NEW YORK-Venture capitalists are beating a path to the door of those who would build a better
mousetrap for the burgeoning telecommunications/wireless sector, according to results of the quarterly
PriceWaterhouseCoopers Money Tree Survey.
Telecom/wireless investments posted a record of $2.23 billion in
1998, a 55-percent increase from 1997. Venture capital investments in all industries totaled $14.27 billion last year, a
24-percent increase from the previous year.
“We expect telecom/wireless investments to continue this trend
by out-pacing the growth rate of overall venture capital investing in 1999,” said Kirk Walden, national marketing
director of PWC’s Technology Industry Group, Austin, Texas.
During the last quarter of 1998, venture capital
investments in telecom/wireless companies also hit an all-time high of $932 million. This represented a 90-percent
increase from the $490 million total posted during the fourth quarter of 1997, and a 73-percent increase from the
previous record of $538 million, set during the third quarter of 1998.
By comparison, overall venture capital
investments in all industry segments during the final quarter of last year reached $3.67 billion, an 11-percent increase
compared with the $3.31 billion total for the last quarter of 1997.
“For the first time in the four-year history of
the [PWC] MoneyTree Survey, investments in the communications industry category, which includes many of the
telecom/wireless companies, exceeded the software industry category, which traditionally captures the most
funding,” Walden said.
The telecom/wireless sector also is a “significant piece” of the Internet-
related activity that “continues to capture the rapt attention of venture capitalists and the stock market,” he
added.
Technologies like voice over Internet protocol and digital subscriber lines, which expand bandwidth and
speed transmission of voice and data, “are integral to greater Internet and intranet growth,” Walden
noted.
The largest venture capital recipient in wireless/telecom during the fourth quarter was Advanced Telecom
Group Inc., a Los Altos, Calif., company formed to build and manage competitive local exchange carrier networks in
smaller cities. It received more than $102 million in second-stage investments.
Advanced Telecom narrowly beat
out WNP Communications, an Earlysville, Va.-based purchaser of Local Multipoint Distribution Services licenses in
the United States. WNP garnered just more than $101 million in first-stage investments.
Many of the other
wireless/telecom venture capital financings last quarter were in the double digits, including $20 million in second-stage
venture capital for Norcross, Ga.-based Home Wireless Networks. The company provides wireless links that permit
personal computers to share files, printers and a single Internet connection.
“Venture capital investments
appear to have reached a new plateau,” said James D. Atwell, managing partner, PWC Global Technology
Industry Group’s venture capital practice. “As long as the financial markets remain relatively favorable, no
brilliant new idea should go wanting for lack of funds.”
