Santa Clara’s Applied Materials has closed its venture capital arm, with apparently no explanation other than the filing it made to the SEC recently (wording contained in extended entry below).
It’s the latest sign of how corporate venture efforts are the first to shut down when times get tough, and how venture capital firms committed over the long term (typically with individual funds lasting ten years) are better suited for the duration.
The background, of course, is that Applied Materials last month said it expects first-quarter orders to drop 35 percent, amid a lull in the semiconductor industry.
We connected with Julien Nguyen, one of the two managing partners of the small venture fund, called Applied Materials Ventures. He said it was unfortunate that Applied’s filing was made before he and his partner, Fahri Diner, could announce a transition strategy. They’re still in the process of doing that, and say they’re committed to finding a way of supporting the companies they funded.
Applied Materials Ventures was designed to be the “eyes and ears” for the semiconductor company, with Nguyen and Diner monitoring the start-up terrain to help Applied stay up with tech trends. They were supposed to invest in semiconductor, communications and nanotech companies, but never found a suitable nanotech opportunity.
Some of the venture arm’s investments include Infinera, Instant802 Networks, Grandis, Menara, M-Stream, FlexLight and Takumi. The venture firm did sell M-Stream to Broadcom about six months ago, for a profit.
Note: We’ve added an update at the end of the fundraising “marketing” item discussed yesterday.
Applied Materials Ventures I, L.P. (the Fund) invests in privately-held, early-stage companies engaged in developing systems, components and devices based on nanotechnology and/or communications technology for specific applications and products. The Fund is a limited partnership, with Applied as the sole limited partner and an independent party as the general partner. During the fourth quarter of fiscal 2004, Applied exercised its right to limit capital contributions to the Fund to $25 million and to elect to terminate the partnership. As a result, under the provisions of the partnership agreement, the partnership will be dissolved, and the activities of the partnership will be concluded six months following the election to terminate the partnership. Appliedï¿½s cumulative capital contributions to the Fund totaled approximately $16 million through October 26, 2003 and $23 million through October 31, 2004….
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