Nokia Growth Partners (NGP), the venture firm which manages the funds of the Finland-based technology company, has received a $350m commitment to invest in the internet of things.
Global Corporate Venturing met with Bo Ilsoe, a NGP managing partner, in a hotel in Barcelona on the sidelines of Mobile World Congress, to talk about the new fund, which has four main areas of investment, connected enterprise, consumer solutions, connected car and digital health.
The firm now has $500m in dry powder available to deploy. Ilsoe said: “Nokia has made more than $1.8bn commitments to venture, and this is their biggest single commitment to any fund or venture activity. For us we are very pleased with it. The arms length, collaborative model we have pioneered with Nokia is something that has been working well.”
The venture unit has been working on stepping up its investment in internet of things since Nokia sold its handset unit to Microsoft. Ilsoe said: “We are supporting the direction Nokia wants to take. It is taking long-term bets to support the internet of things ecosystem through investments and partnership.”
Nokia Growth Partners has had a string of exits of late, including the sales of portfolio companies Ganji and UCMobile, two of the largest venture-backed exits in China, and the Nasdaq-listing of big data company Rocketfuel.
Ilsoe said: “Nokia management feels there is a lot of strategic alignment from our activity. They are very pleased with how things have been working. Our conversations with them started when the Microsoft announcement was made.”
There is a degree to which Nokia Growth Partners believes the excitement around internet of things has made the investment market over-heated. Ilsoe added: “The hype is way ahead of the reality. When the hype cycle goes down the real businesses will emerge. This is why we take a portfolio approach, and looking for a real business case we like enterprise solutions. In other areas we take a bit more of a bet where there is less clarity how massive usage will be.
Yet the excitement has also triggered a huge amount of innovation in internet of things, which Ilsoe believes is driving the opportunity. Ilsoe said: “The most important thing is there are a lot of entrepreneurs and VCs going at this opportunity which means a lot of new businesses will be built which we don’t even understand today.”
There is a large macro trend which is making the internet of things provision a huge market. Paul Asel, another managing partner at Nokia Growth Partners, said in a forthcoming blog post, which examines some of the main themes related to internet of things: “Since 2005, mobile phones have increased 3.4 billion to 6.8 billion time worldwide in 2015 and accounted for 70% of all connected devices as of 2012. But a new generation of sensors and connected devices is emerging that will dwarf mobile phone unit volume. Industry estimates project 3.3x growth in the next five years to 50 IOT devices, 80% of which will be sensors and other new classes of devices. More data has been created in the past five years than in prior human history, yet IOT devices are expected to produce 44 billion zetabytes of data by 2020. McKinsey notes that 90% of global GDP is untouched by the Internet. IOT will substantially touch – and possibly disrupt – many of these greenfield sectors.”
