AMD Ex-President Raza Forms Funds That Will Focus on Communications
By DEAN TAKAHASHI, [email protected]
THE WALL STREET JOURNAL, 09 November 1999
Copyright © 1999 Dow Jones & Company, Inc.
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As president of Advanced Micro Devices Inc., Atiq Raza used to compete
against some of Silicon Valley's high-tech heavy hitters. Nowadays, he is
hitting them up for money. Since resigning from the presidency of AMD in
July, Mr. Raza has worked 20-hour days forming two new venture-capital funds
focused on communications -- thus joining a growing number of former top
executives trying to make big money investing in start-ups rather than
running a big company. Other notables who have joined the venture-capital
crowd include James Barksdale, former CEO of Netscape Communications Corp.,
James Clark, cofounder of Netscape, and Gil Amelio, former CEO at Apple
Computer Inc. and National Semiconductor Corp.
A Basis for Confidence
While they are newcomers to a business with plenty of established stars,
these executives think they can set themselves apart from the pack because
of their familiarity with certain technologies and markets. "I'm finding
there is a lot of venture-capital support for someone with a track record of
managing technology," says Mr. Raza, who made about $30 million in 1996 when
he sold the start-up NexGen Inc. to AMD for about $615 million, a hefty
price for a company with only 140 employees at the time. The first of his
funds will be a $25 million fund called Raza Venture Fund A, and its
investors will include a "who's who of Silicon Valley" entrepreneurs such as
Sun Microsystems Inc. co-founder Andy Bechtolsheim and Rambus Inc.
co-founder Michael Farmwald. The fund will invest in business-to-business
electronic-commerce start-ups, as well as optical-networking technology,
high-bandwidth wireless technology and network processing chips. "A lot of
the venture people are focused on the Internet and nothing else," says Mr.
Bechtolsheim. "Atiq is eminently qualified to judge a lot of the chip
start-ups, like whether they have the right talent and plan. [Venture
capitalists] can pick a company and attend board meetings, but there's a lot
more value added when you add someone with operational experience." The
second fund is expected to be a $100 million to $125 million fund, dubbed
Raza Venture Fund I, in partnership with various established Silicon Valley
venture capitalists such as New Enterprise Associates. But Mr. Raza says now
that demands on his time are so tight that he may skip this fund and move on
to a third idea.
In that business, Mr. Raza says he may start a consulting firm, much like
entrepreneur Bill Gross's ideaLab! incubator firm in Pasadena, Calif. Mr.
Raza says he would offer management-consulting services to start-ups
associated with his venture investments. Mr. Raza has also joined the boards
of 10 companies, among them: Nishan Systems Inc. in San Jose, Calif.; Siara
Systems Inc. in Mountain View, Calif.; VxTel Inc. in Fremont, Calif.; Magma
Design Automation Inc. in Cupertino, Calif.; and SwitchOn Networks Inc. in
Milpitas, Calif. Mr. Raza is setting up an office in San Jose, Calif.
Reasons for the Move
Why the shift from microprocessors to communications? Mr. Raza says, "The
economic value has shifted from the desktop to communications, such that
microprocessor performance improvements offer a smaller benefit to the
productivity of users in comparison to communications improvements." For Mr.
Raza, the shift to venture capital could mean working with former
adversaries. He was once scheduled to be a witness against Intel Corp., an
AMD foe, in the Federal Trade Commission's antitrust lawsuit before that
matter was settled earlier this year. Asked what that means for his new
venture's relationship with Intel, a major purchaser of communications
companies, he says, "I don't look upon Intel as someone to wage war against.
Intel is a major player, and, who knows, maybe a future friend."