Since its launch in 1991, Intel Capital has invested a total of $12.5bn in more than 1,550 startups, focusing on artificial intelligence, autonomous technology, data centres and cloud, 5G, next-generation computing and a range of other disruptive technologies.
Wendell Brooks, president of Intel Capital and chairman of the GCV Leadership Society, took the reins of the unit at the start of 2016 after the retirement of Arvind Sodhani and quickly set about installing a thesis of delivering value to its portfolio companies by focusing on the people. He has homed in on the power of partnerships, not just within Intel and its portfolio companies, but by working with other corporate venturers to improve the value proposition. The goal is for a quarter of Intel’s deals to be syndicated with other CVCs.
Brooks previously told Global Corporate Venturing, which has set up the Connect platform to facilitate such CVC collaboration and deal syndication: “I am committed to growing the CVC ecosystem by building syndicates where we provide better outcomes for entrepreneurs.”
Shortly before Brooks replaced Sodhani, Intel Capital abandoned carried interest, a form of profit-sharing for the investment team if a company is sold or floated profitably. The decision to remove it, combined with a changeover at the top, led to several senior executives leaving to form new funds or take on senior positions at other entities.
Intel recently reinstated carried interest for its employees and moved towards backing a smaller number of deals with larger amounts, resulting in the firm laying off a quarter of its 60-person investment team last year. Intel capital has reduced its entire team from about 115 employees in 2014 to about 68 this year, according to data uncovered by Global Corporate Venturing from Intel, LinkedIn and other public sources, although a number of Intel Capital people have rotated from and back to the parent company, such as Arturo Litvin, Curtis McKee, Eric King, Erica Wu, Greg Scott, Manish Tangri and Vijay Reddy.
Peter Delevett, spokesman at Intel Capital, on reviewing the GCV data and analysis said: “There were 15 names on your spreadsheet you indicated you did not know whether they were still at Intel Capital or had left. Of those 15, I can tell you nine are still here or in another part of Intel. I would prefer not to get into specific names, out of respect for individual privacy.”
The decision to cut the team supported the thesis of adding the most value for its portfolio companies through a focused approach led by Tamiko Hutchinson, as well as increasing the focus on greater partnerships and co-investments with corporate venturing peers through analysis and relationships formed by Lee Sessions.
Many of those leaving Intel over the past five years have gone on to become senior leaders or founders at top firms. As a result, the corporate has amassed a network of deal-makers in both corporate venturing aned venture capital.
Victor Westerlind left to be managing director at GE Ventures, the corporate venturing arm of industrial conglomerate General Electric, while Richard Hsu is now leading Southeast Asia investments for quantitative trading and technology firm Susquehanna International Group.
Among others leaving for corporate or venture capital peers, Alexandre Villela became a managing director at Qualcomm Ventures covering Latin America, Arjun Metre has joined the board of the US National Football League’s OneTeam Collective accelerator, Bhavanipratap Rana has become a partner at Amadeus Capital Partners, Harry Singh has taken on strategic partnerships and transactions at Facebook, Igor Taber became head of corporate development, M&A and strategy at DataRobot, Ken Asada, managing director at NTT Docoomo Ventures, Kostas Katsohirakis, vice-president of M&A at Applied Materials, Tim Danford, a managing partner at Freestone River Group, Sumeet Jain, a founding partner at 7 Global Capital, Tobi Oke, a managing partner at V8 Capital Partners, and Xiaoguang Sun and Chris Pu have become head of China at Robert Bosch Venture Capital and Telstra Ventures respectively.
Outside corporate venturing, Raj Gollamudi is now at OnePrime Capital, and Rob Rueckert and Ken Elefant both have roles at private equity firm Sorenson Capital, Carey Lai has become founder and managing director of Conductive Ventures, Erik Jorgensen a venture and growth equity investor at Macquarie Capital, Karol Szubstarski and Marcin Hejka co-founders at OTB Ventures, Mahesh Vaidya, general partner at Epsilon Venture Partners, Marc Yi and Raj Gollamudi, managing partners at OnePrime Capital, Laura Oliphant, managing partner at Spirit Ventures, and David Thomas a managing director and partner at Sailing Capital Advisors (Hong Kong).
Still others have moved into entrepreneurial positions. Maxim Krasnykh is now chief operating officer at Gett, while Ricardo Arantes and Sudheer Kuppam are respective CEOs of OData and Zebi.
Sean Cunningham is currently managing director at investment firm Forgepoint Capital. During 25 years at Intel, he worked in multiple management roles, most recently director of strategic investments where he was responsible for enterprise and internet security technology investments. With a strong track record of deal-making and networking in the cybersecurity industry, Cunningham left Intel Capital to join a couple of industry colleagues in raising a $300m fund focused on the sector.
