Telecom Italia Makes $600M Call –

MILAN – Just one week after Nokia Ventures revealed it was straying outside of the corporate huddle to bring on third party investors, Telecom Italia (TI) is prepping a new stand-alone vehicle mandated to invest in the broadly-defined Internet, communications and technology space. The new fund has a target capitalization of $600 million and is set to launch in January.

Once the vehicle is filled, TI will be only one in a list of limited partners that will include a number of financial institutions and pension funds. Still, TI will maintain a close eye on its baby, formally christened as a separate division within the corporate structure in June.

“We will be judged on our… strategic and financial results,” said Anna Duce, president of Telecom Italia Ventures. “We need to bring concrete results.”

At least one representative from TI will sit on the fund’s management team, and the telecommunication giant’s business and operating units are expected to source much of the vehicle’s deal flow. Like a corporate venture program, the fund will target companies who can be strategically aligned with its parent’s core business. It will seek out wireless communications and WAP deals, Internet business-to-business management and platform solutions and broadband access technologies.

The new fund will stretch the existing corporate venture program from its current headquarters in San Francisco to New York, TI’s North American headquarters, with investments reaching as far as Italy and Western Europe, Israel and Latin America. Latin America will be of particular interest to the fund, as TI has already secured its place in the region with a 30% stake in Brazil’s largest Internet service provider, It will make early- and mid-stage investments ranging from $2 million to $8 million.

Telecom Italia first ventured into Silicon Valley’s brand of private investing with a limited partner stake in three California funds: Accel Partners’ Internet/Strategic Technology Fund, Allegis Capital and 21st Century Internet Partners. To date, the original $60 million investment has multiplied a five times return, Duce said. The stand-alone fund may continue to invest as a fund-of-funds, perhaps joining the list of LPs on Allegis Capital’s Media Technology Ventures IV. Whether TI will join Allegis, or any other, Duce said, will be determined when the venture finalizes its investment strategy.