Bechtel Enterprises has formed a half-billion-dollar venture-capital

Bechtel offers $500 million to fund telecom startups

Aug 8, 1999, 9:00pm MST Updated Aug 8, 1999, 9:00pm MST

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Lorna Fernandes Special To The Business Journal

Bechtel Enterprises has formed a half-billion-dollar venture-capital company to fund telecommunications startups in North America and Western Europe. 

Bechtel officials would not confirm how much the company has committed to the project, but sources say that the San Francisco engineering giant has committed more than $500 million to the new firm, dubbed Incepta. 

Incepta will be based in Seattle and headed by John DeFeo, former principal at a venture-capital advisory firm, and former president and chief executive of US West NewVector Group, a domestic cellular subsidiary of Denver-based US West Inc.

DeFeo was responsible for the cellular and paging operations and for developing wireless communications strategies for US West. 

"Bechtel is Incepta's founding investor and only shareholder at this time," DeFeo said.

Currently with 25 employees, Incepta will fund about two to four companies a year with investments of about $10 million to $50 million each and will take a board seat on each of them, DeFeo said.

Bechtel is counting on the companies getting additional funding from other investors, he said.

Incepta is looking at existing startups as well as generating ideas to form new companies. It will differ from traditional venture-capital firms in that it not only provides the seed funds, but also the expertise to guide companies to an initial public offering or eventual acquisition. 

"We can provide money for a great idea, provide active support for management issues and tap into Bechtel resources for technical and marketing strategies," DeFeo said. 

Josh Lerner, professor of business administration for Harvard Business School, said Bechtel joins a surge of companies that are setting up similar investment operations. 

"There has been a surge of activity in corporate venture-capital financing," Lerner said.

Companies are deciding they do not need to acquire companies with new technologies but are funding them to keep abreast of their developments, Lerner said. 

"We want to create a portfolio of businesses which in five years will have a value of $5 billion to $10 billion," said Ric Helthall, manager for United States, Canada and global telecommunications for Bechtel Enterprises for Bechtel Enterprises. "The Bechtel name should give the companies credibility when applying for other funding.