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VCs: Management Team Must be Credible

BOSTON -- Don't violate Anthony Marino's 20-minute rule.

"In the first 15 or 20 minutes of a presentation, I figure out if I can trust the CEO," said Marino, a principal at Venrock Associates, and one of four investors on a venture capital panel at the VON trade show here. "If not, I don't even do the work; life's too short. This is really a people business."

His fellow panelists nodded in agreement.

According to Rod Randall, senior managing director for Vesbridge Partners, assessment of the team is crucial. It should have executives with experience, as well as contacts in the specific sector it's addressing with its plan.

The plan itself must be "therapeutic, not diagnostic," he added, meaning that it must not only identify a customer's problems, but also be able to solve them.

Provided a company's management team and concept pass muster, there are plenty of areas that VCs are interested in.

At Venrock, Marino is looking at WLAN and cellular convergence plays, public safety offices that handle 911 calls and VoIP scaling technology.

"One of the things that scares me about VoIP is that there are so many companies in a category, like security" Marino said.

That's not to say a security firm can't be a good investment, but VCs must be sure that an industry giant like Cisco isn't already dominating the space.

And when it comes to offerings aimed at carriers, companies must decide whether dealing with telecom's capital expense cycles and bureaucracy is worth it.

At Vesbridge, Marino said he's scouting companies that will have appealing VoIP applications.

In the current crop of VoIP players, few are as well known as Vonage, which has amassed a war chest of venture capital. The panel was asked if they thought the investment in the consumer and small-business VoIP service provider will pay off for investors.

Several thought it would, but added caveats.

"Some of these companies will be bought for a lot of money, but I'm not sure it's a sustainable business model, because companies coming in today have an established brand," said Gary Rubinoff, president and managing director of BCE Capital, the venture arm of Bell Canada.

"Vonage will make money [for its investors] -- if they sell quickly," said Jamie Robertson-Lavalle, director of communications infrastructure for Intel Capital.