Interview with Arvind Sodhani: Intel Capital isn’t backing off on venture

Arvind Sodhani is one of those investors who isn’t blinking. But he’s not your typical venture capitalist. Sodhani is the chief of Intel Capital, the venture arm of the world’s biggest chip maker. He just closed on a billion-dollar investment in Clearwire, a provider of WiMax broadband wireless service that has raised $3.2 billion total to create a next-generation cell phone network through a merger with Sprint. That’s just one of many bets Sodhani is placing. While other VCs may be panicking, he says Intel will keep a steady hand and invest in the best startups as it finds them.

VB: You recently closed on the billion-dollar investment in Clearwire that got started before the downturn and just closed after the downturn was underway. Did you have to have a discussion about a change in valuation?

AS: It was announced in May and had to wait for regulatory approvals, which just came recently. The valuation was agreed upon at the time of the signing, and the deal was pretty much done at that point in time. There was no valuation change.

VB: How is the downturn changing what Intel Capital does?

AS: Not much has changed on our side. We will continue to invest. My belief, shared by the CEO of Intel, is that you continue to innovate in a downturn, and innovation doesn’t stop because of slowdowns. We’ll continue to invest in technology innovation. The good news is valuations will be more attractive. I think other investors will pull back. We have heard a lot of stories about the venture capital community pulling back. Depending on the life-stage of the fund, VCs are not funding existing companies or new companies.

VB: So do you have to step forward to make the deals happen?

AS: We will continue to invest in the same manner that we always have. You will not see much of a pullback from us. But we will see a much different valuation picture. We are already seeing that.

VB: Do you have to go through some kind of triage with the portfolio?

AS: We are not as active as VCs are in redirecting startups to different business models. We help them redefine what they’re doing in light of the downturn.

VB: What are the latest numbers for your portfolio?

AS: We have 416 companies in our portfolio and the value is $2.162 billion as of Sept. 27. That does not include the $1 billion new Clearwire investment, but it did include the $600 million we already had in Clearwire.

VB: How do you feel about having so much of your portfolio in one investment?

AS: We are excited about it. It’s a network build-out in the U.S. It’s going to be the first 4G broadband wireless network being built in the U.S. Sprint, just before the closing, launched the Baltimore market successfully. They will launch one after the other.

VB: Is everything in place for the rollout?

AS: Our WiMax chip set development is on track and consistent with the development of the networks here and throughout the world. The biggest network deployments are here and in Japan.

VB: Are you concerned carriers will cast their votes with Long Term Evolution?

AS: No, we aren’t worried. LTE is two years behind WiMax. We haven’t seen any chip sets yet. There was a lot of noise about LTE three to six months ago and that has dramatically died down. I don’t see anybody making noise now.

VB: How similar is this downturn to 2001? What will Intel Capital be doing differently?

AS: In 2001, you had a technology bubble that burst, and the consequences of that bubble bursting were largely contained in the technology sector. What we have now is a very broad based decline. It would not surprise me if we saw a fairly large GDP decline in the