Samsung sets up $100m fund for start-ups

Silicon Valley-based unit will offer seed funding for chip innovators in mobile and cloud markets, whose advances the firm can harness

Samsung has set up its latest venture capital fund, which will provide $100m in seed funding for component start-ups, as the Korean giant looks for the next big thing in mobile, cloud and M2M sectors, in particular.

The company also announced that it had increased its US-based corporate venture fund to $1bn and opened a new office in Silicon Valley to manage and coordinate its efforts to invest in and work with start-ups.

The company believes funding is heavily focused on software and web services these days, and it is harder for semiconductor innovators, with their higher risk and longer periods of return, to get off the ground. However, it is increasingly important for Samsung to stay ahead of the latest advances in its various chip and memory businesses, both for internal use by its mobile division and for the merchant market.

“Silicon Valley is the epicenter of disruptive forces, and we want to make sure we are part of it,” said Young Sohn, who will head up the new Strategy and Innovation Center. “A number of investors are running away from basic science, semiconductors, materials and display infrastructure, but we want to make sure those things are well supported. We are very proud of being very patient and oriented on physics and materials because if you solve those issues you can have tremendous leadership long term.”

As well as the US center, which is currently hiring to expand its 100-strong team, Sohn’s organization has an office in Israel and plans to open other R&D hubs around the world, with locations reported to include Cambridge, UK and other US cities such as Boston and Austin, Texas.

The group is specifically focused on companies with innovations that Samsung could leverage in the short to medium term, rather than on incubation or financial investment per se. It will also take a role in identifying acquisition targets and aims to provide a bridge between Samsung’s partners and activities round the world, with its massive R&D and acquisition resources in its native Korea.

The new $100m Samsung Catalyst Fund will focus on seed investments in component technologies targeted at high growth sectors such as cloud infrastructure, mobile security, e-health, next-generation user interfaces, and the internet of things. It will be headed by Shankar Chandran, previously general partner at Panoroma Ventures, who will report to Sohn. Sohn himself spent a decade at Intel and has also headed up Agilent and Quantum. Most recently he was CEO of communications chip start-up Inphi, which was funded by Samsung and went public in 2010.

The larger Samsung Ventures fund did 20 deals worth $160m in total last year, Sohn said. “Every year we add more money to the venture fund, and it is probably one of the top three corporate venture funds in America now,” he said. Samsung is also creating another Silicon Valley center, this one based in Palo Alto and focused on content and media developments