He told Global Corporate Venturing: “The Intel Capital platform enabled me to build a deep network of VC colleagues, entrepreneurs and CVC investors to extend my career with an institutional investment platform. One of the biggest lessons I learnt at Intel was collaboration. Intel Capital was a big machine, coupled with the business units and internal legal and finance it was imperative to collaborate. There is incredible power in leveraging these teams.”
With Intel’s training laying the foundations for his successes at Forgepoint, Cunningham is still reaping the benefits of the firm’s network. “The alumni network is deep and provides introductions, dealflow and opportunities for our portfolio companies. Having trusted former Intel Capital colleagues in influential positions in companies and multiple VC and CVC firms is a benefit that keeps on giving.”
Another former staff member making waves in cybersecurity is Marcos Battisti, formerly vice-president and head of Western Europe and Israel at Intel Capital. Since leaving in 2015 to become managing partner at C5 Capital, Europe’s first dedicated cybersecurity fund, he has co-invested on a couple deals alongside his former corporate employer.
In March 2017, C5 Capital led a $22.5m in series C round for US-based storage management technology producer Reduxio Systems, investing alongside Intel Capital. The investment firm and Intel also teamed up to back Panoply, a Tel Aviv and San Francisco-based startup working on analytics cloud infrastructure technology for enterprises,
Battisti added: “I would proactively look to Intel Capital if I feel they can bring something to the table and if it makes sense and is the right time. Intel behaves correctly, has a good approach and is serious – that goes a long way with me.”
C5 is currently evaluating a deal and Battisti said he would look to Intel as a first co-investor. However, he stressed that this was not always the case. “There is another company we are keeping an eye on, but it just would not be the right time for Intel to come in.”
For Battisti it comes down to finding the right people rather than just the big name, specifically those that have the VC mentality of building a company, echoing Intel’s push for a focus on people.
“Having Intel onboard is always a positive – there is no negative to that name – but the question for me is what positive aspect can they bring, and do they behave like investors. That all comes down to the people. I am a guy that wants to build successful companies, which was what I learnt at Intel. They have great people on board, which is why we have partnered them and will again in the future.”
In March 2018, William Kilmer, previously managing director for UK, Europe and the Middle East at Intel Capital, joined Battisti at C5 to head the firm’s second fund.
Marlon Nichols, a former director of investments for the Intel Capital Diversity Fund and the software and services investment sector, had a vision of building his own firm with a different investment thesis. To realise his ambition and with the experience of working for Intel, Nichols left to form early-stage VC firm Cross Culture Ventures in 2015.
Cross Culture has yet to find the right deal for collaboration with Intel, though because of his connections there he is expecting that to change in the near future. “Intel has produced many high-calibre investors that are now leading venture firms around the globe. It is a terrific network that we have the privilege of tapping into from time to time. It is one of the largest tech companies in the world with influential relationships to many of the largest companies in the world.”
In addition to the network, Nichols told GCV he learned how to evaluate and negotiate deals during his time at Intel and had the privilege of learning from peoploe such as Dharmesh Thakker and Scott Goering, both now at Battery Ventures, and Alex Marquez, now at Experian Ventures.
He also worked closely with Lisa Lambert, who was previously managing director of Intel Capital’s software and services group. She joined National Grid Partners (NGP), the corporate venturing arm of energy supplier National Grid, as chief technology and innovation officer in January last year.
She was not alone in making this move, NGP’s founding team includes Kareem Fahmy, who spent four years as senior director of global business development at Intel Capital, Pradeep Tagare, formerly an investment director at Intel Capital India, Patrick Walsh, another director, and Daniel White, a finance manager at Intel Capital. The firm has already tapped Intel Capital connections to co-invest in a $15m funding round for US-based edge computing technology developer Pixeom.
Another former Intel Capital executive who has used the Intel training and network as a springboard to a career in the industry is Sanjit Dang. He ended his nine-year stint as an investment director at Intel Capital in 2018 to co-create U First Capital, which provides venture-capital-as-a-service for corporations.
He said: “Most corporations are increasingly looking for growth areas from external innovation, and hence creating new venture capital funds. U First Capital is uniquely positioned in this market via a venture-capital-as-a-service model under which we create a dedicated investment fund for each corporation.”
The idea is to offer high strategic value to the corporation while generating high financial returns, building on Dang’s knowledge of the industry through his time at Intel. “Intel Capital is at the pinnacle of the CVC space and other corporations look up to it. The most important lesson I learnt at Intel Capital is that if you help entrepreneurs tremendously, you bring strong strategic and financial value to the corporation as well.
“Intel’s deep and wide network is a key differentiator in the VC market since Intel has relationships with the CEOs of the enterprise world and it can leverage that to the benefit of its portfolio companies.”
