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Ericsson, partners launch $300 million venture fund

Ericsson, Merrill Lynch and Swedish firms AB Industrivarden and Investor AB are pitching in $75 million each to invest in companies working on all aspects of mobile Internet technology.

Ericsson and three investment firms are teaming up to create a $300 million venture capital fund to promote mobile Internet technologies.

Ericsson, Merrill Lynch and Swedish firms AB Industrivarden and Investor AB said they each will contribute $75 million in cash to Ericsson Venture Partners. The fund is expected to be operational no later than October.

The fund will invest in European and North American pre-public companies that are working on all aspects of mobile Internet technology, including network infrastructure, services and applications.

Ericsson president Kurt Hellstrom said in a statement that the fund was formed because mobile Internet users are expected to outnumber fixed Internet users by 2003. Ericsson is expected to lend its expertise in mobile telephony to the search for promising venture capital candidates.

Analysts agree that mobile Internet services are expected to rise dramatically, with The Yankee Group predicting there will be 21.3 million mobile data users in the United States alone by the end of 2001. The research firm Ovum predicts that 204 million so-called smart phones will be in use worldwide by 2005, up from 21 million expected at the end of this year.

The formation of Ericsson Venture Partners comes a few months after the creation of a similar $140 million fund called Ignition, backed by former Microsoft executives and wireless telecommunications company McCaw Cellular.

Merrill Lynch manages assets of about $1.8 billion, while AB Industrivarden has a stock portfolio of about $8 billion and Investor AB $3 billion.