report details:

Lead Analyst: Lynne Gregg
Publication Date: 23/02/06
Pages: 103

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Description  

VC investment in wireless is about to hit an all-time high - ensure your company doesn’t miss out

The portion dedicated to wireless investments has been increasing, and will continue to do so. In 2005, wireless accounted for 7% of total VC investment, and it now contributes to 60% of all telecoms investment. However, while VC in wireless will continue growing in 2006 and beyond, a start-up in the wireless space is not automatically guaranteed funding. VCs invest in only one out of 500 companies they see and it takes more than just a great product to secure funding. What are the factors that attract investors to a particular company? This report will tell you.

During 2005, 152 wireless-related companies received $1.3 billion in funding, a 24% increase over 2004’s $1.1 billion. Telecoms investment is in wireless and related technology, including networking, infrastructure, semiconductors, mobile computing, content and services. But which areas are seeing the most investment? Purchase this report to find out.

VCs are beginning to look outside the US and Europe, as the focus of private equity investors shifts towards the rapidly growing, global wireless market. Longer term, the movement towards financing wireless start-ups worldwide will accelerate, as major funds are earmarking funds for start-ups in Asian countries and other regions, each featuring their own disparate dynamics.

This 100+ page report analyses the VC landscape in the telecoms industry, with a particular focus on the wireless sector. It examines the issues and trends affecting this space and discusses best practices going forward. The report comprehensively details technologies and the companies behind them from a venture capital perspective, and profiles the VC firms most active in the wireless telecoms space.

The report answers questions including:

How has VC in wireless changed over the years and how will it evolve going forward?
What do VCs look for in a start-up and other companies?
Why have some VC/start-up partnerships succeeded while others have failed?
Which regions will see the most investment in telecoms going forward?
How can telecoms companies maximise the benefits that VC firms offer?
Who are the most promising start-ups in emerging market sectors?
Why you should buy this report

Start-ups:

Find out which VCs are most active in the wireless space and what types of companies they prefer investing in
Learn how private equity VC differ from corporate venture funds in terms of focus, criteria and funding
Discover which technologies are seeing most interest and funding from investors
Gain insight into how you can tap into the non-financial resources and benefits that VCs offer
Take advantage of case studies detailing why some partnerships have failed while other have succeeded
Investors:

Learn about innovative and notable start-ups operating in specific industry sectors
Find out where emerging opportunities exist in the wireless space
Learn why 2006 will be a strong year for tech investment and how you can benefit from upcoming opportunities
Gain insight into the private equity industry’s plans for global expansion
Mobile operators and handset makers:

Discover what VC firms’ investment plans are for 2006 and beyond
Find out who the most innovative and well-funded start-ups are
Learn how you can maximise revenue opportunities in the current VC landscape

Table of Contents
 
Chapter 1 Executive Summary

1.1  Learning from past mistakes
1.2  Reasons behind venture-backed dot-com failures
1.3  VC community has returned to conservatism and restraint
1.4  Venture capital in 2005
Table 1.1:  VC and buyout firms fund raising, 2001-2005
1.4.1  2005: A banner year for fundraising
1.4.2  Number of private equity buyouts will continue to increase
1.5   Multifold opportunities exist in wireless VC
1.6   Wireless markets and VC outlook

Chapter 2 Introduction

2.1   Venture Capital - How it works
2.1.1   Why funds are spread
2.1.2   Investors look for aggressive returns
2.1.3   Trend toward later stage investing
2.1.4   Factors that determine VC equity stake
Chart 2.1:  VC equity in seed and start-up firms compared to later stage firms (%)
2.2   Types of venture funding
2.2.1   Seed/Early stage funding
2.2.1.1   Seed funding
2.2.1.2   Start-up funding
2.2.1.3   First Round funding
2.2.2   Later stage funding
2.2.2.1   Expansion funding
2.2.2.2   Acquisition funding
2.2.2.3   Management or leveraged buyout funding

