San Francisco: Despite the economic downturn, Intel Capital, the investing arm of chip maker Intel Corp., says it does not plan to slow deals this year and will even play sole investor in deals that have other venture capitalists (VCs)?backing?out. Early in May, it participated in a $3.2 billion (Rs13,728 crore today) investment in a joint venture between US telecom firms Clearwire Corp. and Sprint Nextel for deployment of Wimax (short for worldwide inter-operability for microwave access, a wireless broadband standard that is capable of data speeds of 10 megabits per second) in the US. Other backers were Comcast, Google Inc. and others.
Since 1991, Intel Capital has invested $7.5 billion in some 1,000 firms in 45 countries. In India, it has invested in more than 40 firms in the last decade, including successful exits such as online brokerage house India Infoline Ltd, computer education company NIIT Technologies Ltd and communication technology firm Sasken Communication Technologies Ltd. Last week, the firm announced investments totalling $60 million in eight new deals at its annual CEO Summit in San Francisco. The investments included Noida-based online educational assessment firm Vriti Infocom.
India focus: Intel Capital’s Arvind Sodhani says education is very high on the priority list of people’s needs and wants in the country (Photo: Jagadeesh NV/MINT)
Arvind Sodhani, president of Intel Capital and executive vice-president of Intel Corp., spoke to Mint about its India investments, exits and why the chip maker believes Wimax will win the race. Edited excerpts:
Where does India fit in the global scheme of things for Intel Capital?
India is an important market to us. We have been investing there since 1998 and had many good exits. In the US and other parts of the world, we have seen a lot more acquisitions. India is unique in the sense that all our exits were through IPOs (initial public offerings). We have seen some of our highest IRRs (internal rate of return, an indicator of the efficiency of an investment) in India, not necessarily because they went public, just that the portfolio companies did very well and valuations went up dramatically.
Will the market slowdown have an effect on the IPOs and hence your exits?
Well, many of the companies that want to go public could defer their IPOs a bit. (But), clearly, there is a decline in the market.
Are you looking at setting up a new fund for India?
No, we have currently not exhausted our fund.
What sectors do you see emerging in India?
We have invested in consumer Internet, telecom, semiconductors and domestic consumption. (And, take) education, for example. We’ve invested in NIIT and now, Vriti. For India, education is very high on the priority list of people’s needs and wants.
India is seen as more of a services market than a product one. As a technology company with a strong focus on products, do you find that lack?
That’s true, that it is seen as a services market. But it won’t necessarily remain a services play. It is a function of what opportunities are out there and the right company at the right time. Many of our investments are product companies—Tejas, Sasken and Persistent. Also, many of the consumer Internet companies are new inventions.
As a corporate VC, how much are your investment decisions a factor of strategic fit versus financial returns?
We look at every deal both from a strategic and financial perspective. We only invest if it is financially viable, but we are (also) a strategic investor. We want to invest in tech innovation and entrepreneurship across the board. Our portfolio companies don’t necessarily need to have business unit interactions and agreements with (Intel), but they have to have relevance to our business. Our investments depend on valuation, stage of company and what we’re trying to achieve. We are stage-agnostic in our deals. We recently announced a $1 billion investment in Clearwire, but also invest as little as $500,000 in new start-ups.
With the spectrum issues in India, do you see a large-scale adoption of Wimax here?
Not just in India, Wimax will become a critical wireless broadband (standard) throughout the world. We’ve already seen that happen in cellular, in India in particular. I easily see a repeat in broadband wireless access. It’s not enough to have cellular access any more, people want high-speed. I don’t think it will be fixed Wimax deployments, it will all be mobile. Many (early) mobile Wimax pilots were done when standards were not defined. But that is changing now.
How does it compare with long- term evolution (LTE) technology, the other fourth generation standard that operators are supporting?
What is LTE? There is no LTE to compare. It’s three letters written on a piece of paper. Show me an LTE network. I think it is a good three years behind Wimax.
Namitha Jagadeesh was in San Francisco recently as a guest of Intel Capital.