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Intel Capital Still Looking for Deals

Light Reading
News Analysis
Light Reading
8/29/2001

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

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flanker
flanker
12/4/2012 | 7:53:28 PM
re: Intel Capital Still Looking for Deals
1) Intel wants to round out their optical portfolio? I didnt know iVillage.com was in the optical space.

2) Please show me a working God Box, and why do only Silicon Valley VCs with tanked portfolios and Silicon Valley firms with no customers refer to them? Is this something the granola eaters meditate to?

3) Maybe b2c e-commerce will come back and the valley start ups will find customers stupid enough to buy their wares, like baseball cards or something.






ownstock
ownstock
12/4/2012 | 7:53:27 PM
re: Intel Capital Still Looking for Deals
Intel is more than willing to put money into a deal that gives them your company in the future, for what they value it for today...(just sign here).

The fact that they got sold a few bags of carp by some of their investments may be viewed by some as ironic, others as no surprize.

Fact: Investing is not a core competence at Intel. Hard to believe a company that got ahead on focus, got so out of focus. Value is 1% intrinsic, 99% perceived. That is a fact of fuzziness, and a long way from the hard technical world of making microprocessors faster and better than anyone else.

They would be better to stick to their knitting. When I invest in Intel, I want to invest in sales and profits. If I want to speculate, I'll go drop some money at a company on Sand Hill.

-Own
flanker
flanker
12/4/2012 | 7:53:09 PM
re: Intel Capital Still Looking for Deals
"They would be better to stick to their knitting"

You're not kidding. These guys are memory chip manufacturers. How can they be expected to pick the next optical winners when the big boys (both the vcs and the established vendors) are having trouble doing it?

Intel can't win in the optical space, because no one knows where the standards will be in five years and its not cost effective to bet on ALL of them.



noptera01
noptera01
12/4/2012 | 7:53:06 PM
re: Intel Capital Still Looking for Deals
Intel's optical acquisitions include Giga A/S, Cognet, nSerial and Light Logic.

About Cognet
Cognet, headquartered in Los Angeles, develops electronic components for use in the 10 Gigabit Ethernet modules. Its products can be found at any point in the network where fiberoptic signals are terminated and converted into the electrical domain such as switches, servers and edge routers used for very high-performance communication applications.

About nSerial
nSerial, headquartered in Santa Clara, Calif., develops high-speed physical layer components such as serializer/deserializer (SerDes) transceivers for the 10 Gigabit Ethernet market segment. These components are used in optical modules as well as a variety of copper media applications including chip-to-chip interconnects and equipment backplanes.

About LightLogic
LightLogic, headquartered in Newark, Calif., designs, manufactures and sells advanced integrated opto-electronic components to original equipment manufactures (OEMs) building next-generation optical communications systems. These opto-electronic components combine lasers, micro-optics and high-speed electronics into integrated devices called transponders.
lambdaswitching
lambdaswitching
12/4/2012 | 7:52:52 PM
re: Intel Capital Still Looking for Deals
I came across a very good Opinion piece, which appeared in IEEE Spectrum, well worth the read for another view of the VC scene.
http://www.spectrum.ieee.org/W...
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