Nokia will launch a $500 million fund to invest in mobile Internet startups.
Ahead of extending its revenue growth forecast for the next three years, Nokia, the world’s largest maker of mobile handsets, yesterday announced that it would launch a $500 million fund to invest in start-ups that provide applications for the mobile Internet. This is Nokia’s second mobile fund, having launched the first in 1998. It includes various third party investors.
There are two main reasons behind this launch. The first is that Nokia is looking for new ways to generate revenue indirectly by investing in new mobile technologies and services. Suppliers of ‘killer apps’ – must-have features for WAP and 3G – will drive the service’s take-up and make a great deal of money.
But Nokia isn’t just in it for the returns. Of course, if ‘killer apps’ arrive, then it will be good for the Finns to have got in early. But Nokia is cunningly trying to create a market for its products, by ensuring that potential developers get the funding they need. It has also wisely aimed the fund at companies outside the more traditional Western Europe/US regions since demand for mobile Internet in many of these areas is high and services are already more advanced. In Japan, for example, NTT DoCoMo’s iMode mobile Internet service has over 13 million users. This fund will be aimed at Israel and the Asia-Pacific region.
The partnership arrangements also look sensible. The other fund contributors include experts in web development and software companies, which should be able to provide technological advice to the recipient companie. Goldman Sachs, another partner, can provide strong analysis and investment banking experience. The fund looks likely to achieve its objectives: providing a good return on investment, and promoting mobile Internet services.
