In 1988, France Telecom, perhaps sensing the imminent demise of its once ground-breaking Minitel (a telephone-based teletext service), launched Innovacom, a venture capital unit, to foster innovation in telecom and IT. Since then, Innovacom has contributed to the emergence of over 250 companies in France. Although Innovacom is bound by charter to invest most of its funds within France, the company has established a presence throughout Europe and, increasingly, in California. In 1996, the company launched a "direct investment program" to invest in the U.S., primarily in Internet companies.

Investment strategy: seed through second round

With over $100 million in investment capital under management, Innovacom's American unit finances companies at varying maturities, but usually offers funding to companies in start-up, first stage, or second stage. First round financing ranges from $250,000 to $1 million, and expands according to projections. Innovacom has 2 categories of funds. One category includes funds for which capital is totally derived from France Telecom. The other category of funds includes those which have institutional or private investors along with France Telecom.

Your basic telecom portfolio

Innovacom seeks young companies geared toward improving public or private telecommunciations with products such as electronic components, boards, mobile network equipment, software development tools, Internet software, and application software on distributed architectures. Notable investments include: eFusion, an Oregon-based provider of Internet systems, which integrates voice and multimedia technology; GlobalCast Communications Inc., a producer of systems that enables delivery of information of private intranets, corporate extranets, and the public Internet; Internet Dynamics, a provider of Internet security solutions; Intershop Communications, a developer of e-commerce applications; and Four11, a people-finder service acquired by Yahoo! in 1997. Innovacom has also invested in Mainsoft, Netmansys, Tumbleweed Software, Micromodule Systems, T.Sqware, Ultracom, and Sandpiper Networks, Inc. Recent IPOs include Poet Software, lastminute.com and Netvalue.

Your basic telecom team

Innovacom is led by 7 investment managers, all armed with advanced degrees in the sciences or economics and plentiful industry experience. The unit's general manager, Denis Champenois, graduated from Paris' HEC (Haute Ecole de Commerce - a top French b-school) and Ecole Nationale Sup?rieure des Postes et T?l?communications. Prior to joining Innovacom, Champenois had worked for several years managing technology investments, and headed the Financing and Equity Department of France Telecom's Financial Division. Innovacom's investment manager in the United States is Aymerik Renard, a graduate of Carnegie Mellon University's Information and Decision Systems/Policy and Management program.