October - 2005 issue > Cover Feature

By Pradeep Shankar

Wireless continues to be one of the most active areas of venture capital investments. The year 2004 saw $951 million dedicated to wireless deals, up from $820 million in 2003—although still nowhere close to the $4 billion invested in wireless in 2000. In the first quarter of this year, the investments in wireless totaled more than $215 million, according to a MoneyTree survey.

“Investors are excited about the sector because the wireless industry continues to grow globally, many late-stage companies are financially successful and M&A activity has been robust,” says Rajeev Chand, a senior equity research analyst at Rutberg & Co., a San Francisco investment bank.

VCs are betting on emerging sectors like Carrier Products, Mobile Content, Enabling Technology, Wi-Fi, Cellular, Wireless Messaging, Mobile Broadband Equipment, enterprise WLAN infrastructure and enterprise RFID solutions among others.
While the current investment environment may be ideal for entrepreneurs, it isn’t so conducive for venture capitalists. Now that there’s more investment in wireless companies, it’s difficult to find good companies. “Even if a particular segment is ‘hot,’ not all startups will figure out what are the right things to do,” says Michel Wendell, General Partner at Nexit Ventures.

Most Venture Capitalists today are looking for companies that will provide technologies and services that will drive the wireless technology revolution in the months and years ahead. But the wireless market is changing so fast that investors are finding it difficult to nail those real ideas.

Enterprise-facing Wireless

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