Cover Story: Inside Intel Capital –

They’re a cagey bunch over at Intel Capital. They’ll tell you a little bit, but they don’t like you poking around too much. For instance, they’ll tell you why they invested in fuel cell companies, but they won’t share the names of the companies they’ve invested in. It can be frustrating, but you really have no choice but to pay close attention: Intel Capital made more venture investments last year than all but the most veteran venture capital firms have invested in their entire existence.

And, here’s the kicker: Intel Capital almost always syndicates its deals. In times like these it’s important to be tight with an investor who not only has deep pockets but also can offer a portfolio company a virtual technology SWAT team, open doors to key partners and make credible introductions to potential customers.

Even though it slowed its investment pace significantly from the billion-dollar mark of the previous two years, Intel Capital was still the world’s most active venture investor last year. It pumped $350 million into 175 companies, putting about $1 million to $10 million in each.

This is not to suggest that Intel is throwing money around. Its pace may look frenetic compared to its institutional peers, but Intel Capital invests in a deliberate fashion. Its army of 300 investors will make fewer new U.S. deals this year than they did a couple of years ago. Following the general trend in the VC world, the corporate venture group will spend more time and money on follow-on rounds than it has in the past.

Making life slightly more difficult for U.S. startups, Intel Capital also plans to boost its investments outside of the United States. International investments accounted for 45% of Intel Capital’s portfolio in 2001, up from less than 5% in 1998, and that figure will likely rise to fully half its deals this year.

Where’s Les?

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