Intel Makes Two Investments for Banias

Bracing itself for Intel Corp.’s launch of a processor that will connect laptop users to wireless networks, Intel Capital added an IP telephony software company to its portfolio and beefed up its stake in a company that builds WiFi networks in hotels.

Without disclosing the size of either investment, Santa Clara, Calif.-based Intel Capital made a new investment in software maker TeleSym Inc. of Bellevue, Wash., and upped its position in STSN Inc., a Salt Lake City company that builds wireless networks for hotels.

Banias – the code name in Intel’s soon-to-be-launched mobile processor – is the first chip Intel has designed specifically for laptops. Without a broad deployment of wireless networks, the processor won’t have mass appeal. So Intel Capital has busied itself finding companies to link laptops to wireless networks and companies that build wireless infrastructure. To date, Intel Capital has targeted four types of wireless companies: component technology, hardware, software companies like TeleSym’s and wireless services like STSN’s network.

Loaded with TeleSym software, a PDA or laptop can make or receive telephone calls when it’s logged onto a WiFi network. If he’s not at his desk, TeleSym vice president of business development Joe Dodson’s PDA picks up his calls, and when he’s in a hotel room with wireless Internet access, his laptop becomes his phone.

Since TelSym’s launch in September, 200 enterprise and individual customers have begun trials with the system.

Bay Partners and Northwest Venture Associates put $3 million into TeleSym in two rounds of financing since its founding in May 2000, however neither participated in this round.

TeleSym’s C round will be used to ramp its sales and marketing efforts and add to its staff of 16 people. It will also be used to add functionality to the software with call log and speed dialing features.

STSN, an Intel portfolio company since December 1999, has created WiFi networks in 450 hotels worldwide, including the Marriott hotel chain and the Fairfield Inn chain. STSN will use Intel’s most recent capital infusion to deploy more dual-band networks – a roll-out that’s slated for completion in June 2003. Intel was the only participant in this round of funding.

The company has raised $175 million in five rounds of venture financing since its founding in 1998. The company’s backers include APV Technology Partners, Bank One Equity Investors, Communications Partners, First Media ST Holdings, Marriott International, Third Coast Capital, ThomVest, Transamerica Mezzanine Financing, VantagePoint Venture Partners and Venture Frogs.

Intel Capital earmarked $150 million of its $500 million Communications Fund for wireless investment in October. Although the firm began investing in the sector in 1996, nine of its 10 wireless deals have been completed since January. Together those investments are worth about $40 million.

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