Small, privately held wireless firms are getting some welcome attention from private equity investors looking for potential investment and acquisition targets. Unlike venture capital companies, which tend to gravitate toward startups, private equity firms typically invest in more mature companies with the intent of holding onto those investments for anywhere from three to seven years and then realizing their investment through either a sale, an initial public offering or a recapitalization.
OpenAir is a private equity firm launched by several former Sprint (NYSE:S) executives including Ron LeMay, the former president of Sprint, and Cathy Walker, the one-time chief network officer of Sprint. The firm invests exclusively in wireless companies and looks for ways to leverage its founders' experience running and operating wireless networks. According to Scott Ford, managing partner of OpenAir and the former founder and general manager of Sprint Nextel Ventures, OpenAir tends to invest in early stage companies and be very involved in their development for about five to eight years before it exits.
One notable investment by OpenAir is Zave Networks, a point-of-sale solution that was acquired by Google (NASDAQ:GOOG) in 2011. Another OpenAir investment, GoGo Inflight Internet, launched a $1.5 billion IPO June 21.
Like many private equity firms, OpenAir is closely watching the M2M market. "We don't invest in M2M for M2M's sake," Ford said. "But we like investing in companies that are transformative in their industry."
One example is FarmLink, a company that helps farmers track and monitor their crops by using wireless technology. The FarmLink technology attaches to combines and helps farmers maximize the efficiency of their harvest by tracking critical data points from those combines.
But OpenAir isn't the only equity investment firm watching the wireless space. Wilson Electronics, maker of wireless signal boosters, was recently acquired by Sorenson Capital. The St. George, Utah-based company was a family owned and operated for more than 40 years until its acquisition. Founder Jim Wilson will remain on the board of directors and is still a minority owner of the firm.
Wilson CEO Bob Van Buskirk said that Sorenson's acquisition will help Wilson expand its product portfolio and look to new markets. For example, currently about 80 percent of Wilson's business is in the United States. Thanks to Sorenson's help, Van Buskirk believes Wilson can move beyond its existing geographic footprint. "Sorenson gives us the ability to grow the business, grow capital and provides us with a well-connected professional network," he said.
Likewise, last October Raco Wireless, another privately held wireless company, received an investment from private equity firm Inverness Graham. Inverness Graham plans to help Raco grow its business and acquire other M2M firms and technologies. When I spoke with John Horn, president of Raco, about the investment, he envisioned that Raco would become the "anchor" tenant and that Inverness Graham's investment would enable it to acquire companies in order to consolidate and grow the fragmented M2M space.
But not all equity investors have the same goals in mind. OpenAir's Ford says that consolidation isn't a high priority for his firm. Instead, the company looks for young companies that have the potential to grow and thrive and can be aided by OpenAir's founders and their vast array of contacts and connections in the wireless industry.
For privately held wireless firms with an innovative technology, a smart business plan and a strong management team, the time may be right for finding an equity investor to take your firm to the next level. But the key to making the right match is finding investors with the same goals and vision.--Sue