Chapter 3 Strategic overview

3.1   2005 year in review
Chart 3.1:  Total VC investing, 1995-2005 ($ bn)
3.2   VC dedicated to wireless investments is increasing
Chart 3.2:  Wireless as % of total VC investment
Chart 3.3:  Wireless related funding, 2004 and 2005
3.3   Why VC investment shows strong support for tech-orientated businesses
Chart 3.4:   VC investment by industry sector, 2005
Chart 3.5:  Wireless as % of telecom investment, 2005
3.4   VCs are showing a stronger preference to backing later-stage firms
Chart 3.6:  Total investments in later stage firms, 2004 and 2005
3.5   Fund raising in 2005
Chart 3.7:  Total VC fundraising (US, Europe and Israel)
3.6   Investment trends
3.6.1   2006 will be a big year for tech investment
Chart 3.8:  Early stage funding, 1999-2004 ($ m)
3.6.2   Fall in IPOs has led to re-investment
Chart 3.9:  Median first-round investments, 2001-2005
3.7   Wireless investments in 2005
Table 3.1:  Wireless companies seeing funding in 2005
3.8   Exit strategies
3.8.1   Telecom and wireless M&As
Chart 3.10:  Fate of VC-backed start-ups since 2000
3.8.2   Exit timeline: what do VC hope for?
3.8.3   Soft market for venture-backed IPOs
Chart 3.11:  IPOs in Europe, 2004 and 2005
3.8.3.1   Increase in IPO activity will be seen
Table 3.2:  US VC-Backed IPOs in telecom, 1998-2005
Table 3.3:  US telecom venture-backed IPOs in 2005
3.8.4   M&A activity and buy-out pricing on the rise
Table 3.4:  Largest Venture-Backed Telecom M&A Deals in 2005
3.8.4.1   Median acquisition prices in 2006 will continue to rise
3.8.5   Tying exit strategy to funding sources
Table 3.5:  Early stage firms funded and acquired by Cisco and Motorola

Chapter 4 Wireless VC opportunities

4.1   The appeal of wireless to investors
Chart 4.1:  Wireless as % of Total Telecom Investment, 1995-2005
4.2   The hotspots for wireless investment
4.2.1   Wi-Fi and WiMAX
Chart 4.2:  VC investment in WiMAX companies, 2005
Table 4.1:  Wi-Fi and WiMAX companies receiving corporate and private venture capital investment
4.2.1.2  VCs will continue to invest in Wi-Fi and WiMAX
4.2.2   Network infrastructure and VoIP solutions
Table 4.2:  Venture-backed players in VoIP
4.2.3   Wireless security
Table 4.3: Venture-backed wireless security firms
4.2.4   Mobile devices
Table 4.4:  Venture-backed mobile terminal developers
4.2.5   MVNOs and mobile content
Table 4.5:  Venture-backed MVNOs and MVNEs
4.2.6   Semiconductor companies
Table 4.6:  Venture backed wireless semiconductor start-ups
4.2.7   RFID
Table 4.7:  Venture backed RFID firms
4.2.8   Mobile broadcast TV
4.2.8.1   Network build-out
4.2.8.2   Revenue sharing with entertainment providers
4.2.8.1   Next-generation devices
Table 4.8:  VC-backed mobile TV companies
4.2.9   Wireless medical systems
4.2.9.1   Patient registration and tracking
4.2.9.2   Asset Tracking
4.2.9.3   Prescription management and Administration of medications
Table 4.9:  Companies developing wireless medical solutions for remote disease control by consumers
4.2.10   Mobile search
Table 4.10:  Venture-backed mobile search start-ups
4.2.11   Gaming

Chapter 5 Partnering with a VC

5.1   Attracting venture capital
5.1.1   A clear vision
5.1.2   A concise and compelling "elevator pitch"
5.1.3   Networking in the door
5.1.4   Demonstrate credibility
5.2   What VCs provide to the start-up
5.2.1  The VC partner is more than a fund manager
5.2.2   VC firms provide a wide range of support
5.2.2.1   Support in the development of products and bringing them to market
5.2.2.2   Strategic direction
5.2.2.3   Management recruiting
5.2.2.4   Financial advice
5.2.2.5   Active participation
5.2.2.6   Contacts
5.3   What the VC gains
5.4   What do VCs look for in an investment?
5.4.1   The odds are stacked against a start-up
5.4.2   Characteristics desired in entrepreneurs
5.4.3   Keeping the 'burn rate' low
5.5   Alternatives  to VC Funding
5.5.1   Angel investors
5.5.1.1   Angel investing is increasingly popular among wireless start-ups
Table 5.1:  Differences between VC and Angels
5.5.1.2   The pros and cons of Angel funding
5.5.2   Venture debt
5.5.2.1   Venture debt is a growing area
5.5.2.2   Tread with caution in using venture debt
Table 5.2:  Venture debt firms active in wireless

