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| What Wireless Investors Are Looking for in 2007 |
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| December 29, 2006 | Venturewire |
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By John Letzing
Venture capitalists eyeing wireless markets plan to mix edgy bets with
technologies coming to potentially lucrative maturity during 2007.
Geographic locales like India will continue to pull in U.S. venture capital
dollars aimed at mobile, as will now-familiar concepts such as phone-based
ads and marketing, online services and video.
Tim Danford, a technology partner with Menlo Park, Calif.-based Storm
Ventures, said his firm will likely do between two and five mobile deals in
2007, while eyeing trends in both established and less familiar territory.
For example, Danford said, Storm Ventures is interested in mobile
micropayments, and will be keeping its eyes open for interesting related
innovations. Mobile micropayments are used for small direct wireless
purchases, of things like cans of soda from vending machines.
Storm Ventures will also be keeping a close eye on millimeter wave
technology, or very high frequency technology in the 60GHz range, Danford
said.
"We're starting to see some interesting ideas now about the millimeter wave
spectrum," Danford said. Danford said that millimeter wave technology has
historically been difficult to manipulate, due to atmospheric interference
at its highest frequency levels. But, he said, with possible innovations it
could be used to supplant other technologies such as ultra wideband for
tasks such as transporting heavy data over short distances in a home.
As for maturing mobile sectors where Storm Ventures will almost certainly
invest in 2007, Danford said mobile advertising will continue to be
attractive. "There will still be a lot of froth in 2007" in mobile marketing
and advertising, Danford acknowledged. But, he said, things will slowly
shake out as ratings firms learn how to measure the effectiveness of
different mobile ad platforms for the benefit of potential corporate
advertisers.
"Until M:Metrics or Nielsen or someone comes up with a methodology to
measure success, we're all going to be dealing with a small market," Danford
said, adding that he expects such firms to begin rolling these measurement
methods out during the coming year, setting the stage for 2008. Storm
Ventures invests in mobile advertising-related companies including Ad Infuse
Inc. and Cellfire Inc.
In red hot India, advertising is just one aspect of the abundant
possibilities in a market that will continue to explode in 2007, according
to Sierra Ventures Principal Vispi Daver.
Despite the rush this year among numerous U.S. firms to invest in India's
mobile market, Daver believes there is plenty of possibility left there to
find gems. Like many investors, Daver points to India's user statistics,
including the fact that the expected subscriber base is 125 million this
year, still only slightly more than 10% of the total population.
Because Indian consumers are more likely to have a phone than a
Web-connected PC, Daver said, the key there is simply to look at what people
in countries with decent Internet infrastructure have been doing online, and
replicate it on mobile.
"All of us are thinking about all the PC-based applications here, and how do
you transform that into mobile," Daver said, adding that such applications
could include banking, e-commerce, payment systems and ticketing. "All of
that is very fascinating," Daver said.
Sierra Ventures invests in India both directly and indirectly as a limited
partner in Seedfund's new $12 million fund. It has not yet wrapped any
mobile deals there yet, Daver said.
On the other side of the world, in Silicon Valley, El Dorado Ventures
General Partner Scott Irwin is taking a practical approach to mobile and
wireless investing in 2007.
One of Irwin's key interests in the new year, he said, will be seeking
technology that synchronizes content between a handset, computer, TV and
other devices.
"That content will be the typical Hollywood premium content, the long tail,
user-generated fun content, and I also think there'll be an interesting
sector of subscription content more instructional and self help in nature."
This emerging sector, Irwin said, will include "services you might have gone
to the local strip mall for in the past: diet services, or real estate
classes."
Infrastructure, too, will be an investment target for El Dorado, Irwin said.
As carriers roll out increasing amounts and varieties of mobile content,
they'll need tools to ensure quality transmission, he said. Irwin has
already led one such deal for El Dorado, an investment in RipCode Inc., a
company that develops technology for better transfer of video to mobile
phones.
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