NEW YORK-Even amid the rapidly expanding parade of venture capital investments, the telecommunications/wireless sector of American industry stands head and shoulders above the crowd.
Venture capital investments in this sector totaled $1.59 billion during the second quarter of the year, more than triple the amount recorded during the same period a year earlier, said Kirk Walden, national director of the PriceWaterhouseCoopers MoneyTree Survey.
This growth outpaced the overall communications industry, which grew at 165 percent to $2.5 billion. It also outstripped the rate of increase in all venture capital investments, which increased by 104 percent over the $3.77 billion recorded during the second quarter of last year.
“We expected investments to grow, but the magnitude of the (overall) increase is absolutely stunning. Technology in general and the Internet in particular are entirely responsible for the leap,” said James D. Atwell, managing partner of the venture capital practice in PWC’s Technology Industry Group.
“All the stars were aligned in the second quarter: a solid economy, a favorable IPO market and a strong stock market. That combination resulted in a level of investment that is not likely to be eclipsed in the near future.”
Telecom/wireless enterprises accounted for 142 of the 992 companies that received venture capital funding last quarter. Each of the 142 received an average of $11.2 million, up from the $5.63 million average a year earlier.
“The increase reflects the larger capital needs for companies in the later stages of development to continue the fast-paced growth necessary to succeed,” Walden said.
Across all domestic industries, the average investment increased by 57 percent to $7.4 million, compared with $4.9 million during the year-ago quarter.
“The jump in average funding is also a record, [one which] reflects higher valuations, the extraordinary potential of new technology companies and the increasingly competitive nature of [their] markets,” Atwell added.
About half of the 142 telecom/wireless company venture capital recipients were in the “expansion to maturity stages of development, having received second-, third- or fourth- and beyond-round funding,” Walden said.
At the other end of the spectrum, about a quarter of the 142 companies were in their formative stages and just received seed or first-round venture capital financing.
“Since these early stage investments cannot be expected to pay off for three-to-four years, this indicates that venture capital firms are continuing to support true entrepreneurs and take a longer view of the market potential,” Walden said.
By region, California’s Silicon Valley continues to lead in terms of the dollar amount of venture capital investments in all industries, attracting $2.7 billion and breaking the $2 billion mark for the first time last quarter. New England ranked second, with $1.1 billion, an amount that represented the first time this region exceeded the $1 billion threshold.
The New York City metropolitan area, Los Angeles/Orange County, Calif., and the Southeast followed in that order, each region capturing more than $500 million in venture capital investments. The Midwest, Texas, the Northwest, the Washington, D.C., Metroplex area and Colorado all attracted at least $200 million in such financing last quarter.
Further information about the MoneyTree Survey may be obtained on PWC’s Web site at: www.pwcglobal.com
In the area of fixed wireless telecommunications, the following represent a sampling of companies that received venture capital investments in the latest complete quarter:
Wavtrace Inc., a Bellevue, Wash., developer of point-to-multipoint wireless broadband access systems, $24.13 million.
Spike Technologies Inc., a Nashua, N.H., designer and manufacturer of broadband point-to-multipoint wireless communications systems, $22 million.
WorkNet Communications Inc., a St. Louis provider of low-cost, high-speed, fixed wireless networks, $6.5 million.
PacketVideo, a San Diego maker of packet-based, multimedia communications for video transmission over wireless and wireline networks.
Aegis Integration, a San Diego provider of security systems for satellite, wireless cable and cable television systems, $450,000.
Pacific DirectConnect Inc., a Honolulu provider of wireless digital subscriber line services, $400,000.
Millitech Corp., a South Deerfield, Mass., supplier of millimeter microwave radio-frequency equipment that supports wireless broadband local loop service, $120,000.
Among the wireless carriers that received venture capital funding last quarter were:
VeloCom Inc., formerly known as WLL International Inc., an Englewood, Colo., member of a partnership that owns two wireless licenses in Brazil, $15 million.
Onebox.com Inc., a San Mateo, Calif., Internet messaging service provider, $13.5 million.
Locus Telecommunications, a Fort Lee, N.J., provider of wireless digital telecommunications services, $9.9 million.
Southwest PCS, an Oklahoma City personal communications services carrier, $7.5 million.
Signius, a Somerset, N.J., provider of paging dispatch, voicemail and telemarketing services, $4 million.
ReadyCom Inc., a Chapel Hill, N.C., provider of two-way voice paging services, $1.3 million.
