Newspaper article THE JOURNAL RECORD

Lucent Venture Capital Fund Scores Early Success

Newspaper article THE JOURNAL RECORD

Lucent Venture Capital Fund Scores Early Success

Article excerpt

The last time Stephen Socolof stood before a roomful of Harvard Business School students, he had just braved a howling blizzard on a drive from New Hampshire. Harried and snow-coated, the MBA student from Dartmouth's Tuck school burst into a waiting room to interview with a hot consulting firm. His Harvard rivals were neatly pressed, sitting in silence, staring at him.

How the roles have reversed.

The latest Harvard MBA class is going to school on Socolof's work. He is a partner and vice president of Lucent Technologies' New Ventures Group, a $200 million-plus portfolio of business ideas culled from the brainy depths of Bell Laboratories. He visited the school last month to hear students discuss a case study on the operation, which is seen as one of the best examples of "corporate venturing" among U.S. firms.

The Lucent group is an incubator for more than a dozen early- stage businesses. Many would never have seen the light of day without this new focus, started in 1997. Bell Labs claims four new patents a day, but ideas can wither inside a giant company.

More than a year after Lucent's spinoff from AT&T, there was a move to shed the phone-company culture and to become more entrepreneurial. As venture capital and the IPO market took off, Lucent didn't want to miss opportunities lurking within its very walls.

"We wanted to emulate the Silicon Valley model inside Lucent," Socolof said during his recent visit to Boston.

At first, the group tried outside venture deals while also mining ideas from Bell Labs. That didn't work, Socolof said; the attention still darted outside. So the efforts were separated.

Lucent started Palo Alto, Calif.-based Lucent Venture Partners. It invests in classic venture deals through a $100 million fund and is expected to launch a second fund soon.

Meanwhile, Socolof's group zoomed in on Lucent's home-grown technologies, and results quickly followed. The group spawned a digital radio company, half of which was sold to outside investors. Other innovations involve electronic fingerprinting, analysis of huge volumes of phone calls, and faster 911 responses by police and fire departments.

Some of the ventures have been acquired by Lucent itself. None has gone public yet, but Socolof hopes to deliver an IPO by the end of the year -- a development that makes the group more financially important to Murray Hill, N.J.-based Lucent than the top brass ever dreamed.

"We want to make sure our companies are ready to stand up on our own," Socolof said. …

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