Claudia Fan Munce, managing director of computer manufacturer IBM’s corporate venturing arm IBM Venture Capital, interviewed Arvind Sodhani, president of semiconductor company Intel’s investment subsidiary Intel Capital, about the next big thing last night at the Global Corporate Venturing Symposium .
The unit has been one the industry’s most successful for a decade, and Munce was keen to hear about any emerging trends Intel Capital has identified over the past year.
Sodhani revealed that drones have been significantly driving investments for Intel Capital, and are set to generate vast quantities of data, especially as cameras are upgraded to ultra high definition.
Intel’s focus has been on building the ecosystem surrounding drone technology, investing in the cloud, networking, wireless technologies and data analytics.
Similarly, the internet of things is another sector where Intel Capital is expecting significant growth, and Sodhani underlined that this has the potential to be a multitrillion dollar industry.
Here, the unit is backing both mobile networks and a startup developing a wide area network, though Sodhani said the future will probably see a combination of both technologies.
However, disruption in this sector is difficult as it is heavily regulated. The same goes for banks, Sodhani explained, where disruption seems inevitable, but also poses a major challenge due to regulations.
On the other hand, self-driving cars remain for now in the more distant future, though Sodhani elaborated that the market should see far more advanced cars within three to five years, equipped with sensors that make collisions nearly impossible.
China is another significant market opportunity that Intel Capital has identified, as the landscape has changed dramatically from one where companies merely copied US models to one where genuine innovation occurs.
Due to the economic realities of the country, the cost structure is a lot lower in China than in the Western world, but at the same time valuations are higher due to the huge market. Sodhani noted that this will make China-based startups highly competitive across the world.
When asked by a member of the audience about Intel Capital’s role in entering emerging markets and bringing them to success, Sodhani explained that the first investment in any new geography or technology is usually a failure, albeit an important one as it allows the team to learn from its mistakes.
James Mawson, editor-in-chief of Global Corporate Venturing, also took the opportunity to ask a question about potential pressure from the parent company to increase returns.
In response, Sodhani underlined the importance of a corporate venturing subsidiary to show financial returns and add strategic value to the parent company. In the case of Intel Capital, the value has always been the creation of ecosystem which the corporation can then exploit.
Sodhani closed with a warning, declaring that a unit can only survive cycles if it has the right resources. He said: “The nature of investing in this business requires staying power.”