‘We will invest in deal sizes of up to $1 mn in early stage seed cos’

‘We will invest in deal sizes of up to $1 mn in early stage seed cos’
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First Published: Wed, Jul 18 2007. 12 30 AM IST
Updated: Wed, Jul 18 2007. 12 30 AM IST
Bangalore: In the two years since he took charge at Intel Capital, the strategic investment arm of chip giant Intel Corp., Arvind Sodhani has turned the spotlight firmly on to India. Intel Capital’s regional office (excluding North Asian countries such as Korea, China and Taiwan) shifted to Bangalore from Hong Kong last month; the firm has made a dozen investments in the last 18 months compared with 32 made between 1998 and early 2006; and it has nearly doubled the India investment team size to seven this month. On Santa Clara, California-based Sodhani’s agenda, as he told Mint in an interview, is an acceleration of pace in India: Intel Capital aims to close up to 20 deals in the next 12 months. Edited excerpts:
There has been a lot of change at the top in the India team at Intel Capital...
We have lost a few people— as you know every arriving VC (venture capitalist) steals people from us. But Sudheer (Sudheer Kumar Kuppam is the managing director of Intel capital, India Japan, Australia and SE Asia) has just arrived in Bangalore; we have moved that position to Bangalore (from Hong Kong) as we want to focus on India. We have made it a lot more unattractive for our employees to leave us. But, yes, we have a strong team of seven very experienced people and very similar in size to our team in China. Both India and China have the largest teams outside of the US.
Will all this translate into more ­money being raised for investments in India?
In 1998, when we first arrived here, we were one of the first VCs to start investing in India. Early last year, we announced the $250 million (Rs1,010 crore) fund, (which) I am sure is still one of the largest technology, India-specific funds. With seven people on the ground, we need more deals done than before. Yes, that would translate into more money being invested in India.
Over the last year, Intel Capital has moved from being an early-stage investor to being more active in late-stage investments.
Does this signify a shift in investing strategy?
We are stage-agnostic, we invest in seed all the way to pre-initial public offer companies. We just announced a pre-IPO investment in VMware (software company owned by EMC Corp, in which Intel Capital invested $218.5 million) only last week. This company is probably a month away from going IPO in the US. In India, we have invested in NIIT, a publicly listed company that was an investment that predated the India focused fund. We put $600 million in Clearwire (a high speed wireless broadband service provider), so it all depends on the company and the stage and the products, and services that they are in.
Will India see investments of that size?
It is the function of the sort of company that we invest in. We will invest in deal sizes of up to $1 million in very early stage seed companies to large pre-IPO deals. I will not be surprised if we see a $20 million to $50 ­million investment in a company that is a late stage or a pre-IPO company. I am not announcing anything but that is a possibility.
What will be the size of the next fund for India ?
The $250 million fund has not been exhausted, so I cannot comment on what we will do next. Once we are done with the investment, we will announce what we will do next.
Do you see more mature ideas coming out of India as against when you started investing in India in 1998?
A lot of the companies when we first arrived here were export-oriented, labour arbitrage-oriented. Now we see more companies geared towards domestic consumption, focusing on the domestic consumer and products and services destined to be used in the Indian marketplace.
What are the new investment areas you are exploring in India?
We are very actively exploring Wimax (an emerging wireless data standard) deployment in India; we have been working with regulatory bodies Trai (Telecom Regulatory Authority of India) and other government officials to get the allocation of spectrum done as rapidly as possible. Within a 7-10 years period, cellular solved the Indian telephony problem. I suspect that will probably see Wimax do the same in broadband, probably in a shorter period of time as the model is already in place and it is a lot easier to replicate.
Intel Capital has shown interest in investing in start-ups with applications in e-governance such as Comat Technologies. Is this a trend we will see?
We are taking an enlightened view of our strategy in investing. We will invest to promote entrepreneurship, innovation and technology deployment. When that happens in emerging markets, where the PC penetration is low, it helps enormously to get new applications in new devices that helps our penetration increase very dramatically.
Will that spur you to look at markets beyond urban areas?
I think the rural market is huge in India... PCs are getting cheaper and more affordable, and income levels are rising. These two forces are making it easier to own PCs and you need broadband to empower the consumer. So, yes, we will look at investments in these sectors, it is a question of when we can find them.
You must remember that we are in the business of investing; we are not in the business of creating entrepreneurs. The entrepreneurs have to exist, be willing to do business, be willing to build start-up companies that address those specific areas but I am very confident that it will happen.
What are the specific benefits an entrepreneur gets from a corporate VC such as Intel Capital ?
We have a relationship with the top 2,000 corporations globally which no other VC has. A typical investor VC will know 5-10 information technology professionals, for example, and will make those introductions. For instance, last year we did 53 Intel Capital Technology Days—a day-long event where we go to a large MNC and introduce our portfolio companies to them. If a start-up such as Real Image, a digital cinema technology firm that Intel Capital has invested in, tried on their own to meet the companies that we introduced them to, it would have taken them a year plus.
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First Published: Wed, Jul 18 2007. 12 30 AM IST