An investor dialogue with Arvind Sodhani

The president of Intel Capital talks about investment strategies, opportunities in India and how to choose the right investment target.
To date, Intel Capital, Intel CorporationÆs global investment organisation, has invested more than $7.5 billion in approximately 1,000 companies in 45 countries. We talk to Arvind Sodhani, who is executive vice-president of Intel Corp and became president of Intel Capital in March 2005, about some of those investment choices.

Tell us about some of your recent investments.
In July 2008, we announced three deals in India simultaneously with a total investment of $17 million. They included:, a leading online travel portal;, an events-oriented social network extending across web and mobile platforms; and Emnet Samsara Media, an out-of-home advertising company focusing on the Indian public transportation market.

The fact that we were able to announce three deals at the same time shows the growth and investment potential in India at the moment. ItÆs a very important market to us and we believe that there is a rich selection of companies that complement our technology initiatives, both early-stage and more mature. Overall, weÆre looking to accelerate the build-out of computing and telecom infrastructure in India and to contribute to the growth of consumer-oriented Indian technology start-ups.

Funding for these deals came from the $250 million Intel Capital India Technology Fund, which we announced in 2006 and which we have since applied to approximately 50 companies across eight cities. Notable examples of current Intel Capital investments in India include:

- Collabnet, an open source software exchange.
- Comat Technologies, a Bangalore-based e-governance company.
- Financial Information Network and Operations, a Mumbai-based biometric-enabled smart card solutions provider.

What is your overall investment strategy?
We like to keep our investment strategy as simple as possible. The over-arching philosophy is to look for companies with innovative and timely technologies and viable financial models. As the investments will be made to support our strategic interests, they must also clearly offer a strategic benefit to Intel Corporation. Our investing style is stage-agnostic, and we seek out successful technology companies at various growth stages.

As far as deal sourcing is concerned, this is done through multiple avenues. It can be proactive scouting by our investment managers, through other Intel business units, our customers, co-investors, entrepreneurs, events and conferences.

What type of companies do you target?
Ultimately, weÆre looking for companies that offer return on investment commensurate with venture capital industry norms, in segments that complement overall Intel Corporation strategic objectives. WeÆre not preoccupied with any one segment but we consider candidates in a broad spectrum of technology-related industries. Of course, we also consider specific criteria before making any investment. These include financial attractiveness of the investment, strength of the management team, the products or services targeted, and the potential market. Last but not least, we consider how Intel Capital can help the company in enhancing its business and shareholder value.

After investing, Intel Capital aims to play an active role in making our portfolio companies more successful by capitalising on our brand recognition, global reach, access to customers and technology expertise. We host events including the Intel Capital CEO Summit and Intel Capital Technology Days to facilitate networking and to introduce our portfolio companies to potential customers worldwide.

What is your time frame for completing and exiting investments?
We donÆt put specific targets on the amount of time it takes to complete deals although we do follow a general process. Our investment managers bring prospective deals to Intel CapitalÆs management committee and then pitch the proposed deal. The management committee then accepts or rejects the dealÆs concept. If accepted, the investment manager performs further financial and technical due diligence for final management review. The final terms of the deal are then negotiated, finalised and money is wired. The investment process can take anywhere from a few weeks to a few months depending on a variety of factors. WeÆve also had complex deals that take some time to bring home, depending on individual circumstances.

What do you consider the right amount of money to invest?
Important for us is carefully selecting the type of company in which we seek to invest and conducting due diligence to understand the market potential and business plan. Over the years, Intel Capital has made some significant and high-profile investments in technology companies and start-ups around the world. However, equally as important there have been much smaller investments that hold just as much relevance to our business. For example, we invested a relatively modest sum in PCCW during its early days.

This story was first published in the October issue of FinanceAsia magazine.
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