SCOTTS VALLEY, Calif. – The venture capital industry has enjoyed a prosperous run this past decade, and disk drive manufacturer Seagate Technology Inc. in April was the latest corporation to join the party.
With a new venture unit, the company has allocated $25 million for seed- and early-stage venture investments outside Seagate’s core business but in areas that will drive future demand for data storage, said Phil Montero, a Seagate spokesperson. Until now, Seagate has pursued an aggressive mergers and acquisitions strategy, buying Connor Peripherals and the Imprimis division of Control Data, and has made equity investments in other businesses in the data storage technology space, such as Gadzoox Microsystems, Dragon Systems Inc., San Disk Corp. and CVC Holdings Inc.
The new venture unit in early April made its first investment, in fabless semiconductor provider iCompression Inc., which has developed a space-saving technology that digitizes audio and video for storage on a hard drive.
The $10 million second round also included capital from Lucent Venture Partners, Benchmark Capital and Integral Capital Partners’ Roger McNamee. The company has completed its product development-stage and will use the new funds to produce and sell the product to large consumer electronics companies in Japan and around the world, said President and Chief Executive Neal Margulis. Benchmark led the company’s $3 million first round in mid-1998.
Don Waite, Seagate’s executive vice president and chief administration officer, is heading the VC unit. While Seagate has no timetable over which to invest the allocated $25 million, the company plans to replenish the funds once they run out, Mr. Montero said.
Seagate is the sixth corporation to launch venture investment units so far this year, joining cable television operator Comcast Corp. (VCJ, February, page 5), computer manufacturer Oracle Corp. (VCJ, March, page 6), long distance telephone carrier Frontier Communications (VCJ, April, page 5), online brokerage E*Trade Group Inc. (VCJ, May, page 5) and semiconductor manufacturer Intel Corp.