Wireless Mail Bubble

Is wireless mail worth $250 million in venture funding? Analyst-turned-VC and one of the few Silicon Valley skeptics, Bill Burnham thinks not really, and goes on to outline why it might be a bubble that would hurt a lot of people. In “A Microcosm of VC Madness: $250M for Wireless E-Mail” he writes:

Last week, Good Technology announced that they had raised another $45.8M bringing their total paid-in-capital to a whopping $146M. This announcement came just about a month after one of Good’s main competitors, Visto, announced that they had also closed a new round taking their total funding to a staggering $160M. If you add in competitor Seven Networks’ $55M in funding that means that over a quarter of billion dollars has been invested in just 3 software firms, each pursuing largely the same market.

While $250 million may not seem like a lot of money to some (especially when you are investing other people’s money), but it is important to point out that software start-ups normally take between $10-to-$25 million to grow. Triple digit amounts are reserved for mostly chip or optical networking start-ups, and there aren’t too many of those around.

Now if Good et. al. were working on some kind of massive world-changing software platform I suppose I could see investing $250M in the sector, but as far as I can tell Good and the others appear to simply be building middleware that enables corporate employees to access their e-mail (and other applications) via hand-held devices. A worthy pursuit no doubt, but not an earth shattering opportunity for software value creation on par with PC operating systems, App Servers or RDBMSs.

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