Intel Finalizes Number for 802.11 Fund

Intel Capital will invest up to $150 million over the next two years in 802.11 wireless startups worldwide – formalizing an investment priority that the firm has pursued with vigor over the last several months (See PE Week, 6/3/02).

As Intel Corp. prepares for the launch of its mobile processor platform – code-named Banias by the team of Israeli developers who created it – Intel Capital will take responsibility for ensuring there are enough functioning wireless networks available to make the platform appealing to consumers.

“We’ve set aside $150 million for investments in this area to proliferate the deployment of WiFi networks and to create WiFi products and standards worldwide,” says Mark Christensen, vice president and director of Intel Capital’s communications investment group.

Banias is the first chip Intel has designed specifically for laptops. Previously the company enhanced desktop processors to counteract heat, power and voltage issues, making them compatible with laptops. The Banias processor will be optimized for laptops and allow users to connect to wireless LANs.

Intel Capital’s wireless strategy is about linking laptops to wireless LANs – wireless LAN infrastructure, in other words. The firm’s new wireless investments will, like its existing portfolio, target four areas for investment: wireless services, applications and channels; hardware; software; and component technology such as radio or packaging technology.

“802.11 is almost viral in nature, the same way Novell’s NetWare spread from office to office in the 1980s. Its viral nature is what makes this area so darn exciting,” Christensen says.

Intel has closed six wireless deals since January, bringing the value of its 10 wireless investments up to $25 million. The firm began investing in the wireless sector in 1996.

Like all Intel Capital investments, each wireless deal will include a syndicate of investors. Intel will take a minority stake, typically investing less than $5 million at the Series A or Series B level. The firm has three people dedicated exclusively to 802.11 investments and dozens of scouts in its offices in Australia, Europe and Israel that are its eyes and ears abroad.

Capital for Intel’s wireless investments will be drawn from its $500 million Communications Fund.

Last year Intel Capital invested $350 million in 175 venture deals. Its portfolio of about 500 companies is worth $1.6 billion.

Contact Carolina Braunschweig