Other long-serving or high-ranking executives, such as Bryan Wolf and Christine Herron, have moved on while Joseph Ngo retired after spending more than 28 years at Intel Capital. Keith Larson, vice-president and managing director, also recently announced his decision to retire, ending nearly 23 years there.
Following the announcement, Brooks said: “Keith has had a long history of finding the best investments for Intel Capital, and we appreciate his many contributions. He has left a great legacy not only in investments but also in the people he has developed. We will miss him and wish him all the best in his retirement.”
Brooks has been promoting the next generation of talent at the firm, including Nick Washburn to chief operating officer, from where he manages Lee Sessions and its CVC partnerships program, Anthony Lin to cover all ex US deals as vice-president, and Andrew Fligel to managing director.
Brooks has also notably been devolving greater responsibility to other vice-presidents, such as Dave Flanagan, Tamiko Hutchinson and Trina Van Pelt, while he links Intel Capital with the parent company’s strategic growth units, including equity investing, mergers and acquisitions (M&A) and new business incubation.
As an extension of his inorganic growth efforts, Brooks headed Intel’s New Technology Group last year to develop new technologies and businesses internally. Intel said: “He redefined the portfolio to align with the team’s core mission and changed the model to focus on nimble innovation as the Emerging Growth Incubation Group.”
Brooks also created the Intel Sports Group as a product of inorganic and organic efforts and led the acquisitions of Altera and Mobileye, both of which have been key elements of Intel’s expansion into data servers and mobility.
Such smooth succession planning while maintaining deal focus is relatively difficult, even for storied institutions, such as independent venture peers Kleiner Perkins, where there was a split when Mary Meeker left to set up a growth-stage firm, Bond, and raised $1.25bn for its debut fund.
The process for succession and rejuvenation can be harder to manage during a period of strategic repositioning in the parent company. Robert Swan was formally made CEO of Intel in January having previously joined in October 2016 as chief financial officer before becoming interim CEO in June last year following the departure of Brian Krzanich. In January, Swan said: “This is an exciting time for Intel – 2018 was an outstanding year and we are in the midst of transforming the company to pursue our biggest market opportunity ever.”
In this context, Intel Capital’s role in this data-centric company is clear – data storage used to be a burden 30 years ago but now it is affordable and so potent that data is being described as “the new oil”. Swan announced his first big decision last month to stop developing 5G mobile phone modems for Apple’s iPhone. One Intel executive described the move as hugely significant for a company moulded from Silicon Valley’s semiconductor heritage, but indicative the new “fewer larger deals” mandate set by Brooks that would also be coordinated more easily with other innovation strategies.
Brooks said last year: “We are deliberately reducing the number of new investments, from 60 to 70 deals per year to 30 to 40, while increasing cheque size to take leadership positions in rounds with active board seats instead of observer rights.”
Intel Capital this year has already invested at least $117m in a total of 14 startups covering artificial intelligence, communications, manufacturing and healthcare technology. The deals were announced at Intel’s Global Summit and form part of a planned provision of $500m annually by Intel Capital. The unit provided a total of $391m to 89 companies in 2018, of which 38 were new investments and 51 were follow-on deals, and co-invested alongside 84 other CVCs in 63% of deals, compared with $690m in 42 new and 45 follow-on deals in 2017 with 51% of deals syndicated with other CVCs.
Brooks at his summit said the investments represent “areas that will become increasingly essential in coming years as the linchpins of a smarter more connected society”.
The batch includes companies headquartered in Canada, Israel, the UK and the US, and the structure of the rounds represent the unit’s increasingly prevalent strategy of taking larger more strategic positions in portfolio companies. It was lead investor in 12 of the 14 deals.
The investments include AI system-on-chip technology provider Zhuhai Eeasy Technology, AI chipmaker Untether AI, e-commerce technology producer Cloudpick and SambaNova Systems, developer of a computing platform designed to provide the basis of data analytics and machine learning applications. Others included Edge computing software platform operator Pixeom, ethernet device maker Tibit Communications, 3D gaming platform Polystream, brand-focused networking platform Mighty Networks, healthcare analytics platform operator Medical Informactics, pathology technology provider Reveal Biosciences, enterprise AI technology producer Landing AI, engineering simulation software provider OnScale, semiconductor technology producer Qolibri and ProteanTecs, a developer of chip telemetry for electronic systems.
During the summit, the unit also announced an investment in HBCU.vc, a non-profit organisation that helps teach Hispanic students and students from historically black colleges and universities about VC and entrepreneurship. Intel and Intel Capital are partnering HBCU.vc to offer mentoring, training and real-world experience.
Brooks said: “Intel has driven disruption for the last 50 years, changing the way we live by making compute ubiquitous. Intel Capital is continuing that legacy of disruption with these investments.”
And he might have added, with a new generation of colleagues supported by plenty of retained institutional knowledge to support them.