Wireless start-ups draw heavy venture money

Quarterly survey also finds electronic commerce firms going strong.

By Chris Nerney
Network World, 5/25/98

If the money is any indication -- and it is -- this is becoming a wireless world.

For the third quarter in a row, start-ups developing wireless communications products and services represented the most attractive high-tech investment category for venture capitalists, according to the latest Price Waterhouse/Network World Venture Capital Survey.

Fifteen wireless start-ups received venture funding in the first quarter of 1998, one less than the number of new wireless firms funded in last year's fourth quarter.
Among the wireless vendors getting venture funding in the first quarter were:

Comm Site International, Inc. of Vienna, Va. ($21.9 million), a provider of site acquisition and development and facilities management services for wireless communications vendors;
SpectraSite Communications, Inc. of Cary, N.C. ($17 million), a company that builds and leases wireless communications towers;
WaveSpan Corp. of Mountain View, Calif. ($12 million), a provider of broadband wireless Internet access.
SignalSoft Corp. of Boulder, Colo. ($9.6 million), a provider of wireless location software and services.

Total venture funding for network- and Internet-related start-ups in the first quarter was off slightly from the previous two quarters. The survey showed that 161 companies received $921 million in the first quarter compared with 175 companies receiving $1.03 billion in the fourth quarter last year and 168 companies getting $930 million in the third quarter last year.

Overall, first quarter venture funding was $3.6 billion, slightly below the fourth quarter's record $3.7 billion, but 54% above the total for last year's first quarter.

While the overall high-tech investment market shows signs of reaching a plateau, telecom investments -- including wireless technology -- continue to sizzle, according to Kirk Walden, director of the quarterly Price Waterhouse Venture Survey.

``In the first quarter of 1996, telecom and wireless investments totaled $133 million," Walden said. ``In Q1 '97 they were $202 million, and last quarter they were $397 million."

Electronic commerce remained another popular investment area for venture capitalists in the first quarter, with 10 start-ups landing funds. Big winners included Web sales/advertising software vendor Narrative Communications, Inc. of Waltham, Mass. ($5 million); Asterion, Inc. of Kent, Wash. ($3.2 million), which provides a range of Internet and network services to health care organizations; and Trade'ex Electronic Commerce Systems Inc. of Tampa, Fla. ($2 million), a maker of enterprise purchasing software.