Local Companies Benefiting from Intel Cash Infusions.

Plenty of U.S. tech giants are active investors in L.A.-based technology companies, but none was more active in 2000 than Intel Corp., according to a new survey by L.A.-based Growthink Inc.

Intel Capital, the strategic venture capital arm of the big Santa Clara-based chipmaker, participated in venture fundings for nine privately held L.A. companies last year, involving a combined $255.2 million of capital.

Intel declined to disclose what portion of that combined amount it invested, but it is clearly among the more significant participants, according to Growthink.

Intel's L.A. investments in 2000 were as diverse as they could be, ranging from CyOptics Inc., a developer of optoelectronic transmission components, to the defunct online entertainment company Digital Entertainment Network Inc.

Intel spokesman Robert Manetta explained that Intel Capital makes investments that it believes will help build the Internet economy, which in turn will help grow Intel. Those investments are targeted at companies that either design hardware or software, or provide Internet content.

"If the Internet is growing, it gives us a bigger market for our products," he said. "We have also been helping the Internet grow where it needs to grow most by making investments in India, Eastern Europe and China. In the U.S., it's where the good ideas are."

Intel Capital invested an average of $5 million in more than 300 companies worldwide last year, Manetta said.

Growing portfolio

While Manetta would not give any specific details regarding the nature of the investments, Cynthia Johnston, vice president of business development at Rampt LLC, an L.A.-based broadband media search directory and products company, said that "Intel's almost $1 million investment bought them about 6 percent of the company."

As of Dec. 31, Intel's portfolio of investments in more than 550 companies worldwide was valued at $3.7 billion, according to Intel financial records.

Dave Lavinsky, president of Growthink and author of the survey, estimated that $1.8 billion of Intel's total portfolio is invested in private companies.

Intel was one of several investors, along with Cisco Systems Inc. and Vitesse Semiconductor Corp., that participated in the $73.3 million round of financing for CyOptics in October.

Eran Yarkoni, president of CyOptics, said the money is being used to fund further product development and to expand the company's manufacturing facilities.

"The Internet continues to grow at an exponential rate, and innovations such as 40 Gbps (gigabytes-per-second) optical components and components for ultra-long-haul transmission will be a necessary development to keep pace with this growth," said Tom Willis, director of optical investments at Intel Capital. "CyOptics is active at the forefront of developing these components using new materials, such as indium phosphide."

Willis said Intel is merely an investor in CyOptics and is not overseeing the company's day-to-day operations.

Optimistic recipient

Besides CyOptics, Intel is one of two investors that put $10.8 million into POPcast Communications Corp, an L.A. online video company.

Keith Moore, the company's president, said Intel's investment would allow the company to develop new offerings, including wireless personal video services and new forms of interactive Webcasting.

"This is not the first time we have worked with Intel," said Moore. "We worked with Intel's Architecture Group and Wireless Communications Group and developed their video e-mail service. I believe that Intel thought this would be a good investment."

Lavinsky said the region's wealth of manufacturing and entertainment companies would continue to spin off new technologies and attract investors in 2001.

"Los Angeles is attractive to startups and investors because it has a large and skilled workforce resulting from the high concentration of people living in the area, our climate and physical landscape, and great academic institutions," Lavinsky said. "We are also geographically close to Silicon Valley, so it is easy for us to do business with firms there."

                          Chipmaker Bets on L.A.
               Here are the local companies that Intel Corp.
                          invested in last year.
Company, Headquarters         Core Business
CyOptics Inc.,                Designs, manufactures and markets high-
 Los Angeles                  performance optical
                              networking components
Digital Entertainment Network Digital online entertainment; has
 Santa Monica                 ceased operations
Rampt LLC,                    Broadband media search, directory
 Los Angeles                  and products company
FirstLook.com,                Supplies streaming media preview
 Sherman Oaks                 packages for new releases
 InterPacket Networks Inc.,    Develops, manages satellite-based
 Santa Monica                 IP network for delivery
                              of Internet services
Nomadix,                      Creates solutions for wide range of Internet
 Westlake Village             and wireless applications
 POPcast Communications,       Provides automated video networking services
 Los Angeles
Quisic,                       Creates business management education and
 Los Angeles                  training environments
                              for corporate and academic markets
Tornado Development,          Developer, marketer of the only carrier-grade
 EI Segundo                   Unified Messaging engine for ISPs, portals,
                              ASPs, telcos and wireless providers
Source: Growthink Inc.