NEW YORK-“One of the humbling things about this business is that, for three out of four years, we are unapproachable and obnoxious, but in the fourth year we have to raise money so we grovel.”
That is how Ronald White, a partner in Argo Global Capital, Lynnfield, Mass., described the effort to create GSM Capital L.P., a new $137 million venture-capital fund earmarked exclusively to financing wireless-related businesses.
Argo manages the fund, which White said, “we assume is the largest pool of capital devoted solely to wireless telecommunications-hardware, software, services anywhere in and out of this world. (However,) we’re not financing carriers. We’re providing Levis and pick axes to the gold miners.
“Our primary focus is expansion funding, from start-ups through private financings for public companies, re-starts (and) leveraged buyouts.”
GSM Capital was the brainchild of Andre Tremblay, president and chief executive officer of Microcell Telecommunications Inc., Montreal.
“Another unusual aspect of this fund is that the original idea was hatched by Andre Tremblay, who felt there is a need for more energy in the entrepreneurial development process for wireless technology,” White said.
“One of the unique factors of this fund is its structure. A third of its capital was provided by nine of the leading carriers: Microcell, Aerial (Communications Inc.), France Telecom, Deutsche Telekom, Omnipoint (Corp.), SmarTone (Mobile Communications Ltd. of Hong Kong), Esat Telecom Group plc, Singtel (of Singapore) and Celcom (of Malaysia).”
CEO’s, chief financial officers and chief technical officers of these carriers participate in panel discussions to evaluate investment opportunities, White said.
“(Doing so) gives them an opportunity to get advanced foresight into new technologies and modalities,” he said.
GSM Capital, which opened for business in the spring, has made three investments to date. The first was in NovAtel Wireless Inc., Calgary, Alberta, which supplies its Minstral modem technology to the cradle of the PalmPilot, allowing the personal digital assistant to communicate over Cellular Digital Packet Data networks.
Last month, LGC Wireless Inc., San Jose, Calif., announced an $8 million GSM Capital investment “to provide expanded product and service offerings for companies offering wireless communications inside buildings, offices and other professional campus environments.
“We have established ourselves with our basic product line of the LGCell distributed antenna system and the PCS Extender, a repeater for small areas (like) retail stores. Carriers want total solutions, however, and we now have the capability to provide them,” said Rod Hoo, CEO of LGC.
Omnipoint Communications Services Inc., Omnipoint Corp.’s Cedar Knolls, N.J.-based personal communications services subsidiary, said in late July it had entered into a joint venture with GSM Capital, Northern Telecom and Microcell Capital Inc., a Microcell subsidiary, to supply information services for wireless carriers.
The joint-venture participants said they expect to begin market trials late this year for services to “allow wireless operators to offer seamless access to information services based on integrated data capabilities.”
These will include services like general information, location-related, electronic commerce and integrated communications, such as e-mail delivery to end-users’ various terminals, office and home computers and wireless handsets.
“We’re long-term investors. Our preference isn’t for instant riches,” said GSM Capital’s White.
