Venture capital activity in the wireless sector continued in the second quarter, providing encouragement for the industry’s financial health, according to Rutberg & Co.’s 2Q03 Wireless Update.
During the second quarter, 144 wireless companies received $915 million in venture capital, down 15 percent from the first quarter but up 22 percent from the year-ago second quarter. Of those, 26 companies, or 18 percent, represented early-stage funding, indicating wireless companies continue to form. Investments were focused on 802.11, rich media, device management, data mobilization and messaging.
Despite the continued investing, Rutberg reiterated concerns regarding possible overfunding in several areas, including wireless local are network semiconductors, enterprise WLAN infrastructure, carrier data platforms, enterprise applications and adaptive computing semiconductors.
Meanwhile, Rutberg said its outlook is positive on rich media and believes 2003 will be “Year 0” for 2.5G wireless data. During the second quarter, eight rich media companies received $83 million in funding, well up from the $15 million divided between eight companies in the first quarter. With growth in the data sector, Rutberg also expects increased revenues and continued consolidation in the messaging subsector.
