Convergence, M2M Communication and Online Solutions Creating New Opportunities for VC Investors, Says Frost & Sullivan

LONDON, Oct. 31, 2012 /PRNewswire/ -- A volatile global economy is making investors increasingly cautious and risk averse about their portfolio investments. This is translating into a restraint for startups in the ICT industry that require sizeable amounts of funding. In contrast, the limited amounts of funding required by companies in the Internet arena are prompting investors to focus on this space. Similarly, new growth opportunities such as M2M communication are also providing investment opportunities for Venture Capital (VC) investors.

Recent Frost & Sullivan study (http://www.financialservices.frost.com) entitled Analysis of Venture Capital Investment Trends in European Application Software, Systems Software, Technology Hardware, and Equipment Industries, finds that convergence, M2M communication and online solutions are creating interesting opportunities for VC investors.

"M2M communication is expected to provide an explosive opportunity for VC investors across different verticals including automotive, utilities, healthcare and security," said Frost & Sullivan Senior Research Analyst Renganathan K. "It is expected that by 2017, the automotive industry would be consuming M2M SIM cards worth $66.6 million per year while utilities would be consuming M2M SIM cards worth $24.8 million."

The availability of broadband and accompanying communication technologies is also expected to increase communication between machines. With the advent of Internet Protocol Version 6 (IPV6), the possibility of identifying every device uniquely has become commercially more viable across industries.

On the telecom front, telecom operators and content providers have suffered because of the global economic downturn on the one hand, and the accelerating demand for data-based services on the other. However, Tier 1 telecom operators are actually increasing spending in new growth areas, even though they may have reduced spending in aggregate levels.  M2M is a growth area and telecom operators have significant financial and human investments in this opportunity.

"While the global economic downturn forces telecom operators and content providers to cut costs and operate efficiently, the accelerating demand for data- based services forces them to boost network capacity and connectivity," explained Renganathan. "This twin challenge is forcing companies in this segment to cut back on investments in technology infrastructure, including additional equipment."

From an overall perspective, the VC deal value has been declining in ICT due to the uncertain economic environment and the increased risk aversion of VC investors. The reduced availability of debt as a source of funding has also contributed to reduced deal value.

"Nevertheless, the cyclical pattern followed by VC funds over the years indicates that the current downtrend in deal value will reverse," remarked Renganathan. "There is no doubt, however, that the current economic uncertainty will have an impact on the pace and direction of the reversal."

If you are interested in more information on this study, please send an e-mail with your contact details to Joanna Lewandowska, Corporate Communications, at [email protected].

Analysis of Venture Capital Investment Trends in European Application Software, Systems Software, Technology Hardware, and Equipment Industries (M7EC-F1) is part of the Financial Benchmarking in the Business and Financial Services Industry subscription, which also includes research services in the following markets: Private Equity and Venture Capital Investment Trends in Financial Services Industry in Europe, M& A in Renewable Energy in North America and European Solar Photovoltaic Market. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

Frost & Sullivan's Business and Financial Services group serves clients around the world in all aspects of financial analysis, market research and monitoring, due diligence, idea generation, opportunity analysis, investment valuation, and other proprietary research.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants.

Our "Growth Partnership" supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.

• The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including: research, analysis, strategy, vision, innovation and implementation.
• The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360 degree research, comprehensive industry coverage, career best practices as well as our global footprint of more than 40 offices.

For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?

Contact Us:     Start the discussion

Join Us:           Join our community

Subscribe:       Newsletter on "the next big thing"

Register:         Gain access to visionary innovation

Contact:
Joanna Lewandowska
Corporate Communications – Europe
P: +48 22 481 62 20
E: [email protected]

http://www.frost.com
www.twitter.com/frost_sullivan
www.facebook.com/FrostandSullivan

SOURCE Frost & Sullivan