"Wireless is where the action is and this is a great time to be a wireless start-upin search of venture funding," says visiongain analyst Lynne Gregg. "The focus ofprivate equity investors is squarely on the rapidly growing, global wireless market.Longer term, we expect the movement towards financing wireless start-ups outside theUS to grow, as major companies are earmarking funds for start-ups in Asiancountries, such as China and India."
"As the US public markets remain weak and private equity investing grows outside theUS, we will see many more IPOs of wireless companies taking place in the publicmarkets outside the US, such as the London Stock Exchange's AIM," adds Gregg.
Gregg, who has formerly held Director-level positions at AT&T Wireless and T-Mobileand worked closely advising numerous VC firms, concludes: "Historically, venturecapital investment has shown strong support for technology-oriented businesses,particularly companies and industries that develop and rely upon informationtechnologies. The rationale is simple: these are growth industries. Most venturecapital firms are led by successful high-tech entrepreneurs or individuals who havesuccessfully financed them."
Venture-backed M&As in the telecom/wireless remained strong in 2005 and allindicators point to continued strength in this area in 2006, particularly with IPOsas stock markets rebound. This is particularly relevant because of the dearth ofIPOs in the technology sector over the past five years. The largest deal of 2005 wasthe $4.1 billion acquisition of VoIP company Skype by eBay. Looking forward, oneeagerly anticipated IPO is Vonage, the US-based VoIP service provider, and it islikely that an IPO will take place in 2006.
However, risks still remain, warns visiongain. During 2005, there were only threeventure-backed IPOs in the US telecoms sector. The stock of each of these firms hasdeclined since their IPOs, which does not provide a great deal of confidence toinvestors in telecom IPOs. Only one 2005 telecom IPO did well: the stock of Neustar,a service provider to wireless and wire line operators, gained post-IPO. However,Neustar was not a venture-backed offering.
This visiongain report analyses the VC landscape in the telecoms industry, with aparticular focus on the wireless sector. The report comprehensively detailstechnologies and the companies behind them from a VC standpoint, and profiles the VCfirms most active in the wireless telecoms space.
ENDS
Notes for EditorsIf you are interested in a more detailed overview of this report, including chartsand images, please e-mail sara.peerun@visiongain.com, phone Sara on 020 8767 6711 orsee http://www.visiongainintellige nce.com/reportDetail.aspx?repo rtId
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