NEW YORK – A group of C-block bidders who backed out of that Federal Communications Commission auction have assembled a venture capital pool for investments targeted primarily at F-block winners.
Transition Technology Corp., based in Falls Church, Va., announced earlier this month its interest in making investments of $200,000 to $500,000, preferably in F-block licenses. The investment group also will consider D-and E-block licenses.
“When you win it, if you don’t want it, run it by us,” said Jerry Prochaska, manager and member of the new investor group to describe its underlying philosophy. “You’ve probably picked up pops in licenses that you have no intention of building, and no one else is bidding on them. You can default and lose the down payments or take waivers and reduce your flexibility in the final rounds of bidding.”
Transition Technology participants expect that at least some of the more than 1,400 licensees in these auctions will find themselves in that position.
“In past auctions, some worthy bidders lost licenses because funding sources dried up at the last minute,” Prochaska said. “It is our goal to prevent this from happening in a way that helps the licensee and also is profitable to your investors.”
As an alternative, Transition Technology seeks to take minority or majority or outright ownership positions.
Its investments will qualify under the very-small business provisions of FCC rules, and therefore there won’t be any restriction on its ownership stake, Prochaska said.
He declined to disclose the size of the private venture capital pool or the identity of its other principals.
“We were in the C-block and backed out on the basis of the prices being irrational,” Prochaska said. “Everyone in (Transition Technology) has been in wireless since the early days of cellular.”
