It’s quite literally about touching the clouds for Intel Capital. The strategic venture capital arm of chipmaker, Intel Corporation, is keen to provide a major thrust to cloud computing as the parent arm looks to support the move globally. The captive investment arm, which has made three investments (Multi Commodity Exchange, July Systems Inc and KLG Systel Ltd) worth $23 million in India in 2010, is closely looking at the cloud computing space. It recently invested in Allied Digital Services Ltd, a remote infrastructure management company which comes under the purview of cloud computing, essentially Internet-based facilitating sharing of technological resources, software and digital information. The rationale stems from the fact that, in the technology landscape, increasingly, everything can be offered as a service, says Sudheer Kuppam, Managing Director, Asia Pacific, Intel Capital. Kuppam talks more about India's position in cloud computing, sectoral preferences, fund raising environment and exits. Excerpts:-
After Allied Digital, will we see Intel Capital more active in the cloud computing space?In the technology market place, deals have moved to cloud computing with the learning that almost everything can be offered as a service. Historically, you have application as a service, software as a service, but surely and slowly, we are moving to infrastructure as a service.
From a technology landscape perspective, Intel is very much supportive of the move, and from an investing standpoint, Intel Capital is supporting investments in markets where cloud computing has already taken place and supporting the adoption of cloud computing in markets where it is still nascent. You will see Intel capital more active in cloud computing related technology space.
How is India placed in the cloud computing landscape?
In emerging markets, we are supporting the adoption of cloud computing. As you start liberating the cloud infrastructure, one thing that makes it very efficient and happening is remote infrastructure management, and there are various components associated with that both on the service as well as the support aspect.
Today India does not have that many clouds or data centres. But we expect internet usage to double or triple in the next three to six years in India following the 3G and BWA (broadband wireless) auctions. I think the timing is very ripe for new data centres to be built in India, and it makes for a very lucrative investment proposition. Some of our own portfolio companies are actually leveraging cloud computing services from foreign entities like Amazon.com, and, in future, offers of these types of services can be offered by Indian companies.
How do you think your investment in Allied Digital is placed?
We found that Allied Digital was actually one of the leaders in the remote infrastructure management space. They are leader in providing BPRO and allows one to automatically offer remote management services.
What are the kind of business models you are seeing in the cloud computing space?
Honestly, we are not seeing enough and if you take IT services in which India is the leading country, we are not seeing them moving into the cloud computing path sooner. We are hearing some noises, but we would like to see an accelerated move, so that they can reap the benefits of cloud computing.
Why not bet on more discovered spaces in India than a relatively nascent cloud computing in India?
This essentially goes back to what is strategic for Intel Corporation. Intel Capital is a strategic investor and it is very clear that the world is going to move to cloud and if India doesn’t become a part of this, someone else will, and India will lose its position in the services space. We would like to see India as a leader in the cloud computing space over the next decade. We have to go with funding innovative technologies and products which support the adoption of cloud computing and accelerate that adoption.
Of late we are seeing you investing into companies by way of warrants. What is the kind of capital you are sitting on?
About 60% of the Intel Capital India Technology Fund is already invested and as soon as that fund is exhausted, we will announce the second fund, as we have in China now.
By when will you exhaust the remaining fund? Intel Capital was one of the most prolific investors last year having invested in five companies?
India is a very heated market and we had to withdraw from half a dozen deals after issuing term sheets. That makes it very difficult from an execution stand point, and it becomes very difficult to predict.
Will you continue to look at PIPE deals?
We continue to explore PIPE deals in India as long as long as the company is strategically positioned to work with Intel and enable the technology-adoption curve globally. We try not to exceed 20% minority ownership into the company.
What are the other spaces you are bullish on? Any exits.
We are also bullish on the mobile VAS space, and continue to look at interesting technologies companies. The end game is to bring more and more Indian population on the internet. One97 communications is already in the IPO phase by mid-November.