Nokia’s venture-capital effort is getting a face lift and a new $350 million fund, news that comes as the venture-capital market slowly reawakens from the doldrums of the past several years.
“The global technology market is gearing up for several exciting years,” said John Malloy, managing partner for the revamped venture. “The pace of innovation is only accelerating and distributing globally.”
Nokia Venture Partners today announced it will change its name to BlueRun Ventures. Nokia Corp., which started the venture firm in 1998, has been decreasing its stake in the business during the past several years. Now Nokia will be a limited partner in the firm, and its stake will be “much less than 50 percent,” Malloy said.
BlueRun this year expects to manage $1 billion. The firm focuses on early-stage startups, and its portfolio includes the likes of 12Snap, Bitfone, Enpocket, FusionOne, KiloPass, PAR3 Communications, SunRocket and others. Although most of BlueRun’s companies are still in the budding stages, the firm is working to grow them into major players in the market. Indeed, BlueRun helped fund PayPal, the online money-exchanging service now owned by eBay.
In the future, BlueRun will concentrate on first and second rounds of funding and will offer funding between $2 million and $8 million. Malloy said the firm will fund companies in the information technology, wireless and consumer electronics industries and will assess players stretching from the hardware to software to services market.
Malloy explained that seven out of every 10 companies funded by the average venture-capital firm will fail. Thus, those companies that do succeed must do so in a significant way. Venture firms generally fund startups for seven to 10 years and can make back five to 10 times their investments.
The key to success for a venture firm is to pick companies that will introduce disruptive technologies into the marketplace, Malloy said. The industry’s big players will often take advantage of the evolution of the market, but startups are in a position to take advantage of industry revolutions. Thus, the challenge is significant for venture-capital firms-they must forecast industry revolutions several years out.
Interestingly, Malloy said now is the time to invest in wireless service companies. He said advanced wireless networks and technologies are poised for deployment, but there are relatively few companies to offer the services and applications that will take advantage of those capabilities.
“I think there’s enough of a groundswell for a new round of service innovation,” he said.
