Meet Concept Ventures

Justin Hibbard

Two partners at Applied Materials Ventures, the VC arm of semiconductor equipment maker Applied Materials, are buying part of the firm's venture portfolio and launching their own VC firm, Concept Ventures, Deal Flow has learned.

Fahri Diner and Julien Nguyen are pedigreed former entrepreneurs. Diner founded optical networking company Qtera, which Nortel Networks bought in 2000 for $3.25 billion. Nguyen founded personalization software maker Ezlogin, which sold to 724 Solution in 2000 for $127 million.

The duo has built an impressive portfolio at Applied, often bringing deals to, and co-investing with, top-tier VC firms. With VC firm Kleiner Perkins Caufield & Byers, they've backed startups such as Devicescape, Infinera, and eAsic (which Diner and Nguyen sourced and invested in personally).

Applied Materials Ventures has invested mainly in communications equipment, semiconductors, and software. Concept Ventures will home in on digital media. "If we overlap semiconductors, communications, and software with digital media, then we build expertise," Nguyen says. "We believe digital media is an area of high growth right now."

Nguyen says all of the positions that Concept will acquire from Applied are in companies related to digital media. Among those outfits is Grandis, a stealth startup that is developing storage technology that could be useful in portable media devices.

Concept is currently raising money from limited partners to fund follow-on investments in the portfolio companies acquired from Applied and to make new investments. Nguyen declined to comment on the projected size of the fund.

Nguyen and Diner will have to form new relationships with LPs since Applied Materials was the sole investor in Applied Materials Ventures. Applied chose to terminate its VC partnership in the fourth quarter of 2004 after contributing $25 million to the fund since 2001.

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