Intel cash heading for home – Chipmaker’s VC fund to pursue digital goal

Intel Corp. will announce today the first group of investments from its $200 million venture capital fund set up to accelerate the chip giant’s digital home initiative.

The fund was started in January as part of the Santa Clara firm’s bold move to focus on the consumer electronics market and help turn the digital home into a reality.

Matthew Yi, Chronicle Staff Writer

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The four new investments include San Francisco’s Trymedia Systems, which makes security software that allows video game publishers to prevent piracy. It also serves softwaremakers that want to provide a layer of security for people who download their products via the Internet.

The other three firms have different pieces of the wireless home networking technology that would allow people to move digital content such as music and high-definition video from one room to another. They are Digital 5 in Lawrenceville, N.J.; Staccato Communications in San Diego and Wisair in Israel.

John Miner, the head of Intel’s investment arm, Intel Capital, is set to make the announcement today during his keynote speech at the chipmaker’s developer forum in Barcelona, Spain, said Intel spokeswoman Laura Anderson.

Although she would not say how much cash the chipmaker is pouring into each startup, she noted that its typical investments range from $1 million to $10 million.

Intel, which has more than $15 billion in reserves, has used its financial muscle in the past to promote initiatives within the industry. In 1998, it unveiled plans to pour $250 million into software firms that will make applications for its new 64-bit Itanium microprocessor. In 1999, it earmarked $500 million to invest in communications startups.

Gabe Zichermann, Trymedia’s vice president of strategy and communications, said Intel’s investment validates his firm’s technology.

"If there’s any company in (Silicon Valley) that you would want to invest in you, no one would be bigger than Intel," he said. "It’s cool."

Zichermann wouldn’t say how much money his 5-year-old company is getting, but said it will be used to expand business in Europe and Asia.

Van Baker, an analyst at market research firm Gartner, said that with tech firms rushing to dominate the consumer’s living room, he expects Intel to dole out its investment cash quickly. "Consumer electronics is a hot area right now, and it’s attracting a lot of players," he said.

E-mail Matthew Yi at [email protected].