Liberate Technologies has started a $50 million corporate venture fund to drive interactive TV content. Mitchell Kertzman, president and CEO of Liberate, is targeting companies that he believes will play a major role in programming interactive TV. The first investment is $7 million in interactive-TV-gaming provider Two Way TV.
"The consumers don't care about competing standards and things like that," says Kertzman. "They just want great programming that looks terrific."
Given the current VC climate, announcing a $50 million venture fund might be akin to dropping horsemeat into a shark tank, but Kertzman makes it clear that Liberate is not interested in investing in startups. "We're investing in companies in their mid- to later-round stages of funding, when they have proven their product and they really just need to jump-start their business plan. We're investing in companies that we think will give us a significant return on our investment."
Interestingly, one of those keys to success is not being proprietary to the Liberate platform, something that Kertzman says could actually make a company less attractive. "We view this broadly," he says. "A lot of the companies we'll be investing in will do things for other platforms like Microsoft, but we think that if interactive TV is successful we'll get more than our share of the market."
In addition to helping other companies move forward while getting a stake in their success, Kertzman also says the fund will help create an "ecosystem" in which Liberate's platform can thrive. "We've come to the conclusion that one of the most significant things we can do is to help enable the development of great content, applications and complementary infrastructure that will effectively help create an ecosystem around standards-based platforms. That way, when the network operators deploy interactive-TV platforms in consumers' homes, there are things that they'll enjoy using."
Regarding Two Way TV (which is distributed by TWIN Entertainment in the U.S.), the investment gives Liberate a 7% stake in the company. Liberate and Two Way TV have already worked together in the UK, courtesy of NTL and Telewest, which has Two Way TV sitting on the Liberate platform.
"We've found that interactive gaming is a killer application of interactive TV," adds Kertzman. "One type is parlor games that allow people to compete within the home or the cable system, and another is downloadable games."
The plan going forward is for Liberate to co-invest with top-tier venture-capital funds and, in most cases, to not seek to retain a seat on a company's board of directors. According to Liberate, the investment will generally run between 15% and 25% of any given financing event.