Gaule: Can you please give an introduction to ARM.
Beckloff: ARM is the world’s leading semiconductor intellectual property supplier and is a the heart of around 95% of mobile phones and moving into areas such as pads, braking systems, printers and other mobile devices. ARM partners are likely to ship over 8 billion chips with our designs this year and we have around 2,000 employees.
Gaule: Can you please give a brief description of the purpose of your venture, when it was formed and how the process occurs in your organisation.
Beckloff: Corporate venturing (CVC) is relatively new to ARM and the official kick-off for our current investment activity was 2009. We had done investing in the past, but not with a formalised process. Our investment activity is solely focused on furthering the overall strategic goals of the ARM Group which will support penetrating new markets, for example in low powered server chips. ARM tries to do roughly five investments per year and deploy £10m ($16m). The fund is around £30m with 13 companies in our portfolio.
Gaule: Can you give us an overview of the people in the team and the partners you work with.
Beckloff: The process is run through our corporate business development (CBD) group, which also looks after the overall corporate strategy, long range financial plan, investment and M&A (mergers and acquisitions). In the team we have three investment managers looking after the investments, one finance, and a technical analyst. As ARM only employs 2,000 people we are able to leverage the entire ARM executive team and I report into the executive vice-president for strategy. The CBD team usually presents to the executive committee or leads a specific strategy round table meeting which gives us quite a lot of linkage. An executive is usually also involved in an investment decision or the on-going interface with the business we have invested in. ARM also partner with other CVCs or traditional venture capital (VC) firms depending on the investment opportunity.
Gaule: Can you give us some insight to an interesting recent deal.
Beckloff: We invest in building the ecosystem for ARM and in obvious adjacent areas as in the example of low power servers. ARM is also interested in investing in businesses that are in markets that have not been disruptive for some time. We recently invested in an intelligent power semiconductor company that has the potential to add intelligence along the supply and transmission of power. The business could disrupt a rather ‘stodgy’ industry that has seen little innovation in recent decades. This then supports the desire for ARM to make the world more efficient in its use of power.
These investments are seen as strategic; some of these are two or three steps removed from where ARM is currently positioned but will support the future use of ARM technologies.
Gaule: What is your view on the current market conditions for starting a new venture?
Beckloff: It is extremely challenging at the moment and that was one of the catalysts for ARM setting up the venturing process to support start-up businesses where VC finance was waning. I believe this is a perfect time for starting a new venture. In a few years time the current economic uncertainty will have run its course. This would perfectly position a new venture that was started today for maximum value creation in a few years time. We are now probably at an investment vintage that we would not have seen since after the internet bubble in the early 2000s.
Gaule: What do you do to relax when you are not doing the Corporate Business Development and leading the investments?
Beckloff: I have a wife and three young children aged eight months, three years and almost five that are my complete focus when I am not working. Our current challenge is removing the stabilisers from their bikes, which may be more difficult than starting a new venture in the current environment.