Moreover, any startup that manages to escape the shakeout immediately is seen as the next meal for larger companies looking for some new ideas. In return, the startup receives an established distribution channel. "Somehow these corporations that have financial capitalists have figured out how to bet on VCs to be the R&D arm for them," said Wes Raffel, general partner for Advanced Tech Ventures. After a VC firm has fed enough capital into the startup to allow it to mature, the larger corporations can snap up the startup. The vast number of hopeful startups just means theres more to choose from, he said.Thats not to say the wireless market is tapped out, the investors said. Just minutes after they claimed that the market was saturated with capital, the venture capitalists rattled off a laundry list of potential investments: software defined radios; smart antennas; MiMo, or the use of wireless sensors; the Zigbee technology; the emerging 802.11k network management standard; Wi-Fi cellular roaming; public hot spots, especially in China; the cable backhaul needed to link them, possibly replaced by mesh networks; WiMax; voice over IP and the tools needed to manage it; and "find me"/"follow me" services that will identify which network a user can be contacted on and make the appropriate connection. The biggest problem? After being bitten by the dot-com bust, Raffel said investors arent willing to sink money into a startup that hasnt proven itself. Investors have become used to managing capital, expecting a return, and not performing their real jobs, managing risk, he said.
The growing number of public hot spots is an opportunity, but a puzzling one. Save for startups like Cometa Networks, the business model doesnt seem to be there, the VCs said.