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BW Businessworld

Intel’s Hard Drive

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In September, technology giants Intel and Google unveiled plans to collaborate on enabling the Android mobile operating system to run on Intel's low-power Atom chips. Apart from the obvious ripple effects on the Indian mobile telephony market, the collaboration will additionally play out here in a different manner. Intel Capital, the Nasdaq-listed chipmaker's venture capital investment arm, is scouting Indian technology startups that are strategically aligned to its global Android plans.

Intel Capital has been aggressively shoring up investments in India since 2005, when it launched a $250-million local fund. About 80 per cent of this fund has been deployed across 40-odd companies, and the firm expects to announce a new fund soon, Sudheer Kuppam, managing director of Intel Capital India, told newspersons in Mumbai last week. Aside of investments from the local fund, the firm has in the past invested $30 million from its parent's balance sheet. Globally, the firm has invested over $10 billion and about $385 million during the current calendar year.

 The emphasis on Android-focused startups is part of a broader sector-based investment thesis that the firm has drawn up for India since 2005. "Following the strategic arrangement with Google, we will make several investments in this area," Kuppam said. Further details were not available. Other sectors of interest include the smart TV and mobility segment, technology enabling the education sector and cloud services. "Investments will be geared towards moving India into a leadership position in cloud services," he said.

Coming off a robust investment run, flanked by 20 profitable exits from portfolio companies, the firm is keen to up the ante here. Last week it announced an aggregate $20 million investment in six companies including Sankhya Labs, FINO, Testing Czars, What's On India, enStage and Duron Energy. Investments in Sankhya, which is a fabless semiconductor company, Testing Czars, testing solutions for mobile applications, and FINO, which provides banking technology solutions, have been completed. It has signed term sheets with television programming guide provider What's on India, electronic payments provider enStage and solar power products maker Duron — and the deals will be completed shortly. enStage and What's on India are co-investment deals with existing investors Accel Partners, and Sequoia Capital and Nexus Venture Partners, respectively.

 While it ramps up investments, 2010 and the current year have been somewhat slow for exits. The firm reported just one exit last year when UK-based chip designer Imagination Technologies acquired video and voice-over-Internet company HelloSoft for a reported $47 million. Intel Capital's exit track record in India has so far yielded four exits through the IPO (initial public offering) route. Given the current global economic climate, the firm expects exits through the IPO route to remain subdued in India and the rest of Asia next year as well.

(This story was published in Businessworld Issue Dated 17-10-2011)