The whopping $740m investment by US-based chipmaker Intel in big data company Cloudera, announced as we were going to press, triggered a lively discussion on our LinkedIn group.
Contributors voiced expectations that this kind of deal was a form of merger and acquisition lite. One commentator, Nick White, of patent broker Tangible IP, said it “smells of M&A”, linking to a TechCrunch article in which an Intel spokesman said in order to acquire “a meaningful share” of the company, it had bought out “some existing stakes”. Cloudera quickly clarified “the majority” of Intel’s money had gone to the company.
However, academics think only about 5% of corporate venturing deals end up as M&A. Intel has also written big cheques to invest in telecoms operator ClearWire, at $600m, and €829m ($1.14bn) in ASML, which produces photolithography systems for the semiconductor industry. These have not yet ended up as acquisitions.
The deal secures a strategic stronghold in the Hadoop market – an open-source technology – with Intel saying Cloudera will develop Hadoop for Intel chips as its “preferred platform”. Computer World quoted an analyst from Endpoint Technologies Associates as saying that owning Cloudera could be used as a “bulwark” to stop servers slipping into UK-based microprocessor company ARM’s hands.
The Cloudera transaction is even more fascinating when you delve deeper into the syndicate backing the remaining $160m of the total $900m round. It includes Google Ventures and Michael Dell’s venture firm MSD Capital, lending even more credence to the theory that the information technology ecosystem is looking to secure a stake in how Cloudera progresses.
Even if the deal is not, as our LinkedIn group commentators thought, M&A on the sly, these big rounds and partnerships are certainly moving corporate venturing up the scale of strategic importance.
In some ways, having seen Intel use corporate venturing in such a powerful way to do business, it is no surprise that more groups are entering the realm. It also links to wider interest in using corporate venturing to expand the corporate innovation toolkit.
Arvind Sodhani, head of Intel’s corporate venturing unit Intel Capital, as well as directors Marcos Battisti, Marcin Hejka and Eric Jorgensen will all be speaking at our symposium on May 20 and 21, where we will hear more from their perspective as the world’s biggest corporate venturing investor.
This month’s issue also includes our annual look at the consumer sector, an innovative region piece on China and Japan, as well as the first in a monthly series of articles by Claire Lee, Silicon Valley Bank’s new head of corporate venturing, plus reports from our parent publishing company’s other two titles, Global Government Venturing and Global University Venturing, among many great contributions by expert commentators.