VCs Bullish on 802.11

By Wi-Fi Planet Staff

June 13, 2003

Investors take notice of wireless firms, saying demand for the technology makes them attractive takeover targets or IPO candidates.

Venture capitalists specializing in communications investments have taken notice of 802.11 startups, saying demand for the technology will make the firms attractive takeover targets or IPO candidates.

"The technology is standards-based and fairly mature," said Robert Fleming, co-founder and general partner of Prism Venture Partners in Westwood, Mass.

Prism typically invests between $5 million and $15 million in a company's early rounds. Currently, it has three Wi-Fi firms in its portfolio. IceFyre Semiconductor and SiGe Semiconductor make chips for various components of wireless systems. Two other Boston-area VCs, Kodiak Venture Partners and TD Capital Technology Partners, also participated IceFyre's round.

And Colubris Networks' products help protect data flowing between hotspots and Wi-Fi enabled laptops, PDAs and mobile phones. (Colubris will exhibit at booth 824 of 802.11 Planet & Expo in Boston this month.)

Big IT firms are also earmarking investment dollars for 802.11 startups, in hopes of later integrating the technology into their offerings.

For example, late last year Intel began investing from a pool of $150 million earmarked for smaller Wi-Fi companies. The Santa Clara, Calif., chip maker said it will make about 30 investments. Motorola's venture arm has also been actively investing in the field.

Others are buying established companies. For example, Cisco, making a play for the small office/home office market, plunked down $500 million for Linksys, the leader in consumer wireless access points.

Consumers spent $3.7 billion on gear such as wireless routers and access points last year, a figure that is expected to double over the next three years, according to the Dell'Oro Group.

Though most of the investments in Wi-Fi hardware have already been make in the last two years, Prism's Fleming said there is still opportunity in the sector.

"One area I think is going to take off is 802.11 in home entertainment," Fleming said, noting that set-top boxes, music and video servers are increasingly being tied together on wireless home networks.

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