Intel Capital, one of the most active investors in the optical space over the past two years, says it will continue to look for deals to fund, even as the overall venture capital market dries up.

John Hull, director of Intel Capital's communications fund, says parent Intel Corp. (Nasdaq: INTC) is looking to "fill in the gaps" in its optical portfolio and is particularly interested in startups with component-manufacturing expertise.

"If it's something to do with manufacturing automation, or if it's something that could be part of an optical module, it's very interesting to us," says Hull, who spoke with Light Reading following his presentation Wednesday at the Intel Developers' Forum in San Jose, Calif.

Following its purchase earlier this year of three optical components firms (see Intel's 10-Gig Shopping Spree), Intel remains particularly interested in startups playing in the 10-Gig space, Hull says.

"40-Gig is something that's a little farther out for us right now. We're looking for things that are 10-Gig, with a bent toward Ethernet."

However, Hull says Intel Capital isn't especially interested in adding any new system plays, especially multiservice platforms, to its portfolio.

"We've pretty much made our bets with the God-box players," says Hull, whose firm invested in struggling Mayan Networks Inc. (Nasdaq: ADSP) (see Mayan Calls a Time-Out ).

In his presentation, Hull tried to provide a bit of investment optimism, claiming that "there's still money out there, waiting to be invested," even though current venture capital levels are far below the totals of the bubble years of 1999 and 2000. He did confirm that it's a lot tougher to get venture money these days, with longer due-diligence periods and lower valuations being facts of life.

"It may take longer to close a [venture] deal. You can't do it over a really good lunch in Palo Alto anymore."

(The good news is you can still get a really good lunch in Palo Alto.)

In terms of its optical strategy, Hull says Intel is moving beyond its initial phase, which he says was largely "exploratory," and is now looking for more strategic investments that fit in with the company's overall network processor plans (see Mike Ricci).

In typical Intel Capital fashion, Hull says the possibility of an acquisition by Intel is not a prerequisite to investment, but neither is it out of the question.

"Both are acceptable to us," he says.

Hull also confirmed that sometimes Intel Capital's investment in a company isn't as long-term (or faithful) a relationship as the startup might like (see Intel's Optical Attack Makes Waves).

"It can be a long-term relationship if the strategy remains aligned [with Intel's], but it may leave if the strategy diverges. It may seem like a marriage made in heaven, but sometimes, six months later, you're homeless."

- Paul Kapustka, Editor at Large, Light Reading
http://www.lightreading.com