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Why venture capitalists aren?t eyeing mobile: MMF speaker

NEW YORK -- Venture capitalists provide capital for emerging businesses. Yet in mobile it is difficult to get their attention because they are interested in companies with a broader vision, not just one feature or product.

Gil Beyda, managing partner at Genacast Ventures informed the audience of the Mobile Marketing Association's Mobile Marketing Forum on what he is looking for in an investment. He stressed the importance of looking at mobile as a new way of interacting as the next wave of novel mobile paradigms sweeps the nation.

"[The characteristics I look for] probably boil down to a couple factors," Mr. Beyda said.

"One: This is a brand new medium and device and we must look at it that way," he said. "Two: It is not just a micro browser so we can't take old paradigms and the way we were connected before and port it to mobile."

Mr. Beyda stressed the importance of a distinction between features, products, companies and industries.

He said that he often sees inventive applications with great technology but it is only a feature.

Therefore, competitors in the area only have to spend a little time engineering to have the same feature too.

He mentioned that customers buy products, not features. However, one product does not make a company, but rather acts as a one trick pony that solves only one problem.

"When it comes to mobile, it's all about scalability," Mr. Beyda said. "It is critical to be able to hit that inflection point in user adoption and penetration on both the customer side and the user side."

Mr. Beyda also relayed that location is monumental, more so than with any other media.

He sees location based abilities as a differentiator for mobile devices because it is always with the consumer and is always tracking. Because of this, marketers can truly see the patters of usage and travel, giving them the advantage they need to turn basic metrics into revenue.

Mr. Beyda explained the solution to issues between carriers and application stores as a love/hate relationship.

"If you can get over that hurdle and come out with a new partnership than its potentially another barrier that you can erect around your business to defend it," Mr. Beyda said.

He said a partnership like that can yield a competitive advantage.

However, companies at seed stage don't have the money or time to find their way in to that.

Mr. Beyda said that the companies he looks to invest in need to find a way around that problem either by becoming an insider or gaining domain expertise so that the next guy in line loses his advantage.

"It would be extremely difficult to raise a pure mobile fund in today's market because limited partners are not a forward thinking group," Mr. Beyda said.

"They have been hearing the same story for a long time that ?the time of mobile is coming' and we have that barrier to get over with these guys who have heard the same thing over and over," he said.