Rutberg & Company has reviewed and analyzed the venture capital activity for the wireless sector in 2006. Their key takeaways include:
- Venture financings in wireless totaled $6.4 billion in 2006, as compared to $5.4 billion in 2005. A material portion of the growth is due to several outlier investments. The growth rate for 2006, adjusted for outliers, is 13 percent, which is in line with the growth rates for the overall venture industry.
- This strong level of activity is consistent with their conversations with entrepreneurs and investors. On an anecdotal basis, they continue to hear significant interest among venture capitalists, and they continue to see financings with multiple term sheets and full valuations.
- The percentage of transactions with a financing size of $20MM or greater was 18 percent in 2006, as compared to 11 percent in 2005. This and other statistics reflect in their view the growth of private company revenues and funding requirements to late stage levels in numerous sub-sectors.
- Excluding outliers, the sector with the greatest increase in 2006 was Carrier Applications, driven by the partnership opportunities between private companies and carriers in the wireless ecosystem. The sector with the greatest decrease was Enterprise Infrastructure & Applications, as the consumer market continues to drive more of the near-term revenue growth in wireless.
- Commensurate with industry trends, MVNO/MVNE represented the sub-sector with the greatest decrease in venture financings in 2006. Further, WiMAX represented the sub-sector with the greatest increase. Significant increases also occurred in mobile video and mobile search. New and meaningful sub-sectors in 2006 included mobile advertising and user-generated content.