BOSTON -Beacon Telco, a venture capital development company, was launched in mid-September to focus on optical networking and broadband communications, said Alok Prasad, president of the company. Beacon Telco is the first operating company created by Beacon Photonics, a private holding company whose goal is to create venture capital development companies in photonics related market sectors.
The Photonics Center at Boston University founded Beacon Photonics in April, through a joint venture with Globalvest Management Co. LP, an investment manager specializing in Latin America and emerging markets. The Photonics Center has been in existence for six years and has been running an incubation program for the last three years, said Shawn Burke, deputy director of the center. “The incubation program tries to help companies improve their time to market and cut their burn rate,” said Burke, adding “but what we saw as a key element to accomplishing this goal – access to capital – was missing from the incubation program.” In order to address this need, the Photonics Center created Beacon Photonics to seed various vertical market sectors, he said. The optical networking and broadband areas, through the creation of Beacon Telco, are the first market sectors to be addressed by Beacon Photonics.
“The emphasis of Beacon Telco is on reducing time to market and improving on a company’s execution,” Prasad said. The company plans to back 15 to 20 seed- to early-stage companies per year in the photonics and broadband market sectors, Prasad said. Most of these companies will also participate in the Photonic’s Center’s incubation program, which provides the company with access to laboratories, equipment, technical staff and affiliated Boston University faculty members, he added. Beacon Telco also plans to create an additional two to three companies a year and place them in the Phontics Center’s incubation program, too, said Prasad.
The VC company will provide its portfolio companies with $1 million to $3 million in funding, he added, noting that companies which choose to participate in the incubation program will also need to pay a program cost for the incubator’s services. He declined to disclose the program cost.
Beacon Telco is currently funding its operations from the seed round of funding it closed in early-September, Prasad said. He declined to discuss the funding round, except to say Beacon Photonics and Pittiglio Rabin Todd & McGrath, a management consulting firm to technology-based businesses, provided all the funding. Beacon Telco will hold two rounds of funding over the next six months, for the purpose of raising an additional $100 million to $200 million. “In the next one to two months we will look to involve high profile individuals in the optics and broadband industries. After that, in the next three to six month, we will bring on strategic partners such as corporations and VC companies that can provide value to our portfolio companies.” He declined to identify any potential investors.
In addition to its future fund-raising plans, Beacon Telco will also be eyeing the public markets for a possible initial public offering of its own. “In the next 18 months to three years, if the market seems right we will go public,” Prasad added.