SAN JOSE, Calif. An Intel Capital executive who helped organize the Invest in America Alliance launched last week is bullish on new opportunities for semiconductor startups. The alliance was aimed in part to spark venture capitalists to invest money they have been sitting on, said Keith Larson, a vice president at Intel Capital.
Intel Capital is one of 25 VCs in the new alliance that said as a group they will invest $3.5 billion in startups over the next two years, including $200 million from a new Intel Capital Invest in America Technology Fund. However, it's unclear whether any of that spending represents additional funding beyond what the group's members had planned.
In 2009 venture investments fell 37 percent in dollars and a 30 percent in the number of deals from 2008, the second consecutive year of annual deal and dollar declines, according to figures released in January by the National Venture Capital Association.
"There's a lot of VC money sitting on the sidelines and not getting invested," said Larson of Intel Capital.
| Keith Larson|
Vice President, Intel Capital
VCs are hanging on to some of their funds in part due to a bad economy and the lack of acquisitions or public offerings for startups. "A lack of exists shouldn't impact you, because VCs should be long-term investors with a three-to-seven year horizon, but it's a behavioral thing that people tend to cramp up and not invest," he said.
In semiconductors, digital fabless startups "will continue to struggle" fund funding because they are seen as capital intensive. However, Larsen listed several chip sectors where he sees promise.
"You will see innovations in horizontal ways to drive cost out of semis such as in test, packaging and critical parts of process innovations such as patterning and polishing-- those are areas where we look to invest," he said.
In the memory chip area that is part of Larson's focus, Intel is exploring opportunities in full wafer test and chip stacking. Other themes the Intel group is studying include solid-state lighting, smart grids, and educational PCs.
With the alliance, "we're taking the glass-half-full attitude, saying we've collected a group of top tier investors who will be investing in this time period in these kinds of [electronics] companies," said Larsen. "I personally think it will be new additional funds," because of the alliance, he added.
It's difficult to tell if even Intel's new $200 million Invest in America Technology Fund represents a heightened investment. In 2009, the company invested $327 million in startups, about half of them in the U.S.
"We don't have a budgeted amount of money to invest in a given year--we are very much opportunity driven," said Larsen.