Wireless appeal

The long-term growth potential of the wireless sector continues to be hard to resist for venture capitalists (VCs), despite the considerable short-term difficulties. The proportion of transactions involving fixed telecoms and wireless start-ups continues to be high compared to other sectors of the technology industry.

In recent weeks, VC firms have invested in just 18 European technology companies. Of those, no fewer than eight are in the communications sector. One such beneficiary was End2End (formerly Pre-tel Wireless), a Denmark-based supplier of aggregated wireless applications and content. In July 2002, it secured EU20 million in a third round of funding. Within weeks, the company said it had secured a deal to supply wireless application infrastructure to Sonofon, a Danish mobile operator. End2End already is a supplier to Orange, the France-based mobile phone giant.

AssetHouse, a BT spin-off that secured EU6.3 million from BT, LMS Capital, Quester and Intel, is another company whose technology aggregates content and services from a number of sources and for a variety of distribution channels. Like End2End, the company’s key selling point is its ability to enable service providers to deploy new data services rapidly and comparatively cheaply. Many VCs believe such technologies are timely, given the fact that operators are pressed for cash and yet need to continue investing in new services to stay ahead of the pack.

The burgeoning wireless local area network (WLAN) market is a further source of qualified hope for embattled VCs. Wificom Technologies, a supplier of WLAN infrastructure software, won EU1.5 million in first-round funding from 3i, the UK-based firm, in August 2002. Wificom Technologies was created in July 2002 by the merger of two small European WLAN software vendors: Wificom, a France-based supplier of WLAN provisioning software, and Miscom, a Finnish supplier of broadband platforms.

For these and other start-ups to succeed, of course, the communications industry as a whole will have to find that elusive ‘killer application’. One early favourite is the various forms of interactive, multi-user communication, including instant messaging and teleconferencing, for fixed phones, mobile devices and so-called PC ‘softphones’.

A key underlying technology that seeks to enable simultaneous multi-user communication between different types of devices is known as the session initiation protocol, or SIP. One company heavily involved in SIP work is Hotsip, a Stockholm-based supplier of SIP-based products to network operators and application developers, which secured EU4.5 million in funding from several investors including Ledstiernan and 3i. Sonera, Finland’s dominant phone company, is an early licensee.


Deals announced during July/August 2002
Company   What it does   Country   Amount in EU (round)   Lead investor  
Activiti* Financial application s/w UK 6.1m Benchmark Capital
AssetHouse Telecoms service platforms UK 6.3m (2nd) LMS Capital
Attenda Managed web hosting services UK 14.2m M/C Venture Partners
Cassium Technologies E-marketplace s/w UK 1.6m (1st) N/a
Dune Networks Fabless semiconductors Israel 24.5m Jerusalem Venture Partners
Empower Interactive* Messaging s/w UK 8.0m (3rd) Digital Networks
End2End Wireless application hosting services Denmark 20.0m (3rd) Draper Fisher Jurvetson
FIS Software Insurance s/w UK 9.2m N/a
Hotsip* Wireless messaging s/w Sweden 4.5m (3rd) 3i
HumanEyes Technologies 3D imaging s/w Israel 5.1m (1st) BRM Capital
Intense Photonics Photonic integrated circuits UK 16.6m Cazenove Private Equity
Nemerix* Fabless semiconductors Switzerland 5.8m (1st) Atlas Ventures
Norwood Systems Bluetooth network supplier UK 15.0m (3rd) Deutsche Bank
Pixology Digital photography s/w UK 5.9m (2nd) 3i
Qlusters Clustering s/w Israel 6.3m Benchmark Capital
SWT Document processing s/w France 3.8m (1st) BNP Private Equity
Volantis Wireless application infrastructure UK 11.4m (3rd) N/a
Wificom Technologies* Wireless broadband s/w Finland 1.5m (1st) 3i
*notes available

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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