While Research In Motion Ltd. and Apple Inc. fight for market share, venture capital funds and other investors are duking it out to be the first to invest in companies they believe could be the next big thing in mobile application technology.
In the past six months, two major venture capital funds were established with the stated goal of funding innovative companies developing mobile applications for the rival BlackBerry and iPhone.
In March, California-based venture capital fund Kleiner Perkins Caufield & Byers announced the establishment of the $100-million (U.S.) iFund, to spur development of applications that will run on the iPhone and be sold through the App Store.
“Apple believes that in a time like this when you have a new platform emerging around the mobile Internet, some really big companies are going to be built,” said Matt Murphy, who oversees the iFund at KPCB. “Companies that have that potential are better served to have venture capital and professional company-building help.”
Two months after the iFund's launch came the BlackBerry Partners Fund. Backed by RBC Venture Partners, Thomson Reuters, JLA Ventures and RIM, the $150-million fund seeks to invest in developers trying to build applications for the BlackBerry.
“We are sitting at a very interesting time in the evolution of technology,” said Kevin Talbot, managing director for RBC Venture Partners and a co-manager of the BlackBerry Partners Fund.
“There is a critical mass of smart phone handsets in the mobile space, which is providing the catalyst for what we think will be an even bigger revolution in computing, the likes of which we've never seen before.”
To date, the BlackBerry Partnership Fund has not announced any investments, although within a few hours of the fund's unveiling, Mr. Talbot and John Albright, a co-manager of the fund and a partner with JLA Ventures, received more than 120 proposals.
In the iFund's first two months, more than 1,500 proposals were submitted from developers looking for startup cash. (While Apple has no direct involvement with the iFund, the company has a long-standing relationship with KPCB, and Apple CEO Steve Jobs and one of KPCB's top partners, John Doerr, are friends.)
The challenge facing Mr. Murphy and his colleagues now is identifying the companies that offer more than just a good idea.
“We're really looking for things that we feel will have the potential to be one of the foundational platform companies for the mobile Internet,” he said.
“If you look at that set of peers from the original Internet – Amazon.com, Google, Yahoo Inc., Netscape – that class of companies … we are looking for companies with that kind of potential, that can be leaders in this segment, go public and build large businesses.”
