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Friday, December 21, 2007

Intel shares it's Investment Strategy




VC Economy: Spotting the next big VC thing



By Ashish Patel,

European Managing Director of Intel Capital


The VC environment is currently in vibrant mode, with lots of liquidity in the market. We are seeing a lot of activity, and the deal flow is as high as it’s been for a very long time. Some of the big European exits have happened and will continue to happen.
The market challenge is that there are not as many VCs as you would have liked, and a lot of attention is being given to late stage buyout houses or late stage investing. So perhaps there isn’t enough capital going into early stage. There is economic pressure as well: I don’t think many VCs have been successful in making great returns from venture investing. So they’re now under pressure to do things where the returns have been shown to be better, and of course, that’s driving them to later stage deals.
Competition creates opportunities, We’ve made high returns on early, mid and late stage opportunities. Sometimes however, it’s just nice to have more players, because that creates a lot more opportunities. The more players there are the more start-ups there are created.
To some extent, Intel’s very success is necessary to counter its worries over the future: last year it invested over a billion dollars in its venture programme across the world, and this year invested US$509.1 million in 120 deals between January-September 2007.If you look at history, the downfall of businesses has typically been where they have failed to recognise market segment changes quick enough (either from a product point or a business model) and suddenly got caught out. Our culture is one of paranoia: what or who could come and eat our lunch? How do we innovate to be a step ahead?
Mobility One of Intel’s key innovations is ‘mobility’, and its focus includes a range from silicon to middleware, from software to display systems and even batteries and power.
All of these are interrelated: to have a mobile device that’s useful, it needs a battery life that’s in excess of a day, so you need batteries that have higher capacity and a better form factor. You’ll also want innovation at the display level for reduced power consumption.We’ve begun a lower power initiative for our next generation of chip to address the mobile market segment. We are also looking at new ways to connect to broadband and are very bullish on WiMax as a way to be always connected, anywhere, anytime at low cost.
Digital content Another area in which Intel Capital is interested is digital content, with a particular focus on gaming. The consumption of such user generated content is seeing exponential growth, with the mass multiplaying of games, or games on demand. Metaboli and Akella are key players. In another area, Mirics, which makes a single radio that allows you to span across different types of frequency, is one to watch.
We’re putting a lot of effort now into WiMax, helping fund a number of operators, such as Freedom4 which is a joint venture with Pipex Wireless, DBD in Germany and Worldmax in the Netherlands.
Enterprise software Intel Capital is focused around the security, manageability and regulatory needs of software and data. One of its success stores is the Czech security software company AVG, which Intel invested in three years ago, and which Patel believes could be the largest European IPO in the software sector for a decade.
Joining forcesIntel Capital plays a critical part in Intel’s strategic long term plan which asks where the market is heading, and is always led by very senior members of Intel’s management team. Our investment programme is not a ‘nice to have’, for us, it’s a strategic ‘must have.’



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