BCE’s new investment arm to fund emerging wireless Internet ventures

BCE Inc has diverted $30 million from its main venture fund to create a new R&D and investment pool for wireless Internet and data companies. Unveiled Feb. 12, Bell Mobility Investments (BMI) will act as the primary investment vehicle for Bell Mobility, which will be looking to take minority equity stakes in companies on the verge of commercializing wireless Internet or data technology. The new fund will also take over management of another of Bell Mobility's funding program, which includes some of the two per cent of gross revenue that wireless licensees must spend on research. That commitment has now been increased as a condition of winning new PCS licences (RoW, Feb. 5/01). BCE Ventures will provide BMI with $30 million for its first year of operation. The bulk of the money will go towards minority equity stakes in emerging companies. A small portion of the fund will be used to fulfill its R&D PCS licence commitments. Ted Maksimowski, president and CEO of the new company, expects BMI will announce its first equity investments in a few months. Maksimowski describes BMI as a natural extension of its earlier-stage funding programs. As previously funded companies grow out of the nascent phase and need additional financing for staffing requirements or product development, BMI can help finance the next phase in the company's development. "One of the reasons that we're doing this, is we believe there is entrepreneurship and real knowledge and know-how out in the marketplace that we want to get a hold of and we want to capitalize on," he told Report on Wireless. BMI expects to invest $100,000 to $400,000 in each company. An equity investment can yield a much larger cash infusion, between $3-$5 million. Maksimowski estimates that level of investment will allow BMI to take minority stakes in five or six companies this year with a little money left over for follow-on investments. The company is looking for smaller firms developing innovative and compelling wireless Internet and data applications, particularly third generation services that are entertainment oriented, for example. Other investment targets include location-based services applications, mcommerce and wireless application service providers operating in the 3G space. Development in these areas will become hot beds of activity once the migration to higher data rates moves into high gear late this year and early next year. The implementation of GPRS and 1XRTT -- the next step towards 3G -- is expected to generate data speeds of about 115 kbs. Over the next several years, market research estimates that more than 500 million wireless phones will be on the market. A major portion of those devices will be Internet-ready. Rather than issue a call for proposals, BMI will identify potential investment targets primarily through roadshows and onsite visits, although interested companies are welcome to approach them directly. Many, but not all, of those investments will be in Canadian companies. "Certainly, we're going to look primarily in our own backyard (but) the Internet makes this a global marketplace and we will look at companies and consider companies anywhere in the world," says Maksimowski. Bell Wireless Alliance partners Aliant, MTS and SaskTel could join Currently the Bell Wireless Alliance, which includes the mobility arms of the other major telcos, excluding Telus, participate in a program that provides funding to early stage companies. Money is awarded in conjunction with CANARIE Inc. The program has been running for two years and has funded a handful of emerging enterprises, including SiGEM Inc and e-plicity. Bell Mobility estimates that it has spent about $2.5 million to date, with nine companies receiving between $100,000 to $200,000 each. The company's wireless alliance partners are welcome to join the program. "Whether our alliance partners, Aliant, MTS and SaskTel choose to vest in BMI that activity, in other words do it on our behalf," Maksimowski says, "that is yet to be confirmed." Last November, BCE announced a major corporate reorganization that grouped operations along the lines of connectivity, commerce and media. Bell Mobility falls under the Canadian connectivity division, while BCE Capital and Bell Mobility Investments along with Telesat Canada come under the BCE Ventures moniker. According to industry analysts, the restructuring shouldn't do much to affect activities and it will likely be business as usual for the foreseeable future.

BCE’s new investment arm to fund emerging wireless Internet ventures

News | 02/19/2001 5:00 am EST

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