Venture

Another European Carrier Goes VC: Orange Partners With Publicis, Iris In $400M Fund

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Today sees the launch of one more venture capital fund backed by a large European telecoms carrier: Orange, the retail face of France Telecom, is teaming up with the advertising giant Publicis and Iris Capital Management to start OP Ventures Growth, a new $400-million-plus fund to back French and other European technology startups.

Orange and Publicis are contributing half of those funds, $200 million (€150 million) with the total to be used both for seed capital/early stage investments, as well as later rounds; and the deal will see the carrier and ad giant effectively become minority partners (24.5 percent each) in Iris.

The move underscores how the older guard of media and communications are continuing to invest to make sure that they, too, are in the thick of newer innovations — and they are using the vehicle of VC cash to get there. The move comes just a week after Telefonica also announced more startup activities — the launch of its Wayra incubator — and amidst reports that the Spanish carrier is gearing up,  within days, to announce another significant investment in a startup.

OP Ventures says it will be looking to invest up to €15 million ($20 million) in individual projects. Meanwhile, seed and early-stage investments will likely be more in the region of up to €3 million ($6 million) per project.

These will be divided into three groups: OP Ventures Growth will target established companies in France and Europe, providing up to 15 million euros per project; OP Ventures Global will invest in start-ups outside Europe, also with funds of up to 15 million euros per project; and OP Ventures Early Stage will provide seed-capital and early-stage investment of up to 3 million euros to young companies in France and Europe, the company said in a news release. The group says in a release the first two are “immediately operational” with the third to come online by the second quarter of 2012.

This is not the first time that Orange has acted as VC — or the first time it has partnered with Publicis to do it.

Orange has stakes in both the streaming music service Deezer, as well as 49 percent of the online video site DailyMotion, for which it paid $80 million. Both of these were strategic investments for the company: it has an extensive IPTV/mobile operation in France and has integrated both of these services into those offerings, using them to upsell its customers into more advanced services.

(Orange also has extensive holdings outside of France, including a mobile JV in the UK with T-Mobile called Everything Everywhere, as well as mobile operations across the rest of Europe and in emerging markets like Africa. It has not made as much of a converge play in these other markets, as it has in France.)

The Deezer investment, a minority share of an undisclosed amount, has also seen Orange taking the service into other markets like the UK, but last month, TechCrunch understands that while Orange decided to keep its stake in Deezer, it decided not to increase its investment in the company; this new activity may have been one reason why.

Orange also announced in November 2011 that it was teaming up with Publicis for a $300-million VC fund. It’s unclear whether today’s announcement is the transferring of that fund, or a new one altogether. (We’re finding out.) Update: An Orange spokesperson confirmed to me that this is the same tranche of money that Orange and Publicis announced last November, not a new round of investment.

Within OP Ventures, Orange and Publicis Groupe will each have a minority 24.5 percent interest in Paris- based Iris. Iris’ management meanwhile keep a controlling 51 percent interest. The company will continue to be run by Iris’ Pierre de Fouquet and Antoine Garrigues, with the supervisory board including Maurice Lévy, Chairman and CEO of Publicis Groupe and Gervais Pellissier, deputy CEO of France Télécom-Orange, who becomes deputy chairman.

Partnering with Iris for the fund is a smart move for the other two: the company has been around since 1986 and has contacts in the investment communities of some 18 European countries, where it has in total invested $1.1 billion. Iris already manages funds for some of Europe’s biggest public venture funds, including the European Investment Fund and French public investor CDC Entreprises (Groupe Caisse des Dépôts). Some recent investments include stakes in Mediastay, an online games monetization platform; Berlin-based search-engine optimization company Searchmetrics; and Clear2Pay, a Belgian company specializing in payment technology solutions.

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