Ericsson Inc. and three financial powerhouses plan to begin making investments in mobile Internet technologies through a $300 million venture-capital fund. Ericsson, Merrill Lynch, and two Swedish companies, AB Industrivarden and Investor AB, each will contribute $75 million and expect to begin making investments in the next two months.
Kathy Egan, an Ericsson VP, says the fund is intended to leverage Ericsson's mobile infrastructure technologies by fueling development of complementary products and services. According to Egan, the fund will invest in companies at various stages, and Ericsson hopes to take preferred equity stakes and occupy board seats in each of the investments. Egan says studies indicate that by 2003, mobile Internet users will outnumber their wired counterparts. In light of such explosive growth, she says, it was important that Ericsson remain aggressive in encouraging industrywide development.
Tim Luke, a senior VP with Lehman Bros., says Ericsson has been talking about forming a venture fund for a while, and he sees the decision to finally do so as a strong move. "If Ericsson's goal is to deliver data across wireless networks, they need to have a lot of innovators driving the development of applications and services," Luke says. He expects to see more of these corporate venture funds being created.
Egan says each of the financial players in the fund was selected for strategic reasons. Investor AB is one of Ericsson's largest shareholders, and Merrill Lynch has a global reputation as a technology underwriter. Industrivarden, meanwhile, is one of Sweden's largest holding companies, with a number of portfolio companies competing in mobile technologies markets. Some of those companies are expected to be recipients of the fund's investments.