VCs falling over themselves to spend on VoIP

With a theoretical $85bn of unclaimed VC funds in the pot, technology companies could be missing out on milking the venture capitalist cash cow - the money men and women are just falling over themselves to invest in voice over IP, or VoIP.

While investment in the technology is thought to have grown eight per cent in 2003, it looks to be ready to explode in the coming years, according to a study from analyst house Yankee Group, Venture Capitalists are Once Again Ready to Invest in VoIP.

The analysts predict that spending won't move much between 2004 and 2005 but will pick up speed, eventually reaching a growth rate of 20 to 20 per cent after 2005. By 2008, it will reach 30 per cent of all telecoms funding as a whole compared to just six per cent at the moment.

According to the Yankee Group's communications network infrastructure senior analyst, the desire of governments to interfere with VoIP by imposing an extra regulatory framework could hold up deployment, even though the technology is now mature enough for mainstream take-up.

"Regulators should not impose rules for VoIP prematurely. The industry needs time to nurture this technology and can only accomplish this with more time and money. Regulations imposed too early will scare away investors and stifle innovation, and the market will take much longer to mature," he said in a statement.

Telecoms carriers are also investing heavily in VoIP, according to a separate study by Infonetics Research. The market researcher predicts carriers will spend $4.8bn on next-generation voice equipment by 2007, up from $1.2bn in 2003.