Corporate conception
- Article 6 of 25
- Infoconomist, August 2001
The Internet-incubator model was deeply flawed, but corporate incubators could yet deliver substantial returns.
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"If we take a controlling stake, the start-up becomes a BT subsidiary rather than an independent entity," says Chris Winter, BT's head of business development. That, he says, leads to a more bureaucratic decision making process. "VCs also become nervous if we take a majority stake. They need to retain control so they can dictate when and how they exit the investment," he says.
The same considerations mean that, at this stage, an individual from outside BT is invariably installed as the CEO of the new company. This not only reassures the VCs, says Berry, but circumvents the lack of business experience of most of the engineers who founded the companies. "It also helps them get over their BT mindset," he says.
3i has been the main investor in two of the three Brightstar launches, but Berry says there is no bias towards 3i as a partner. "It really goes back to a long-standing relationship we have with BT," says Robin Winning, investment manager with 3i's technology team.
Winning says that working with BT is of great value, although he denies that Brightstar's launches have an automatic, guaranteed customer – BT itself. "I'd say that's over-doing things, although, certainly, BT's sales channels are very interesting."
So far so good. But is Brightstar vulnerable to BT's own financial situation? Christopher Bland, the newly appointed chairman of BT, is under significant pressure to reduce BT's ?������48.8bn debt burden. The need to cut costs in an adverse business climate, warns IDC, is one of the biggest reasons, short-sighted or not, that corporations abandon their incubation initiatives.
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