Intel Capital’s India head and Director of Strategic Investment, Dr.Kumar Shiralagi is talking about the company’s growing Eastern interests.

Intel Corp.’s venture arm, Intel Capital is investing half of its worldwide investment in Asia indicating a lurking growth in the continent. How Asian companies can be the next technology monoliths. And where India and its entrepreneurs stand; are few a resonating thoughts Intel India has expressed all the way since late ‘90s.

With Intel’s investment pouring into Asian companies, there are signals that Asia will be the next technology hub. And countries like China, India, South Korea, Taiwan and Japan will be the five forces of technology fiefdom. Although, who’ll be the Asian monarch is still a nail-biting climax; it is sure that the rest of them will at least remain as knights.

If this climax turns real, then it’s not just the CA based chipmaker Intel that would benefit, but also Intel Capital, which has today pioneered the art of external corporate venturing in the Asian countries and in turn led a slew of MNC investment in India.

India’s rugged route
Intel’s entry into India was one of the most triggering changes to the face of the venture funding in the country. Intel used a very innovative approach of co-investing with top-tier VCs in software services and product firms. Although it was a safer bet to co-invest, their entry was not timely. Intel discovered that the VC activity in India was distinctly small and it had to lead investments. Added to it, there was a market downtrend and telecom bust.

However, a strategy of shelving most of its investment plans in software services and concentrating on computing and communication technologies has made Intel play safe. Intel not only acquired some customers like the peripheral makers by offering Intel and its portfolios’ technologies as a packaged deal, but also found a market for its chip sets and motherboards through its portfolios. This strategy turned around Intel’s business; which Shiralagi emphasizes, “Intel is a VC with a strategic angle.”

For Intel, “Strategy doesn’t wholly mean financial returns,” says Shiralagi. “Our returns commensurate with top tier VCs. But focus is Intel-made: concentrating on early stage companies pursuing innovative technology, while Intel provides a global outlook and market for such companies.” This has helped Intel explore newer and disruptive technologies. A plan that Intel adopted for its worldwide business, and which Shiralagi calls the ‘two-way-stream.’

Intel, with two-way-stream mechanism might have conceived a smart idea, but for a country like India, during ‘98 it was premature. Entrepreneurs in the technology space were few in number. “Entrepreneurial culture in the country was young,” says Shiralagi. While sources reveal that Intel Capital has invested in more than thirty Indian companies since 2001, the company’s Website currently mentions only seven. The numbers are no surprise; the way Intel went about finding good entrepreneurs and early stage companies doing innovative technologies is worth exploring (see table). “Today all our portfolios are global in nature because no two companies execute the same areas of technology,” says Shiralagi.

Intel’s follows four-fold criterion for investing in companies worldwide. First, companies that are developing hot new innovative technologies—that Intel refers as the eyes-and-ears. Second, companies that builds digital home products, WiMax, telecom, digital optical and WiFi technologies stationed around Intel’s chip sets. Third, the gap-filler technology, that helps in bridging the divide between the first two criteria. And finally, companies that create markets—say enterprises like handheld devices and laptops.

Although this four-fold approach did make a difference worldwide, for India, Intel Capital re-structured its strategies. “Basically, because India could see itself in two markets,” says Shiralagi. “One, it could create products for the global market, and at the same time concentrate on domestic markets.” So Intel today also funds companies serving the local markets that are into education software, gaming, e-governance solutions and broadband. Some companies in this space are Career Launcher, indiamarkets.com, rediff.com and so on. Intel saw some exciting exits from companies like Subex Systems, DeccaNet Designs and Elind Computers. A few of them that Shiralagi calls the ‘survivors of the hard time and successors of today.’

Intel’s Incubator
Incubation is something that Shiralagi seems to explain like a researcher in the Intel laboratory. He talks about the value add Intel delivers to its portfolios as a strategic investor. “We take all our portfolios to Intel’s global technology forums held in South America, U.S. and Europe to introduce to our clients. They can talk to any of our international clients, showcase their products and build relationship,” he says. If this is one way, the other has been quite innovative: Intel organizes a Indian Technology Day where it brings all the senior managers of global carriers of the world and its Indian portfolios under one roof to exchange ideas and opinions. Sasken Communication Technologies is one such Intel funded company that has raised two rounds of funding in the last six years and attended most of such events. Milind Gandhe, General Manager of Strategic Planning at Sasken, explains, “what is really good about partnering with Intel is not the global vision, international market or the brand value you get, but it is more about where do you as a company stand in the international value chain.”

Intel’s strategies of cross leveraging its portfolios’ technologies across its other companies and customers worldwide, has made it a trendsetter in the industry. “Some technologies which we develop in (and for) India’s domestic market will be taken to other geographies if Intel thinks that really caters to that market as well,” says Shiralagi.

Intel Capital’s early move has not only earned it recognition but has certified it as a pioneer. Asia Private Equity Review, an equity and venture investment journal in Asia, called Intel as one of the most active corporate investor in Asia. External corporate venturing is currently the trend in venture activity and India is clearly moving north. Ask Shiralagi, what Intel did to start a new trend? He simply grins to say, “VC just add value, but growth is in the hands of the company’s management.”