Intel Capital, the corporate venturing unit of the eponymous US-listed semiconductor and data company, has begun making profit payments again.
In a networking reception at Intel’s headquarters last week, Wendell Brooks, president of Intel Capital and new chairman of the GCV Leadership Society, confirmed a story by Private Equity (PE) News that he was reinstating carried interest, a form of profit sharing for investors if a company is profitably sold or floated.
Intel had done away with carry for its investment staff shortly before Brooks became president of Intel Capital about three years ago, he told PE News.
The decision, together with the changeover process from former head Arvind Sodhani to Brooks, helped lead to the departure of a number of senior executives from Intel Capital, including Lisa Lambert, who now runs National Grid Ventures, and Marcos Battisti, who took a managing partner role at venture capital firm C5 Capital.
In the summer, Intel Capital also laid off a quarter of its 60-person investment team, as the firm moves to a model where it makes a smaller number of larger deals more closely related to its parent company’s core business, according to PE News.
One of the investors reportedly departing is Christine Herron, an early-stage investor who was also co-lead of Intel Capital’s Diversity Initiative – formerly known as the Diversity Fund – a program that backs founders who are female or in underrepresented minority groups, as well as those who are lesbian, gay, bisexual or transgender, disabled or veterans.
Herron, who had been at the firm eight years, was unavailable to comment. Intel Capital will continue operating the Diversity Initiative program under Trina van Pelt, a GCV Rising Stars award winner in 2017.
Under Brooks, Intel Capital has been moving over the past few years toward backing a smaller number of deals with larger amounts and has pushed for greater partnerships and co-investments with its corporate venturing peers.
Brooks told PE News it did not make sense to have 60 investment professionals aiming to make 30 deals a year, which is about half the number of deals the firm did annually in the years before he took charge in 2015. He added that the decision was “gut-wrenching” but was necessary to support the new focus and to add the most value for its portfolio companies.
“There is deal creep where you want to do more than 30 deals a year,” Brooks told PE News. “It finally dawned on me that we had a structural problem.”
The firm will also no longer participate in seed-stage deals, but will still take part in venture deals at the series A, B, and C stages, with the aim of investing about $400m per year. Brooks said the unit will continue to invest across a variety of areas including artificial intelligence, cloud computing and the internet of things, but it intends to move away from sectors such as e-commerce and related areas.
So far this year, Intel Capital has invested in 31 new companies and 41 follow-on deals, investing a total of $252m, according to the company. The unit has invested more than $12bn since 1991, in more than 1,500 companies globally.
