Intel Capital, which is Intel's strategic investment programme, with the objective of making investments in innovative technology start-ups and companies, has big plans for the local technology innovation market.
Sam Mensah, director of sub-Saharan Africa at Intel Africa, believes Intel Capital brings benefits to innovators because of its global operations and network of partners.
“The unique position of Intel is that we are a global investor and we will take them to the global market. We are a global technology network and we understand technology. Companies can also leverage Intel's contacts globally. We can put them in touch with major technology players who are a part of our extensive network and leverage those contacts.
“We find that in SA there are pockets of sporadic innovation, where people are forming companies and operating.”
As the local office has only recently been opened, Mensah says the focus now is on introducing Intel Capital to the industry and entrepreneurs. The first investment will be made soon, he says, adding that the first signing will depend on the complex and sometimes lengthy due diligence process.
Market development
Intel's investments in SA will be focused on investing in technologies that result in market growth, says Mensah.
“The focus in SA will be on market development. We see this as a major priority. Internet penetration rates in SA and Africa are low, and we want to facilitate and accelerate the growth and see more people beginning to own PCs. So we will be focusing on investments in the broadband space and wireless technologies.”
Mensah notes that investments will be made in companies of all sizes, but the focus will be on those in the “late-early stage” of development - which means they have a product, have customers and are looking to grow.
“Our sweet spot will be in the late-early stage. The deals are likely to be between $5 million and $20 million. But this will obviously depend on the company and the stage that it's in. Let me say though, that we don't have a cap. We don't have a ceiling on investments.”
Exceptions will only be made for cutting-edge innovations, Mensah adds.
“If a company is in its early stages and has a technology which is truly ground-breaking, and we believe that the technology has a future and no-one else in the world has this technology, we will invest in the company. But if it's only an application, then we will come later - when there are customers and it has started to generate some revenue.”
Promising landscape
Mensah says there were several encouraging factors that motivated the opening of offices in Africa.
“One of the reasons we decided to expand into SA was because of the work that the government has done. Government has done a lot to spur local innovation. There are also other encouraging factors, such as the small angel networks which are operating and that our private equity market was ranked higher than countries like Spain and Israel. There is also a promising private venture capital market.”
Mensah feels the SA government has done well - with the establishment of bodies such as the CSIR and IDC - and Intel Capital will work with existing structures to help companies grow and expand.
“When deciding to enter a market, you have to consider whether you can generate deal flow, and if there are enough companies to make an investment, and are we able to exit a company. We need to be able to exit the company and for this there needs to be a vibrant economy,” Mensah concludes.
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