VCs See Wireless As Investment Hotspot - InformationWeek

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VCs See Wireless As Investment Hotspot

Wireless ventures get $3 of every $5 invested in telecom, MoneyTree Survey reveals.

From a venture-capital perspective, wireless seems everywhere.

That's the way venture capitalists see the explosion in the technology. Different IT sectors--networking, semiconductors, and software--are creating products and services tied to the wireless revolution. And, venture capitalists are pumping money at record levels into companies creating wireless products and services.

Wireless ventures got $3 of every $5 invested in telecom so far this year, a MoneyTree Survey reveals. "Wireless is the hotspot of telecom," says Tracy Lefteroff, global managing partner at PricewaterhouseCoopers, one of three companies that sponsor the quarterly MoneyTree survey of VC investments, which was released Tuesday. According to MoneyTree, of the $1.6 billion invested in telecoms so far this year, $984 million were earmarked for wireless ventures.

Indeed, the two top VC deals last quarter involved wireless technology. FiberTower Corp. received $150 million in later-stage money to boost its business of designing and creating backhaul networks. Visto Corp., the provider mobile messaging services to mobile operators that was once known as RoamPage, got $70 million in later-stage capital.

"The wireless industry seems to have unlimited growth potential as the next generation of technology proliferates across the airwaves," Lefteroff says, including WiMax.

WiMax is the IEEE 802.16 broadband standard that extends local Wi-Fi networks across greater distances, such as a campus or neighborhood. WiMax also can provide the last last mile connectivity to an Internet Service Provider or other carrier many miles away. Potential markets for WiMax include regions not easily served by other broadband services, such as rural communities and third-world countries.

The MoneyTree survey, also sponsored by Thomson Financial and the National Venture Capital Association, showed that VC investments in software companies slipped last quarter, but that industry kept its spot as the leading industry category with 185 ventures gabbing $1 billion.

After a jump in the second quarter, the networking industry returned to recent historical levels with $339 million going to 34 companies. Other major industry categories were generally consistent with or slightly below investment activity seen over the prior year, including IT services at $195.9 million in 34 transactions and computers and peripherals at $66.1 million in 12 deals.

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