Chapter 6 Wireless VC firms and corporate venturing

6.1   Venture capital firms with wireless focus
6.1.1   Accel Partners
6.1.2   Apax Partners
6.1.3   Benchmark Capital
6.1.4   BlueRun Ventures
6.1.5   Draper Fisher Jurvetson
6.1.6   IDG Ventures
6.1.7   Ignition Partners
6.1.8   Innovacom
6.1.9   Redpoint Ventures
6.1.10   Sevin Rosen Funds
6.2   Corporate venturing
6.2.1   Corporations are a major source of funds for new ventures
6.2.2   Differences between corporate venturing and other types of venture investment vehicles
6.2.3   Corporate venturing groups active in wireless
6.2.3.1   Alcatel Ventures
6.2.3.2   Cisco Systems/Softbank
6.2.3.3   Comcast Interactive Capital
6.2.3.4   DoCoMo Capital
6.2.3.4   Intel Capital
6.2.3.5   Motorola Ventures
6.2.3.6   BlueRun Ventures
6.2.3.7   Qualcomm
6.2.3.8   Samsung Ventures America
6.2.3.9   Siemens Venture Capital
Chart 6.1:  Siemens Venture Capital’s investment distribution by region
6.2.3.10   Siemens Acceleration
6.2.3.11   Sprint Nextel
6.2.3.12  Texas Instruments
6.2.3.13   T-Venture
6.2.3.14   Vodafone Ventures
6.3   Case studies: Wireless venture investment successes and failures
6.3.1   Juniper Networks and Ericsson investment
6.3.1.1   Original aim
6.3.1.2   Challenges
6.3.1.3   Resolution
6.3.1.4   Result
6.3.2   Telesym and multiple investors
6.3.2.1   Original aim
6.3.2.2   Challenges
6.3.2.3   Resolution
6.3.2.4   Result
6.3.3   Vivato and multiple investors
6.3.3.1   Original aim
6.3.3.2   Challenges
6.3.3.3   Resolution
6.3.3.4   Result

Chapter 7 Global telecom VC landscape

7.1   Global investing
Chart 7.1:  VC firms by region
7.1.1   US-based VCs are taking a global view
Chart 7.2:  US-based VC funds planned investments by region
7.2   China
Chart 7.3:  Venture investment by industry category in China, 2005 ($ m)
7.2.2   Local VC firms are growing
7.2.3   Regulatory constraints are improving
7.3   India
7.3.1   Micro-lending is a popular practice
7.3.2   Private equity deals comprise most recent investment activity
7.3.3   Significant growth in corporate venturing
Table 7.1: VC investment categories in India
7.3.4   A promising market for future VC  investment
7.4   Israel
7.4.1  A thriving entrepreneurial culture
Chart 7.4:  Seed investment deals in Israel, Europe and US
7.4.2   Strong track record of nurturing venture-backed tech firms
7.5   UK
7.5.1   The AIM is benefiting tech IPOs
7.6   Continental Europe
7.6.1   Europe will continue to see more tech IPOs vs US
Table 7.2:  Most active European countries in venture investing in 2005
Chart 7.5:  European vs. US Venture Backed IPOs, 2005
7.6.2   Major venture investments by European VCs in local wireless companies
7.6.3   European VCs are venturing into foreign markets
7.7   Canada & Mexico
7.7.1   Connections with US-based VCs will stimulate tech growth
7.8   Rest of the world

Chapter 8 Conclusions and recommendations

8.1   Conclusions
8.2   Recommendations
8.1   For start-ups
8.2   For investors

Appendix A VC firms with extensive wireless portfolios

Appendix B  Lead author's profile

Appendix C  About visiongain

Appendix D Visiongain report evaluation form