into an adjacency. Google getting into Google Fiber is another example. For tier one telcos, a similar sort of move might include expanding from mobile access to mobile apps, as in the connected car business, where most of the money will be made by firms supplying connected car services, not connectivity or hardware.

Cable TV and telco firms also are getting into the home security business in a new way, as integrating mobile and other devices as controllers, plus the new potential of sensors and cameras, with high speed access, change the context and features a home security service can offer.

If a possible analogy is that the access business is a supertanker, while the startups are speedboats, the issue is creating successful new apps that have the potential to affect gross revenue in a meaningful way.

Thousands of telco-affiliated apps might not have as much revenue impact as one big new move into an adjacency.
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