Nokia Corp. on Thursday becomes the latest maker of smart phones to invest millions of dollars to spur the creation of new services and features for the mobile market.
The world's biggest manufacturer of cellphones is committing $150-million (U.S.) to its venture capital arm, Nokia Growth Partners, to fund firms selling things such as location-based services, mobile payments systems, and wireless advertising and entertainment technology. The sum brings the four year-old venture capital firm's total funds to $250-million.
The excitement in the private equity world about the potential of wireless handheld computing matches the euphoria around the early Web a decade ago, said John Gardner, a partner who helps manage the fund from Menlo Park, Calif.
People are seeing the opportunity to make money, and “the trends are much more real than some of the things in 1998,” he said. Today's optimism has a global feel to it and is not just emanating from Silicon Valley. It is rooted in real products and services that can generate profits, he said. “The time is now.”
Nokia Growth Partners will target firms that are building software or hardware to encourage the rapid adoption of mobile phones.
As part of its seeding efforts, Nokia said it will expand the reach of the fund, setting up offices in both India and China to augment its operations in Europe and the United States.
Large technology companies such as Intel Corp. and Cisco Systems Inc. have thrown money at VC projects for years. Nokia itself has operated an early-stage VC firm since 1998, called BlueRun Ventures.
During the past six months, handset makers have stepped up to try to fund new features and services that will drive demand for their devices and speed up the adoption of mobile computing.
In March, Silicon Valley-based VC Kleiner Perkins Caufield & Byers announced the establishment of the $100-million iFund, to spur development of applications for Apple Inc.'s iPhone. The fund is independent, but it has a close relationship with Apple's chief executive officer Steve Jobs, who has said that a lack of applications hampered the first iPhone model launched last summer.
In May, RBC Venture Partners, Thomson Reuters Corp., JLA Ventures and Research In Motion Ltd. established the BlackBerry Partners Fund. The $150-million venture is run from Toronto, but has a mandate to invest in firms anywhere in the world.
Rick Simonson, Nokia's chief financial officer, said the company is not using Nokia Growth Partners to try to find the next Google or Amazon of the mobile Internet. Instead, it looks for firms that have existing products and customers, in which it can invest $8-million to $10-million during the life of the relationship and see a twofold return on investment.
