Chip giant's venture capital arm puts its money behind four diverse companies Intel Capital yesterday announced four investments from its year-old US$200 million China fund, including a chip designer, a personal computer network management company, an online game developer and a firm that operates an advertising network on mainland university campuses. The venture capital arm of the United States chip giant did not disclose financial details of the deals but it typically invests US$3 million to US$5 million per round in its mainland portfolio companies for a minority stake of less than 20 per cent. Intel's investments in Montage Technology, Star Softcomm, Winking Entertainment and Campus Media are consistent with its strategy of investing in mainland firms with solid growth prospects that will also improve market conditions for the parent company's core chip business. The case for investing in fabless chip designer Montage Technology is relatively straightforward. But Intel's interest in online gaming and campus advertising is arguably less so. 'Ever since Intel moved to a platform approach last year, we have been looking for third-party technologies which can contribute to that strategy, hence the investment in Montage and Star,' said Intel Capital Asia managing director Cadol Cheung. However, he said working with Winking Entertainment would help the online game developer enhance its software when running on the Intel platform, thereby promoting the chip company's products in a hot sector. Investing in advertising network operator Campus Media would also have promotional benefits. 'Campus media has good access to university students, who are difficult to reach from an advertising perspective,' he said. 'The investment also will enable Intel to customise a marketing programme for the campus audience.' Intel Capital has now invested in 12 companies via its China-specific fund but it has been active in the mainland since 1998. Ten of its more than 50 Chinese portfolio companies have gone public or been acquired. The company invested about 60 per cent of its US$265 million total in markets outside the US last year. Venture capitalists raised US$1.93 billion last year for mainland investments and US$733 million during the first five months this year, according to the Asian Venture Capital Journal. That level of fund-raising has led industry watchers to warn of a glut of funding and an increase in valuations in mainland deals. Venture capital firms have spent US$1.03 billion in China this year. But Mr Cheung said Intel still saw plenty of potential in Chinese companies. 'What we are seeing is a growing number of Chinese technology firms that are doing much more than simply taking advantage of low labour and manufacturing costs,' he said. 'They are focusing on gaining a unique competitive advantage in their domestic market from where they may be able to export their technology overseas.'
