The VCs have been rolled out again in another session here in Sitges – this time on the mobile market. But the VCs aren’t putting their money behind semiconductor companies, component companies and mobile infrastructure because it’s all too difficult for the poor dears.
Mobile infrastructure, said Claire Houry of Ventech Ventures, has problems because of standards that are imposed. Her company targets not the components that make up the infrastructure, but businesses that build on that infrastructure, so she’s more interested in applications rather than infrastructure.
Semi and component startups can forget getting investment from these guys – it costs too much to invest and there’s too few companies to buy them. That can’t be good news for the industry.
Peter Globokar of Mooreland Partners said companies have had enough of investing in semiconductor companies. It takes $30 million to $40 million before companies like that can start making money. Going into the component market costs a lot of money, and IPOs are difficult, or you have to find a company that is going to spend $50 million and the number of buyers is very limited.
But Qualcomm’s Nagraj Kashyapa said that his company will develop in hardware companies. Mobile infrastructure, he said, isn’t going away. As there’s more movement to the cloud, the infrastructure companies will take a different form and people will be able to make money out of them.
But there is money in telematics and in the machine to machine space. Globokar said the operators haven’t seen this sector coming. The operators needed to realise they were making less money from consumers but could make more money from machine to machine data if they price it right. Orange last week did announce its strategy. But we don’t know what it is.
One problem, he said, is that it’s difficult to make money in the mobile market because you can’t think three or four years ahead – 12 to 18 months is the maximum turn round time.