Intel Capital Looking for Bigger Deals
By Ian King
April 9 (Bloomberg) -- Intel Corp.’s venture-capital arm plans to increase the size of its deals and is being approached by more established companies amid the worst market for initial public offerings on record.
Intel Capital is looking at investments in the $10 million to $50 million range, Vice President Keith Larson said. The unit has typically invested smaller amounts, giving a total of $7.5 billion to about 1,000 companies since it was founded in 1991.
“We’re looking at a little more mature companies that have revenue,” Larson said in an interview. “Those companies can have more positive impact back on Intel.”
Intel Capital, whose mandate is to foster technologies that will later help microprocessor sales, is being approached by more companies looking for capital as the money flowing into venture capital dwindles, Larson said. Startups are approaching deep-pocketed companies such as Intel as an alternative to the closed market for IPOs and slump in acquisitions.
Previous investments in technologies such as Wi-Fi helped Santa Clara, California-based Intel boost sales and extend its lead over Advanced Micro Devices Inc. Last year, Intel Capital spent $1.59 billion in 169 investments. About $1 billion of that went into Clearwire Corp., the provider of high-speed wireless- Internet service.
That investment mirrors Intel’s earlier strategy of backing companies working on Wi-Fi, a short-range wireless technology that Intel built into its Centrino laptop product from 2003. Centrino’s popularity helped Intel boost annual sales 13 percent in each of 2003, 2004 and 2005.
International Investments
The company made 62 percent of its investments outside the U.S. last year, with the biggest chunk spent in Western Europe and the Middle East. Larson said Intel doesn’t comment on deals before disclosing them publicly.
In contrast with Intel’s ability to spend, the venture- capital industry is hurting from the recession. The amount raised by U.S. venture funds fell 71 percent in the fourth quarter, to $3.37 billion, according to the National Venture Capital Association in Arlington, Virginia.
No startups were able to hold initial public offerings in the first quarter, the second period of drought in a row. The market for selling startup companies fell to 56 deals from 106 a year earlier, with the average value of sales where prices were disclosed falling to $49.6 million from $113.6 million.
Investing in companies that are more mature will give Intel a better chance of making a return, because firms that already earn revenue are less likely to fail, Larson said.
“People have definitely hunkered down, trying to work with the companies they have now,” he said.
One of the main challenges startups face is that banks are cutting credit lines regardless of the companies’ operating performance, Larson said.
Intel rose 71 cents to $15.98 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has gained 9 percent this year.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
Last Updated: April 9, 2009 16:06 EDT |
