Intel Cap eyes deals to make most of 3G auctions

Intel Capital, the venture capital (VC) arm of global chipmaker Intel, is focusing on investing in services firms that can cater to three screens — mobile, computer (internet) and television.

The venture capital firm feels that with the recent 3G and broadband wireless access (BWA) auctions, services on these three screens will be in demand. This also fits into Intel Cap’s focus for 2010. It had said it would focus more on new investments in 2010.

“With BWA auctions, there will be an opportunity to offer services on all three screens — mobile, computer and TV. We have invested in some firms that have presence in the internet space. From an investment point of view, there will be focus on investing in firms that can cater to these three screens,” said Varsha Tagare, director, Intel Cap.

Some online companies the VC firm has invested in are travel portal Yatra Online, 123greeting.com and multi-purpose pre-paid cash provider Itz Cash.

Intel Capital was one of the few VCs that bet on the Worldwide Interoperability for Microwave Access (WiMax) technology globally. In India, while the parent company has done a WiMax pilot in Pune, Intel Capital has been waiting for the government to auction WiMax spectrum.

Intel Cap’s largest investment in WiMax, of $1 billion, was in the US-based Clearwire. For this, the firm had to make a write-off. “For us, investments are of strategic and financial nature. We don’t think the Clearwire investment was bad. If you look at the dollar numbers, yes, as we had to take a write-off. But I think it was strategic. We wanted to kick-start WiMax and unless you have an eco-system, it’s not possible. So, Clearwire was the first operator to deploy WiMax,” said Tagare.

In India, the VC firm is working closely with Intel on WiMax. “We will work on the commercial side. We have so far not done any investment in India. But we plan to get some of our investee firms abroad to India,” added Tagare. Intel Capital has invested in firms like Beceem, a mobile WiMax chipset developer, and Telsima Networks, a WiMax hardware maker that was acquired by the US-based Harris Stratex Network.

Intel Capital has been in India for over 10 years. In 2005, it set up the $250-million (Rs 1,150 crore) India Technology Fund. So far, it has exhausted 60 per cent of the fund. Tagare feels the 60 per cent of the fund will be used for new and follow-on investments as the firm has a substantial portfolio in India. Tagare added the VC had evolved and changed its investment strategy as it grew in India.

“I think Intel Cap strategy has evolved in India as the country has grown. We do early stage and Pipe (public investment in private equity) deals in India. We have now become much more stage-agnostic in terms of the kinds of deals and the types of securities. I think it is necessary in India, because if you restrict yourself to only one type of security, the deals get restricted. The three deals that were announced in April highlight this point. July System was a primary investment, while KLG was an FCCB restructuring,” said Tagare.