TeleCorp PCS Inc., an Arlington, Va., PCS company, $417,000.
A significant number of companies received financing last quarter for their efforts to improve wireless network performance, capabilities and management, including:
Metawave Communications Corp., a Redmond, Wash., designer and manufacturer of intelligent spectrum management systems and tools to help carriers optimize call quality, coverage and network call handling capacity, $91 million.
Centillium Technology Corp., a Fremont, Calif., provider of integrated telecommunications circuits, $37.7 million.
GRIC Communications, formerly AimQuest Corp., a Millpitas, Calif., provider of totally integrated and managed Internet Protocol-based networks to a global alliance of internet service providers and telecommunications carriers, $28.2 million.
Time Domain Corp., a Huntsville, Ala., creator of a new wireless medium it calls “time modulated ultra wide band” technology. Time Domain, which received $20 million, said this medium “has a fused technology that provides orders of magnitude improvement in wireless communications, super high definition radar and sub-centimeter geo location.”
WhereNet, formerly known as WiData, a Santa Clara, Calif., developer of solutions to lower the cost and improve the timeliness and accuracy of asset tracking using wireless data techniques, $16.12 million.
Endgate Technology Corp., a Sunnyvale, Calif., designer and maker of high-frequency transmitters and receivers for wireless voice, data and video communications, $15.6 million.
Synacom Technology Inc., a San Jose, Calif., designer and supplier of roaming fraud prevention and mobile phone activation products, $14.2 million.
Authentix Inc., a Tucson, Ariz., developer and provider of cellular fraud detection equipment, $5 million.
Telephia Inc., a San Francisco provider of integrated marketing and network quality information to wireless carriers, $2.3 million.
Tantivy Communications Inc., a Melbourne, Fla., developer of products for low-cost, high-speed wireless Internet and data access that are integrated with wireless voice service, $1.5 million.
AirNet Communications Inc., a Coconut Creek, Fla., supplier of wireless base stations, $600,000.
Those companies working to improve the functionality of handsets, pagers and other end-user wireless devices also captured a significant share of last quarter’s venture capitalist att
ention. Following are some examples of the recipients:
InfoGear Technology Corp., a Redwood City, Calif., developer of network-centric technology and services design
ed to enable Internet-based appliances, including handsets, $12 million.
Morphics Technology, a Cambell, Calif., maker of multistandard computer chips for cellular phones, $12 million.
Tegic Communications, a Seattle producer of T9 for mobile text input and other technologies that increase the information utility of wireless handsets, $10 million.
GWCom Inc., a Santa Clara, Calif., maker of wireless paging products, $9.8 million.
Silicon Wave Inc., a San Diego designer of radios for Code Division Multiple Access handsets and high-performance radios for wideband CDMA, $7 million.
InViso Inc., formerly Siliscape, a Sunnyvale, Calif., designer and manufacturer of display technology for Internet appliances like pagers, cellular phones and personal digital assistants, $6 million.
The Thinking Media Inc., a New York company that said it provides “software for wireless devices with certain qualities that allow you to build service on any device for any bandwidth,” $5 million.
Confinity Inc., a Palo Alto, Calif., developer of software technology to enable financial and electronic commerce transactions from personal digital assistants, cellular phones and two-way pagers, $4.5 million.
Kinetic Computer Corp., a Billerica, Mass., maker of wireless in-vehicle computers, $4.5 million.
PocketScience Inc., a Santa Clara, Calif., creator of mobile messaging systems that are embedded into consumer electronics products that work over many communications links, $3 million.
Ebay Systems Inc., an Atlanta developer of software to extend corporate enterprise applications to the mobile workforce, $1.5 million.
Callisto Software Inc., a Wheaton, Ill., developer of solutions for corporate Information Technology groups to manage and support mobile computing environments, $1.1 million.
Diablo Research Inc., a Sunnyvale, Calif., company that develops electronics products for wireless communications, data transfer and control applications, $250,000.
Neither last nor least, a number of companies providing various services to wireless carriers also garnered a share of the quarter’s venture capital investments. These included:
Totally Wireless, a Fremont, Calif. retailer of wireless telecommunications products and services, $14.5 million.
Arbinet, a New York-based telecommunications bandwidth commodities exchange, $6 million.
Titan Towers L.L.C., a tower construction, management and ownership company based in Abilene, Texas, $2 million.
Netcom Solutions International Inc., an Oklahoma City engineering services company, $1.5 million.
