Marcin Hejka, managing director for Intel Capital, the corporate venturing subsidiary of semiconductor technology provider Intel, in Greater Europe and India, took some time out to speak to Global Corporate Venturing about the unit’s investment strategy and the region in general.
Hejka has been at Intel Capital since 1999 and was recently promoted from his position overseeing activity in Eastern Europe, the Middle East, Africa and Russia/CIS to a wider ranging role.
The move comes at a time when Intel Capital MDs are expected to oversee not only CVC investments but M&A deals and business development, but Hejka shrugged off suggestions that the unit was focusing more on strategy than returns in comparison to the past.
“I would say there is no real conflict between the two,” Hejka said. “Generally, it is not smart to compromise financial viability in the investments you do, just because what the companies are doing seems strategic. Companies that go bankrupt do not help anyone’s strategy.
“With all the investments we do, we try to make sure that they are strategic, and at the same time financially viable investments. The ultimate objective is to on one hand achieve the strategic benefits, but at the same time make sure we are a financially viable organisation. I think that is one of the things we have been doing well.”
Strategic relevance is probably more important for portfolio companies than for Intel Capital itself, as they gain access to Intel’s resources, he added. The unit’s investments currently focus on five ‘core pillars’ – the cloud and data centre technology, the internet of things, memory and programmable solutions, connectivity and Moore’s Law – but there is also room for technologies outside those areas.
“Our strategy has been changing and in terms of the five areas we have right now, those are the priority areas and we are focusing on them,” Hejka said. “We [also] have the initiative of investing in pathfinding opportunities.
“Those are basically opportunities that are not part of our strategy at this point in time just, for example, because they are active in areas that are just emerging and are still too small, and it is still uncertain whether they will succeed.
“We hope that many of them become one of the key strategic priorities going forward, but I think at this point in time we are focusing on those five areas and making that through opportunities in some new, emerging initiatives and technologies. But it is too early to judge whether any of them is going to become one of the priorities going forward.”
Intel Capital announced three deals covering Israel, part of Hejka’s region, last week, leading early-stage rounds for workload mobility technology developer Velostrata, service provider network technology provider Sedona Systems and cloud analytics startup Panoply.io, and taking a prominent role is an important part of the unit’s strategy.
“We lead the majority of the deals we do,” Hejka stated. “Generally we are flexible, so in most cases we do lead, but we are also able to be part of a round led by someone else. In some cases we are a solo investor but in 90-95% of the deals we do, we co-invest with other venture investors.”
Not a lot of venture capital investors have the experience in the range of economies Hejka does, and he stated that because the worldwide startup ecosystem has been developed, startup culture is now an important part of local technology ecosystems globally. Intel Capital has invested in about 60 countries and focuses on technologies rather than markets it finds exciting.
“But saying that, in our experience the technology innovation activity is concentrating around certain hubs,” Hejka said, explaining that the majority of the deal flow will naturally come from startup ecosystems with deep technology links, and which revolve around chain reactions where capital secured in an exit is used to fund new startups and attract additional investors.
“Those ecosystems are naturally producing larger deal flow, I would say the more shallow markets still have time to develop, and hopefully they will, but they are naturally shallower when it comes to producing deal flow.
“Historically, the hubs that were producing very healthy deal flow for us included Israel, London, Scandinavia, Russia, Central and Eastern Europe, and we see the French and Berlin ecosystems also producing more and more. I think in the near future the majority of the deal flow is probably going to come from those ecosystems that are already established, but at the same time we are absolutely not dismissing any opportunities coming from anywhere.”