By Jonathan Shieber

NEW YORK (AP) It is a cliche in the venture business that corporate venture capital is the first to jump out of the game when things look bad, and the first to jump back in when things start to pick up.

Well, corporate venture capitals are coming back.

The venture arms of corporations poured $5 billion into start-ups at the height of the dot-com bubble in 2000 and participated in almost 30 percent of all venture-backed deals, according to a recent survey of corporate venture capital by the global strategy group at Samsung Corp.

By 2002, that number had fallen to $1 billion and 15 percent of all venture-backed deals.

Now, the percentage of start-ups with corporate capital is on the upswing, and corporate venture firms are participating in nearly 20 percent of all venture-backed companies for the first quarter of 2005, according to data from Samsung published in April.

Even though corporations are investing in more deals, dollars remain constant, hovering around $1 billion since 2002.

“Corporate venture capital is back, but I wouldn’t say it’s back to what it was,” said Venky Ganesan, a managing director with Globespan Capital Partners. “We are emerging from the nuclear winter of corporate venture capital to a sign of spring. We’re not close to it being summer.”

The corporations that have venture arms range from information technology giants to industrial materials manufacturers. Many are re-evaluating their venture capital strategies in what appears to be a preamble to re-entering the venture game.

Foreign multinational corporations, like BASF AG, NTT DoCoMo Inc., Samsung Electronics Co. Ltd. and Vodafone Group PLC have either put down roots or deepened their commitment to the U.S. venture market in the past few years.

Not to be outdone by their international counterparts, U.S. companies are also taking steps to return to the venture fray.

Some, like auto maker General Motors Corp., are just beginning to shape their venture capital strategies and have yet to commit capital to new deals.

Others have been lured back to the table by market opportunities in new investment sectors such as clean technology, or by the promise of new revenue streams from intellectual property derived from research that can’t be applied in-house.

General Electric Co., Stamford, Connecticut, for example, has begun making equity investments through its venture-lending division. It’s part of its “Ecomagination” initiative, an overall involvement in developing what’s called clean technologies, according to GE.

Between the investment vehicles of GE Asset Management, GE Equity Capital Group and GE Venture Capital, there were at least 143 investments or acquisitions that GE made in 2000, according to Dow Jones’ venture-capital-research unit, VentureOne. By 2001 that number had fallen to 58 and in 2002 it was down to 24. GE’s investments bottomed in 2005, when the company took an equity stake in only one new deal. The two investments GE has made in January – the funding of Watertown, Massachusetts-based battery start-up A123 Systems Inc. and Ocean Power Delivery – are the first equity capital commitments so far this year.

Meanwhile, Microsoft Corp. has launched an initiative to generate additional revenue through the spinout and licensing of technologies developed internally. In exchange for license fees or an equity stake for Microsoft, a start-up can use technology based on the Redmond, Washington, company’s intellectual property.

So far, Microsoft has only taken an equity stake in one of the companies launched with help from its IP Ventures program, Wallop Inc San Jose. A new iteration of the social networking phenomenon based on internal research out of Microsoft’s development laboratories, Wallop was incubated at Microsoft before it emerged from stealth in March.

Microsoft has invested in other start-ups since the dot-com crash, but Wallop is the first spinout from the IP Ventures initiative. It makes at least the fourth investment or acquisition of a start-up company from Microsoft this year, according to data from VentureSource. In 2005 Microsoft invested or acquired at least seven start-up companies, Dow Jones’ VentureSource data show. That’s the most activity from Redmond since 2000. Then, at the height of the bubble, Microsoft invested or acquired 24 start-ups.

Neither GE nor Microsoft responded to information requests regarding their investment history.

Even big media is back in the venture game, with News Corp.’s return through its Fox Interactive Media division. In April Fox Interactive invested in the $13.5 million (euro10.7 million) financing of Simply Hired Inc., an online job board. It was the first investment from News Corp. since the company’s ill-fated ePartners Inc. venture fund.

Launched in 1999, ePartners was discontinued in 2001 after receiving $750 million in capital commitments from News Corp.

On top of the return of these reticent investors, U.S. corporations that remained active in the market throughout the downturn are expanding and turning their attention abroad, adding fuel to the corporate fire.

For instance, Intel Corp., of Santa Clara, California, has made a point of expanding their activities internationally, looking for investments in Brazil, China, India, the Middle-East and Russia, even as foreign investors are trolling the continental U.S.

The firm has dedicated $250 million for venture investments in India, $200 million for investing in China, $50 million for Brazil, and another $50 million for the Middle East.

While Intel may be the biggest spender abroad, other corporate investors who have stayed the course, such as Motorola Inc. and Cisco Systems Inc. are also logging frequent-flyer miles in the same markets.

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