OWINGS MILLS, Md. – In a move to expand its markets and to preview new technologies, Aether Systems Inc., a provider of wireless data products and services, launched Aether Capital as its venture capital arm in mid-August, said Wayne Jackson, managing director of Aether Capital.
Aether Capital received $125 million from its parent company to fund its initial operations. The VC unit will invest in wireless and mobile computing companies, Jackson said. “One of the criterion we will use to guide our investments is that there has to be a direct and measurable connection between Aether Systems and the companies we invest in,” he added. Jackson said Aether Capital’s investments would likely fall into three broad groups: companies with a market focus different from Aether Systems; companies with a different geographic focus; and companies developing different technologies that will be necessary in a new wireless world.
“We are looking for companies that Aether Systems can partner with,” Jackson said, adding that the Aether Capital will act as a kind of research and development department for its parent company. “We want to do more than just technology R&D though we will be looking for good business plans and marketing strategies, which can also benefit Aether Systems,” he noted.
Jackson anticipated that Aether Capital will be fully invested in about 6 months. He said the VC unit would do about 10 to 20 deals in that time span, with an average deal size between $6 million and $7 million. He said Aether Capital would raise another vehicle when its initial funds are fully invested, at which point he expected to raise some funds from outside limited partners. However, Jackson noted that any potential LPs would have to add strategic value to the fund, rather than simply being financial investors. Jackson said he had no set size in mind for a future fund. “I think we will always have rolling funds in place, probably between $100 million and $300 million in size,” he said. Jackson declined to reveal Aether Capital’s management fee or carried interest structure.
Aether Capital will invest in companies at all stages of their development, Jackson said. “In so far as we have limited bandwidth, we will want to work with partners other VC firms in early-stage deals,” he added, noting “early-stage companies need a lot of guidance and we are going to want VCs to provide this; our value add is our expertise and network of connections in the wireless industry.”
The vehicle does not have a particular geographic focus, he said. “It would be nice if all the companies were located near us in Northern Virginia,” he said, “but that clearly won’t be the case. In fact, we are seeing a lot of opportunities overseas.”
Jackson is currently working to put together Aether Capital’s investment team. When the VC arm is up and running, its team should number 12 to 15 people, he said. The whole team should be in place by January, he added.
In addition to ferreting out new deals, Aether Capital’s investment team will also be responsible for managing Aether System’s existing portfolio of strategic investments, Jackson said. That portfolio has been accumulated over the last year and has a value approaching $1 billion, he noted. Before being tapped to run Aether Capital, Jackson was chief strategy officer at Aether Systems, where he was involved with the company’s strategic investment program.