Qualcomm Follows the Pack, Sets Up Venture Fund
Updated from 4:20 p.m. ET
Qualcomm
(QCOM) - Get QUALCOMM Incorporated Report
on Tuesday became the latest company to launch a venture capital unit, saying it would commit $500 million to
Qualcomm Ventures
for investment over four years to push its CDMA (code division multiple access) technology.
Investments will be made in startup companies that support the adoption of CDMA and "make the wireless Internet a success," said Jeff Jacobs, Qualcomm's senior vice president of business development who'll direct the unit. Those areas include communications devices and applications; wireless communications components and infrastructure; and Internet infrastructure, content and services.
The company's investments will average $10 million, mostly in early-to-midstage private ventures, officials say.
Qualcomm, which uses its CDMA technology in chipsets for mobile phones and licenses the technology, isn't new to the investing game. "Qualcomm has been an active investor for a few years now and they are just formalizing their venture strategy," Barry says. Past investments include
Handspring
(HAND)
, maker of the
Visor
handheld computer;
Haht Commerce
, an e-commerce management software concern which filed to go public last week; and
TheStreet Recommends
Phone.com
(PHCM)
, a maker of software for wireless access to the Internet.
There already are about 350 corporate venture arms worldwide, with 300 of them in the U.S., says Dave Barry, senior editor of
Corporate Venturing Report
, a Wellesley, Mass.-based newsletter. Most were established in the last two years.
Qualcomm's strategy largely mirrors that of companies such as
Intel
(INTC) - Get Intel Corporation Report
, whose
Intel Capital
unit makes investments in a bid to boost the use of the company's technology.
For many of these companies a monetary return, the usual goal of venture capital firms, is less of a concern. "Our priority is the strategic return," Jacobs noted, though he said that financial returns are important.
In addition, many corporate venture arms are relatively small, especially in light of the billion dollar funds recently raised by venture capital houses.
Ericsson Venture Partners
-- set up with money from wireless giant
Ericsson
(ERICY)
, investment bank
Merrill Lynch
and Swedish conglomerates
Investor AB
and
AB Industrivarden
-- was
seeded with $300 million in August.
Palm Ventures
began life in September with $50 million from its parent
Palm
(PALM)
, maker of the popular
Palm Pilot
.
There are exceptions, of course.
Chase Capital Partners
is a venture capital firm in the traditional mold. Backed primarily by
Chase Manhattan
(CMB)
, it manages a $20 billion portfolio. (Chase Capital has invested in
TheStreet.com
(TSCM)
, publisher of this Web site.)
"If you look at Chase, you can make the argument that Chase is a public venture capital fund that happens to be in the business of commercial lending," says Joseph Bartlett, a lawyer with
Morrison & Foerster
, a law firm that works on deals for venture capital houses, and the author of
Fundamentals of Venture Capital
.
The bottom lines of Chase, Intel and
Microsoft
(MSFT) - Get Microsoft Corporation Report
, among others,
benefited from these venture units when the market was climbing. But with the
Nasdaq
sliding, despite Tuesday's advance, companies will have a tougher time generating returns that'll help earnings. Chase, for instance, already has seen the market's
weakness affect its results.
