A panel at the High Tech Industry Association's 2010 Annual Conference in Jerusalem was entitled, "Is There Room for Startups in the Telecom Space?" Alcatel-Lucent CTO Marcus Weldon, who moderated the panel, opened the session with the Deloitte "Global trends in venture capital - 2009 global report", which found that only 15% of venture capitalists said investment in telecommunications companies would grow over the next three years, while 29% said that investment in the sector would decrease.
Gemini Israel Funds managing partner Menashe Ezra, one of the representatives of the venture capital industry on the panel, said, "The main reason why venture capital avoids telecommunications is that the industry is in poor shape."
Against this, Weldon argued that demand in the telecommunications market was actually flourishing in the components sector, which integrate software and other components on processors, and offer complete system on chip (SoC) solutions. "Components are the simplest way to reach carriers, which are seeking end-to-end solutions.
Nokia Growth Partners partner Bo Ilsoe agreed, saying, "There is no way to compete over a period of years without integrating silicon in communications equipment systems, and that is also Israel's big opportunity."
Israeli telecommunications start-ups were a focus of attention on the panel, and it turns out that Deloitte's figures for global investment in telecommunications do not apply to Israel. Deloitte's regional breakdown shows that, in Israel, 45% of venture capital firms predict an increase in investment in telecommunications over the next three years, while 9% predict a decrease.
Weldon asked, "Is this because investors in Israel lag behind the trend? But it demonstrates steadfastness, and Israel will be in an excellent position as a result of the switch to SoC, and the need for extensive integration of components. Israel will be in an excellent position to drive innovation in the field."
Weldon's answer to the panel's question was positive. "To date, applications have been developed, but the network could not support them. To turn this into a cycle of innovation, there must be start-ups.
"Anyone who is not in the field will simply miss the window. As an investor, your big mistake would be to quit the field now. I predict that, in two years, we'll see venture capital investment in telecommunications at least double."
Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2010
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