There are 1.3 billion venture dollars available for startups that want to play a role in the fourth-generation Long Term Evolution wireless network being deployed this year by Verizon, so I talked to Daniel Deeney, a partner at a venture firm that’s investing some of those dollars, to see what types of companies have a shot at the dough. Deeney is with New Venture Partners, a telecommunications-focused firm that invests primarily in corporate spin-outs and is about to make its first investment under the Verizon LTE program.
The program, called the 4G Venture Forum, was created back in October. Participating venture funds, which also include Charles River Partners, North Bridge Venture Partners, Norwest Venture Partners and Redpoint Ventures, will sit down with Verizon executives each quarter to figure out which startups the wireless carrier is interested in and decide if they represent an investment opportunity.
Deeney said he’s looking at everything from ways to improve capacity and speeds on the LTE network to technologies that allow devices to use bandwidth effectively or make the network smarter. In other words, he’s focused not so much on apps (although he’s interested in those that help enterprises take advantage of LTE connectivity) as on the deep infrastructure that will enable a robust mobile broadband network, one that can support updates from household appliances to peer-to-peer file sharing.
Those kinds of nitty-gritty technology equipment companies can eat up a lot of capital, something most venture firms are especially leery of right now. But Deeney says the fact that many of the startups only need to build gear that works on standards-based IP equipment rather than the proprietary older 2G and 3G network gear will help them keep costs down. However, he also acknowledged that since existing 3G networks are here to stay, in some parts of the network, going all-IP wouldn’t make sense. My hunch is that a lot of the equipment investments will involve gear that can sit on the edge of the network, or technology such as better antennas inside devices.
For example, the first investment he’s hoping to announce within the next month is in a Dallas-based stealth equipment startup that helps boost capacity at the edge of the network. Aside from hardware, software that helps track network or device activity and respond to problems proactively is another area of interest.
Carriers currently have equipment that can measure the type of traffic flowing across the core of the network, but Denney is looking at software that can aggregate traffic from the cell sites at the edge and make suggestions to load balance to improve the capacity quickly, or even in real time. In theory such software may mean fewer dropped calls as people move in and out of various parts of the network.
Using that analytic software to help plan future network buildouts is also of interest to Deeney. Companies that provide software on the devices themselves that can help optimize the way the devices communicate with the network or even schedule tasks in ways that don’t use as much bandwidth could also expect interest from the 4G Venture Forum. For startups, the lure of Verizon as a customer, as well as investment dollars from a contracting industry, is strong. For consumers, the 4G Venture Forum could deliver a better mobile broadband experience.
Image courtesy of Flickr user swanksalot