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Intel Capital invests Rs 54 crore in Bangalore-based startup NxtGen Datacenter

BANGALORE: Intel Capital has invested more than Rs 50 crore in a Bangalore-based startup NxtGen Datacenter and Cloud Technologies that offers data storage services to corporations in India. 

The sizable investment by the venture capital arm of the world's largest computer chip-maker signifies the growth potential for such services in Asia's third-largest economy. 

For NxtGen, the $9 million (Rs 54 crore) investment is the first round of funding, and is in return for an undisclosed equity stake, a senior executive at the company told ET on condition of anonymity. A senior official at the Intel Capital confirmed the investment. 

Demand for data centre and storage services, a market that used to be dominated by leading telecom services provides such as 
AirtelBSE 0.47 %, Reliance CommunicationsBSE 1.94 % and Tata CommunicationsBSE 1.87 %, has been growing in India as large corporations including banks and media companies look to outsource storage of basic corporate data. Technology market researcher IDC valued the third-party data centre opportunity in India at around $671 million (nearly Rs 4,000 crore) by the end of 2012—a growth of 36.5% from the year ago period. 

"In the third-party data centre segment, telcos continue to hold the largest market share. Among the pure-play service providers, Netmagic has further consolidated its position, with a healthy and growing focus on managed services," said 
Ravikant Sharma of IDC India. 

Early last year, Japan's 
NTT Data bought a 74% equity in Netmagic for about Rs 900 crore. 

Intel Capital has invested in over 25 companies in India, including travel portal Yatra, online retailer 
FashionAndYou and Happiest Minds, the information technology services company founded by former MindtreeBSE -0.50 % chairman Ashok Soota. Globally the chip-maker's venture capital arm has invested nearly $11 billion in over 1,250 companies across 54 countries. 

NxtGen was founded in May last year by AS Rajgopal a veteran in the datacentre space who has previously worked with Tulip Data City, and Reliance Communication's datacentre business. 

The company has a cloud data center in Bangalore and plans to launch another in Delhi and Mumbai. The Bangalore-based company, which is targeting revenues of Rs 500 crore in next three years, has acquired around ten acres of land in the outskirts of Bangalore for setting up an advanced facility.