Intel Capital to invest $20 mn in Indian firms

Mumbai: Intel Capital, the venture capital (VC) arm of the world’s largest chip maker, announced an investment of $20 million (Rs 97.8 crore) in six Indian companies.

The VC firm has invested in Saankhya Labs Pvt. Ltd (a semi-conductor company), Testing Czars (a solutions provider for mobile applications), Financial Inclusion Network and Operations (a banking technology platform provider), What’s On India Pvt. Ltd (an electronic programming guide for television), enStage (an electronic payment solutions and processing provider), and Duron Energy Pvt. Ltd (an affordable solar products company). Specific investment details were not disclosed.

“The primary focus of the investments by Intel Capital is to develop the market for Intel,” said Sudheer Kumar Kuppam, managing director of Intel Capital in India.

“We are increasingly seeing more opportunities to invest in product companies,” Kuppam added, explaining the rationale behind investments in companies such as Saankhya Labs.

Several software companies have emerged in sectors such as banking and telecommunications, said Alok Mittal, managing director, Canaan India, a VC firm.

“They cannot be classified as pure product companies as they are more of a solutions provider,” he said.

The investments by Intel Capital were made from its $250 million Intel Capital India Technology Fund, 80% of which has already been deployed.

“We will look to raise a new fund when we fully exhaust this fund by the end of 2012,” said Kuppam.

Accel Partners co-invested in enStage in this round, while Sequoia Capital and Nexus Venture Partners, existing investors in What’s On India, also invested in the company in this round.

Duron Solar is looking to raise a total of $16 million, said Ajay Awasthi, president and chief executive of the company.

While Intel has been quick in making investment exits, they have been few in India. Of the 24 exits made in 2011 from the global portfolio, there was only one from India. The UK-based Imagination Technologies Group Plc, developer of a mobile graphics and microprocessor chip technology, agreed to acquire HelloSoft Inc., a provider of software for convergence applications.

“We are bracing for a slow 2012 in terms of exit,” said Kuppam. According to him, the volatility in the capital markets and the economic slowdown will hamper the exit environment for VC firms next year as well.

Intel Capital is also expecting a stake sale through the listing of one of its portfolio firms—commodity bourse Multi Commodity Exchange of India Ltd—which has received approval from the capital markets regulator to list.

The exit market has been muted in general for VC firms. Till August, there have been only 11 exits worth $157 million compared with 41 exits worth $416 million in 2010 (full year), according to data from VCCEdge, a financial research platform.