Nervous climate spreads to Intel

By PETER GRIFFIN it writer

SAN JOSE - The massive fund set up by computer giant Intel to invest in start-up technology companies is unlikely to be as generous this year as it was in 2000.

Market jitters sending tech stocks plunging to new lows have prompted Intel Capital bosses to take a "steady-as-she-goes" approach to backing new businesses.

Intel Capital invested $US1.3 billion ($3.03 billion) in start-ups during 2000, making it the single biggest such investment fund in the world. Around 550 companies receive financial backing directly from Intel and, although the majority are American companies, an increasing amount has been invested outside US borders.

Speaking at the Intel Developer Forum in San Jose this week, Intel Capital president Les Vadasz said the company's worldwide relationships with venture capitalists might slow down Intel's investment programme.

Venture capitalists had cut back their activities "quite significantly," and this had an impact on Intel, he said.

"Deals are harder to close these days. The number one rule we have adopted during these more difficult market times is 'steady as she goes'."

Despite an investment slowdown, Intel plans to pour $US4.3 billion into its own research and development this year. A further $US7.5 billion will be invested in "capital equipment," including more advanced computer chip factories.

The considerable spending power of Intel is yet to directly help New Zealand companies bring their innovations to market, but the company has spent more than $US100 million in the Asia-Pacific region in the past year.

Several Australian start-ups have attracted Intel's attention, most of them involved in designing new internet delivery systems, an area Intel is expected to focus on.

Australian companies Streamline Solutions, a developer of customer relationship management (eCRM), and 80-20, a specialist in knowledge portal technology, are among Intel's recent Australian investments.

But Intel's main areas of interest in the Asia-Pacific region are Japan and China. The latter is rapidly becoming a major force in software development.

Mr Vadasz said investment in start-ups was essential in creating new markets and that Intel's investments, unlike those made by venture capitalists, were strategically rather than financially driven.

* Peter Griffin is attending the Intel Developer Forum as a guest of Intel.

Intel Capital

Streamline solutions

80-20