Semiconductors and 5G Venture

Investors May Be Speeding To 5G

Although 5G has been talked about for more than half a decade, progress has been much slower than the speed and reliability promised by the new network.

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However, as 5G deployments have increased around the world and more devices are being manufactured for the new network, both strategic and venture capital investors seem to be hedging bets 5G will become a reality for more people as early as this year.

“I think in just the last six to nine months we’ve watched news (concerning investing) really accelerating,” said Till Stenzel, managing director of Telekom Innovation Pool (TIP), Deutsche Telekom’s strategic investment fund.

Money coming in

In December, TIP was joined by Amazon Web Services (AWS), Ericsson, Orange Ventures and others for a $36.65 million investment into Weaveworks as telecoms look to Kubernetes as part of the ecosystem to build out 5G networks.

That deal was just one example of growing interest by telecommunication companies, cloud providers, hyperscalers and venture capitalists in general to help build out the 5G ecosystem.

In the final quarter of last year, T-Mobile created T-Mobile Ventures — a new venture arm to invest in 5G products and services — while Qualcomm Ventures invested in four companies — Celona, Cellwize, Azion and Pensando Systems — out of its 5G Ecosystem Fund. Qualcomm has invested more than $170 million from the fund since it was created in late 2019.

Just last week, Israel-based DriveNets closed a $208 million Series B, valuing the company at more than $1 billion. The company’s software-based routing solution — replacing hardware traditionally supplied companies like by Cisco and Juniper Networks — already is being used by AT&T.

“I think you’ll see (5G) accelerate,” said Hillel Kobrinsky, co-founder and chief strategy officer of DriveNets. “I think 2021 will be a good year for 5G investments.”

Building the ecosystem

While it is hard to label any investment as a “pure 5G investment,” Stenzel said we will see investors continue to bet on companies tied to underlying use cases of 5G.

Weaveworks co-founder and CEO Alexis Richardson said the ecosystem around 5G should see increased investment in things such as DevOps — which combines software development and IT operations — where companies such as Microsoft’s GitHub and GitLab, and Atlassian’s Bitbucket have become crucial to developers, and startups like Redwood City, California-based Earthly Technologies are doing interesting things.

Security and networking technologies — like DriveNets — also will get looked at by venture capitalists and strategics alike.

“These 5G-related investments enable the infrastructure, and allow 5G to do what it can do,” said Aaron Mankovski at Pitango Venture Capital, an investor in DriveNets.

Mankovski said he can see new video advancements, as well as new technologies that bring content and safety to vehicles as areas investors could spotlight, especially as cars become new edge devices due to 5G’s speed and reliability.

Mark Sherman, managing director at Telstra Ventures, said he can see strategies such as VMware, Intel, Qualcomm, Nokia and Ericsson, as well as Microsoft, which acquired networking solutions Affirmed Networks and Metaswitch Networks earlier last year to build out its Azure cloud for the coming of 5G, all continuing to invest in their 5G plans.

Cloud providers also will continue to invest in layers of 5G, as the network will help deliver faster and more reliable computing at the edge. No matter who invests or where, everyone agrees that building the ecosystem will be key.

“5G is all about the infrastructure,” Richardson said. “Businesses need that infrastructure to take advantage of 5G.”

Almost here … maybe

Despite the money being invested, many still want to know when 5G will be deployed on a larger scale — and some think that day is not far away.

“I think you’ll see private 5G (networks) this year,” said Kobrinsky, adding that private 4G networks were too expensive and complicated to create. He said now that the technology is there, people could see private 5G networks in manufacturing plants and other facilities where automation and robots are used.

Kobrinsky said he expects massive investments this year and next by large telecommunication service providers as they push 5G into more areas.

“They own the cells, the fibers, everything,” he said. “It’s their game.”

Mankovski is not so sure, pointing out that 4G took longer to take hold than many initially thought, and 5G is even more of a massive upgrade with added infrastructure like cell towers necessary.

“I’m not that optimistic it’ll be here that fast,” he said, adding one may first see more hybrid networks that work off both 5G and Wi-F first. “We will see what happens.”

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