Orange Ventures legal separation is official

Orange has spun off its investment fund arm into a separate legal entity renamed as Orange Ventures with €350 million worth of start-up investments.

Feel like you’ve read that somewhere before? That’s because Orange announced plans to do exactly that, right down to the new name and the €350 million allocation, in its 2019 annual report. So there’s nothing new about this week’s announcement from the French telecoms group, apart from the fact that it has now actually happened.

Given the way Orange shared its plans in the aforementioned report, you could be forgiven for thinking that Orange Ventures was already up and running as an autonomous entity.

“Orange Digital Ventures has become Orange Ventures and been provided with an increased financial commitment from the Group, taking its total assets under management to €350 million,” the telco wrote in the report, published last spring.

But actually it became a separate legal entity less than a fortnight ago, on 1 January, to be precise, a spokesperson for the company clarified on Monday. And that’s what the new announcement is all about. The details shared last year still stand though. Orange Ventures formally launches with an allocation of €350 million, which means the total value of the assets it holds under management total that amount, as per last year’s report.

Orange noted that Orange Ventures will take over management of the portfolio of the fund it replaces. Orange Digital Ventures launched in early 2015 under the Orange Digital Investments (ODI) umbrella with €100 million in funding to enable it to acquire stakes in start-ups in areas like IoT, and fintech; by the end of that year, ODI said it had made seven such investments.

Just under a year ago, when it led a US$1.5 million investment round in Lagos-based digital identity start-up Youverify, Orange noted that Digital Ventures was a €150 million fund. It has, therefore, more than doubled. Looking past the confusing – and you could argue, obfuscatory – way that Orange has chosen to share information on its VC activities, that makes it pretty clear that this is a key area of focus for the operator. Which is not surprising, really.

Orange is far from being the only telco group to start looking seriously at venture capitalism as a way to generate future growth alongside its core business. The likes of Softbank’s Vision Fund and NTT DoCoMo Ventures are currently leading the charge, but there are lower-profile examples closer to home too, such as Deutsche Telekom Capital Partners, which has been around in various guises since the late 1990s. It makes sense for telecoms operators to use their financial muscle and expertise to support start-ups in related industries, potentially making savvy investments of their own.

“Orange Ventures aims to achieve the financial performance of the best venture capital investment companies, and will make its investment decisions autonomously,” Orange said on Monday, noting that it has added expert help from the VC world to Orange Ventures’ staff to support its growth.

Orange Ventures has offices in Paris and Dakar and focuses on early stage start-ups in Africa and the Middle East and more mature companies in Europe and the US, and has up to €20 million per financing round at its disposal. Doubtless we will hear more from the company about its various investments in due course.