Deutsche Telekom, Telefónica revamp startup investment strategy

Deutsche Telekom (DT) will overhaul its startup investment strategy as it looks to find new revenue streams to offset declining returns from its telephone business.

The operator said that its T-Venture division is now able to acquire majority holdings in startups and has adjusted the structure of its venture funds to enable quicker decisions on attractive targets, Nico Goericke, a DT spokesman told Bloomberg.

Goericke added that T-Venture now has a total budget of around €450 million for investments and plans to step up the investment frequency.

Of note, DT CEO, Rene Obermann took charge of innovation strategy this year--after board member Ed Kozel stepped down--and is pushing for alliances with startups to happen faster. T-Venture did not invest enough of its budget before, an unnamed source told Bloomberg.

"Through this new structure, we want to integrate startups as majority investments into DT and speed up our pace of innovation," Goericke said, declining to identify potential targets.

Separately, Telefónica says it will invest €68 million over the next five years in a network of technology venture capital funds that will be open to other public and private investment groups.

To promote this effort, the operator has launched Amérigo, a new international network of technology venture capital funds, to identify and finance innovative businesses in the digital industry to help offset Telefónica's declining telephone revenue.

"We have long understood that to succeed we need to understand and embrace the digital innovation ecosystem," Telefónica Digital CEO Matthew Key said in a statement. "This has driven our investment in initiatives such as Campus Party and Wayra. Amérigo marks the next stage in this strategy as we seek to combine the funding power of private and public funds to create a real engine for stimulating technology innovation."

So far, the network of technology VC funds have raised €300 million which will enable it to oversee projects with an estimated value of €1 billion, according to Telefónica Digital, which will manage the overall business.

The company confirmed that it will initially target Spain, Colombia, Chile and Brazil, with early investments expected to be about €1 million depending on the size and stage of the project.

For more:
- see this Bloomberg article
- see this Financial Times article (sub. req.)
- see this Telefónica Digital release
- see this Reuters article

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