Home In The News Interviews An Interview with Mr. Bart Stuck, Managing Director, Signal Lake Venture Fund

An Interview with Mr. Bart Stuck, Managing Director, Signal Lake Venture Fund

Bart Stuck is the Managing Director of Signal Lake, an early stage Venture Capital Fund which focuses on Broadband Telecom and Networking Infrastructure. Signal Lake, located in Boston MA & Westport CT, was founded in 1998. Prior to that, from 1984-1998 he served as the Managing Director of Business Strategies LLC, a consultancy involved with 450+ client engagements and over $60B+ in capital placements.

From 1993 to 1998, Bart Stuck invested in 24 companies over $350K and generated over $16M in return. first round investor in Ciena, Covad, Torrent Networks, Tegic, and moving Uniphase into telecoms to create JDSUniphase. From 1972-1984 he was with Bell Laboratories. He holds the degrees of ScD, SMEE, and SBEE, all from the Massachusetts Institute of Technology, Cambridge MA. He was on the Global Board of the MIT Enterprise Forum, 2004-2006.

Yaron Bazaz: Hi Bart, how did you find yourself involved with venture capital activities?

Bart Stuck:
While at MIT I was in Amar Bose's group and offered job at Bose Corporation. MIT alumni have created many companies over the years, and were involved in the first venture capital fund after WWII - American Research and Development (Doriot). Bob Metcalfe, Co-Inventor of Ethernet, is a classmate of mine who founded 3COM; I reconnected with him when he and I were involved in Local Area Network Standards in the early eighties, and many companies were started up then that I was engaged with.

While at Bell Labs I met with Wall Street analysts re industry trends and new IPOs. I advised many funds on investment opportunities during the period of 1984-1998.often I would be asked - "would you put your money in this deal?" so I asked "COULD I INVEST ?", and from 1993-1998 I invested $350K into 24 companies that returned $16M+, 760% IRR per year, original investor in Ciena (with Sevin Rosen), in Covad (with Warburg Pincus), in Torrent Networks (with Columbia Capital) and many other funds and companies.

Y.B: What distinguish Signal Lake from other early stage venture capital in the Northeast area?

Bart Stuck: First - Breadth and depth of technical knowledge coupled with market dynamics so intellectual property is properly valued. Secondly - True venture deals in which we take technical team and build management team, business plan, financing, and counsel on how to transition from development to operating business. Having said that, there are clearly a number of outstanding funds in the North East that could claim the same capabilities and have been engaged in this far longer than Signal Lake.

Y.B: What is your investment focus?

Bart Stuck: Signal Lake focus in the Network computing and Telecom sectors include fabless semiconductor, network equipment, network software, network services, storage, optoelectronic packaging, displays and electric power for network devices.

Y.B: How you define your value proposition for your portfolio companies?

Bart Stuck: We target groups with significant intellectual property, attempt to turn those into high margin products with a compelling roadmap, attract management team, handle financing, and hit 10X cash on cash, 60% IRR investment hurdles while preserving significant equity stake for the company team.

Y.B: Can you mention several of your portfolio companies?

Bart Stuck:

  • InPhase Technologies: Holographic digital storage drive and media
  • Hermios: softlogic for integrated circuitry for packet processing, protocol conversion
  • CorEdge Networks: components for xTCA standards based network equipment
  • SeraStar: application software ready xTCA systems
  • Insights

    Y.B: As a VC that focuses on the Broadband Telecom and Networking Infrastructure, what are the most significant trends/ developments we are witnessing at that area now and about to witness at the near future?

    Bart Stuck: From 1995-2002: core network opportunities based on optical components and systems. from 2002-onward: edge of network and higher layer opportunities. The basic theme - moving up and to the edge.

    Y.B: When we will see a massive penetration of real convergence fixed-mobile platforms to the market?

    Bart Stuck: To predict the future is especially difficult. You missed the single most important trend in network equipment: Adoption of standards In the computer industry. This led to major restructuring, as vertical integrated proprietary system vendors gave way to horizontally integrated component suppliers that fed packagers like Compaq and Dell and Acer and Lenovo, And value accrued to component companies (Intel in chips, Microsoft in system software and application software). The telecom equipment industry is going through this now, and this will lead to a huge restructuring, which Is why Signal Lake bet on CorEdge and on SeraStar (read Dell), with Hermios supplying packet processing chips (read Intel).

    Huawei in China is a major adopter of telecom equipment standards, this year 2007 is forecast to hit $11B in sales and this will fuel the convergence you cite (common platforms, interoperability) which drive costs down. Ericsson is the single largest backer of standards based telecom equipment: they are the global dominant vendor in Both wireline and in wireless network equipment. Convergence will be in full force in three to five years, everywhere.

    Read more on Bart Stuck's forecasts at:
    Thoughts on xTCA Market Forecasting Micro and Pico TCA
    The Impact Of ATCA On Telecom Economics Chipping Away At Value Added

    Tips

    Y.B: Any tips you would like to contribute for other early stage VC managers?

    Bart Stuck: Always raise money when you can.

    Y.B: Any tips you would like to contribute for entrepreneurs seeking for VC investments?

    Bart Stuck:

  • Think real hard if you really want to start a business: the odds are against you becoming a huge success
  • Successful early stage true venture funds (that invest at all stages to keep their ownership position from being significantly diluted) see 1/3 of investments as writeoffs, 1/3 of investments return some money, and 1/3 of investments pay for all the rest many times over, so an entrepreneur sees only 1/3 in being with a successful business!
  • Â

    Y.B: Out of office, what are your preferred leisure time activities?

    Bart Stuck: Mainly Squash, tennis, bicycling, snow skiing, scuba diving, travel and reading.

    Y.B: What's next for you Bart, where you intend to invest most of your time and efforts?

    Bart Stuck: I would like to focus my attention on Networking software, Nanotech and materials signal processing/search and integrated circuitry.

    Y.B: Thanks a lot for your time Bart.

    Bart Stuck: Thank You

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