Telstra’s four-year old venture capital arm is increasingly turning its attention to Asia, seeking to add to its investments portfolio in a range of companies across the technology spectrum.
Telstra Ventures’ latest investment – its 26th to date – in the fourth round of fund raising for Shanghai-based cloud computing company Qiniu, is representative of the type of investments that the telecommunications giant is looking for and is the third investment made in the 2015/2016 calendar year.
Qiniu is a cloud-based platform as a service company that “provides multimedia content upload and distribution services for application providers to manage user content”.
It is the first investment in China since Chris Pu was employed from Intel Capital in Asia to run the Telstra Ventures office in Beijing. The group also has an office in San Francisco.
While it doesn’t have a specific fund amount, the regular investments are between five to 20 percent of a company and Telstra Ventures Managing Director Matthew Koertge told InnovationAus.com, adding the Qiniu investment was around that range.
“Originally we were looking at investments in Australia and the United States, as I am based in Sydney and Telstra Ventures’ other managing director Mark Sherman is based in California,” Mr Koertge said.
“But now we are looking more in Asia. One of the company’s recent investments is in Singapore based Monk’s Hill Ventures, a venture capital group that focuses on Singapore and Indonesia but also other parts of Southeast Asia.”
Monk’s Hill is unusual in terms of the group’s other investments, which are generally directly into businesses, but it was made to give Telstra Ventures exposure to Southeast Asia where the existing 10 investment executives have little experience.
Telstra Venture sits under the recently formed International and New Business unit of the company and its investments are driven by the corporation’s strategic aims.
Most of (but not all) the time one of the 10 Telstra Ventures executives –who have expertise in different parts of the technology sector – will sit in the board of an investment company.
“All our investments are sponsored by one of the companies business units,’ Mr Koertge said.
He explained Telstra tends to offer the products and services of its investee companies to its customers either as Telstra branded or originally. Telstra also contracts to be a customer of some of its investment companies.
So while the valuations of Telstra Venture’s investments need to stack up financially, because they are strategic “we have some room to move on valuations,” Mr Koertge said.
Telstra does hold out the prospects of eventually purchasing one of its investee companies outright, as it did with Silicon Valley based streaming group Ooyala.
But this is unusual and Telstra is just as likely to cash out of investments as it did, for instance, with online file swapping software group Box when it listed in the US in early 2015.
Other Telstra investment companies have been acquired by third parties, or other shareholders.
Still, an increasing number of people in the technology sector, particular in the United States are concerned that private valuations in the industry have entered bubble territory, even as the value of publicly listed companies have come off in the new year amid a more general stock market malaise.
Mr Koertge also admitted that valuations in the industry had risen in the recent past year.
“We have had to walk away from some proposals,” he said
Mr Koertge said that an announcement of Telstra Ventures 27th investment was not far away but remained tight lipped about the target – but he also warned that “sometimes these things can fall over at the alter.”