After six months of scouting the software sector for new talent, BlackBerry Partners Fund has made its first-round draft choices, and opted for seasoned players that have shown they are likely to survive economic turmoil.
The $150-million (U.S.) fund was set up in May to bankroll software developers building applications for smart phones, including the BlackBerry. It is backed by RBC Venture Partners, Thomson Reuters, JLA Ventures and BlackBerry-maker Research In Motion Ltd.
Although the fund has awarded smaller amounts in the past, the first three major investments will go to a pair of U.S. firms and one from Israel. Although two of the companies were founded within the past two years, all three have mature footprints in the mobile sector and are not exactly startups.
"Any investment from a venture fund is a slice in time," said Kevin Talbot, managing director for RBC Venture Partners and a co-manager of the BlackBerry Partners Fund. "This is a Canadian venture capital organization that is now recognized around the world and is getting the best pick of companies on a global scale and that's building a Canadian investment capacity that is going to be pretty exciting."
The three companies are: Buzzd, which operates a GPS-enabled program that updates the user about what is going on at entertainment and social events nearby; Digby Inc., which builds custom "mobile storefronts" for other businesses; and WorldMate Inc., an Israeli company that produces a travel application that allows users to check the weather and exchange rates and book hotels from their BlackBerrys.
The Fund has reviewed more than 3,000 applications from companies looking for financial backing. By comparison, Mr. Talbot said RBC Venture Partners tends to handle about 500 applications and averages about three deals a year.
"We're in a very enviable position," Mr. Talbot said. "Just as some very famous investors from Omaha have said, when you have capital, down markets represent buying opportunities. That's certainly the case for us. … We'll pace ourselves and take our time and wait out the best opportunities that we can find."
Mr. Talbot said the fund is close to brokering deals with several other companies, including some from Canada, and that more investments could be announced before the end of the year.
Although it has introduced three new devices in recent months — the 3G BlackBerry Bold, the Pearl Flip and the touch-screen BlackBerry Storm — shares of RIM have been hammered by worried investors who have shaved more than $30-billion off the company's market capitalization in little more than a month.
Still, the wireless and smart phone industries are proving to be more recession-proof than other sectors, as evidenced by Rogers Communications Inc.'s announcement of strong financial results yesterday, largely on sales of the iPhone and increasing demand for Internet-enabled cellphones.
Nokia Corp. sponsored a similar fund to bankroll companies developing programs for its Symbian operating system, and in March, California-based venture capital fund Kleiner Perkins Caufield & Byers created the $100-million iFund to provide funding to startups creating software for Apple Inc.'s iPhone.
Each of the three companies is expected to be represented in the BlackBerry Application Storefront, RIM's new online software bazaar for games and other programs, which is set to go online in March, 2009.
For independent software developers, the increasing popularity of Internet-enabled smart phones and the rise of the mobile Web have combined to create opportunities for technology startups, the likes of which have not been seen for more than a decade.
"It's 1995 all over again," said Dave Sikora, the founder and CEO of Digby. "I was around for the PC revolution and the Internet revolution and it is my profound belief that this is the third one. Mobility really represents gigantic change and opportunity for the way we consume information and interact."
AND THE WINNERS ARE...
Buzzd
Founded:
2007, New York, N.Y.CEO:
Nihal MehtaInvestment:
$3.2-million from BlackBerry Partners Fund, Greycroft Partners, Monitor Ventures and Qualcomm VenturesApplication:
Described as a "contextual Twitter," Buzzd is a free social service that can be accessed through any Internet browser, mobile or PC. On a smart phone, it uses the device's GPS system to offer a wide array of information on events and venues nearby, such as the length of the queue at a popular bar or ticket prices for a concert. Users can also add their own information. The service is supported by advertising from brands such as Unilever NV.
Digby Inc.
Founded:
2006, in Austin, Tex.CEO:
Dave SikoraInvestment:
$5.5-million from BlackBerry Partners Fund and existing shareholdersApplication:
Instead of having its own branded applications, Digby builds mobile storefront applications for brands such as Campbell Soup Co.'s Godiva Chocolatier brand and 1-800-FLOWERS, which allow users to make purchases from their BlackBerry, locate physical stores and check the availability of a product at a specific location.
WorldMate Inc.
Founded:
2000, in Lod, IsraelCEO:
Nadav GurInvestment:
$8-million from BlackBerry Partners Fund, Motorola Ventures and AMC CommunicationsApplication:
WorldMate has been building mobile applications for business travellers since the PDA was the device of choice. Its WorldMate Live service is already on more than a million smart phones. By accessing the user's calendar and e-mails, it can build travel itineraries and maps for business trips. It also allows users to book hotels, check flight times and features weather and currency exchange information.
