Nokia Launches New US$500M VC Fund

Nokia Venture Partners on Monday launched a new US$500 million venture capital fund to invest in startup companies focused on the mobile Internet.

"Nokia Venture Partners is an important part of Nokia's overall strategy," said Pekka Ala-Pietila, president of Nokia Corp., during a teleconference. "One of the main goals of Nokia Venture Partners is for Nokia to learn in advance about future markets."

Nokia launched its first venture fund focused on the mobile communications market with US$150 million in 1998. The new fund will be different in that it will have third party investors such as investment banking company, Goldman Sachs Group Inc., independent software vendor, BMC Software Inc. and Italian private equity company, CDBWebTech.

The fund will be used for early stage investment in wireless technology companies. Investment will be focused on wireless markets in Asia, Europe and the U.S. Israel, a highly developed wireless market, also will be a strong contender for investment.

"In the near term, we are going to put more focus on Europe," said John Malloy, general partner and head of Nokia Venture Partners. "The reason for that is that we see (Europe) as a very significant market for the wireless space, especially with the 2.5G (generation) technology." But he also added that it will be building its investment in Asia.

Applications may see less of the investment dollars, Malloy said.

"We really see more investment in the infrastructure or what we like to call the plumbing," Malloy said. "There is just a lot of infrastructure needed just to make the applications work."

The first $150 million fund is closed and has financed 19 companies, Malloy said. It is expected to take three to four years to commit the $500 million for the new fund, he said.

Nokia did not disclose its or the other partners' specific investment in the new venture fund.