Entrepreneurs go the wireless way
20 October 2009
A ‘festival’ at the beginning of this month was aimed at giving wireless entrepreneurs a springboard to promote their ideas.
The event was held in London on 8 October and was clearly an innovative way of promoting emerging technologies and companies in the wireless sector. However, I was unable to attend personally, and so asked for a report on proceedings that I could share with you… and here it is.
"Aspirin or chocolate?" This is a key differentiator if you want to get investment, entrepreneurs were told at the first Wireless Start-up Festival, where they were given the opportunity to pitch their propositions to potential investors and gain some useful insights from a range of industry experts. The event, a joint initiative of Cambridge Wireless and Silicon SouthWest, showed that innovation in the industry is producing some exciting pain relief with blockbuster potential.
"iPhone was the aspirin; the app store the chocolate," explained veteran entrepreneur and Angel investor David Cleevely. "What you have in iPhone is a platform on which others can build and this is fundamental to a sustainable business and an 'investable' proposition. The risk with 'chocolate' is that it becomes too niche and you need big market ambitions to attract enough funding."
The funding environment is still tough. Ted Mercer, Partner of law firm Taylor Wessing, host for the event, said that total venture capital-type investment was 30% down in the first three-quarters of this year, but the interesting thing to note is where the money is going. We are seeing most activity at the bottom of the market and at the top. Start-ups are attracting interest from active groups of entrepreneur-led funds looking to make seed corn investments. At the top end, large later stage projects are also gaining investment. It is the middle that is losing out from lack of confidence in the banking sector. The smart money is on telecoms, cleantech and media and it is going to companies in the South of England. Another helpful factor is the Government announcement of £100m of funding to prep the market and this coming directly or through intermediates."
This observation makes the synergy between Cambridge Wireless and Silicon SouthWest particularly timely. Simon Bond, CEO of Silicon SouthWest, commented that he saw a major role of his organisation as channelling government support and private investment to his members: "The wireless industry in the UK is in a wide corridor from Bath and Bristol to Cambridge. We have more silicon designers here than anywhere outside the US. By creating closer relationships with the product design and software excellence seen in Cambridge we will create a powerhouse for UK plc."
Soraya Jones, CEO of Cambridge Wireless, sees evidence that wireless community in the UK is vibrant. "We now have a generation of serial entrepreneurs in the industry that are looking to provide Angel funding. Not only are they offering finance at the level these start-ups require, but also advice and contacts that are invaluable."
Cleevely agrees. "As an angel investor I want to see that the entrepreneur is able to listen and value advice. To hear someone come back with a synthesis that takes the best of your comments with a twist of their own is an indication that you can move forward. Abcam was on business plan four or five before it was successful. You have to listen hard and respond with a dialogue."
Cleevely also warned darkly of the risk that VCs present to the Angel community. "In a portfolio of 10 companies you might have three that die, two stars and the rest are the middle ground that make a return. If a VC moves in at the later stage all the middle ground has disappeared."
Mercer responded that this is a real risk. He is seeing five or six rounds of funding with early investor interests getting diluted at each stage. Mercer also outlined a number of legislative developments that are impacting the wireless sector.
President Obama has moved to enforce 'net neutrality' and reduce manipulation of search and this will impact technologies in this sector. Other moves are to reduce risk, with emerging concepts such as 'step-in' rights (where investors can act if you don't achieve the stated goals), 'venture debt' and 'elegant giving up'. Lastly, he warned that entrepreneurs should expect lawyers such as him to come stamping even harder all over their IPR to check that it is all in place.
Finance is not the only challenge. Moray Rumney, Lead Technologist at Agilent, sees a growing divergence between market opportunities and industry goals.
"The industry continues to deploy increasingly complex air interfaces when what users want are ubiquitous high value services. Voice and SMS are still the dominant profitable services and there are no plans to pull the plug on GSM which is a good enough technology," he said, to the relief of many. "It works. It has become evident that the value, availability and commercial viability of services is inversely proportional to their data rate.
"The industry is maintaining or increasing costs in the pursuit of higher performance to deliver niche 'sci-fi' applications that sometimes work. However, much opportunity lies in maintaining performance while driving down costs to deliver human scale applications such as village-scale wireless and SMS banking for the developing world," he said.
The better usability offered by the larger screens of the iPhone and others which allow a whole page to be viewed at once has driven demand for mobile internet.
Limvirak Chea from Google agreed, saying that from their statistics, 2008 was the year when the mobile internet came of age, largely driven by flat and inexpensive data plans and availability of full browsers that can properly render any web page on mobile devices.
David Cleevely continues that this is an industry where size matters. "If you can miniaturise monitoring equipment so that it can be taken out of the lab and into the field communicating wirelessly to a base station, then the world becomes a different place with new market opportunities. But this also creates a demand for an alternative form of energy and this creates the issue of where the power comes from. The major challenge for the wireless world is to create a demand for the development of low powered devices that can scavenge or harvest energy and can also switch seamlessly to reserve power when required."
Professor Joe McGeehan, MD of Toshiba TRL, thinks we will get there. "Everything we are doing today someone said was impossible. There is a great future in wireless and there is lots to be done," he said.
Wireless Start-Up Festival 2009 is a joint initiative between Cambridge Wireless and Silicon SouthWest and made possible with the generous support of Agilent, Google, Microlease, Ontario International Marketing, Rohde&Schwarz, Taylor Wessing and UKTI.
Contact Details and Archive...
Most Viewed Articles...
