Intel Capital, the corporate venturing unit of US-listed chip maker Intel, has responded to internal research showed slow-moving boards were a primary cause of entrepreneurial failure, by leading and 60% to 80% of deals it takes part in as well as taking more board seats.
Arvind Sodhani, president of Intel Capital, told the IBF Corporate Venturing & Innovation Partnering conference that for 80% of its companies, "boards not acting fast enough" was a primary cause of companies being written down in value.
He said: "Whatever the issue, whether cash burn, management or products not selling, boards gave more room and if the board had acted sooner the company would have had a chance as the technology was fine. So we changed and have been leading more deals and sitting on boards."
However, he added that Intel Capital never acted unilaterally, partly for fear of lawsuits, and worked with the rest of the board to get consensus. Half of Intel Capital’s 200 staff work as investment managers and the rest on helping portfolio companies and providing links back to business units and third parties through its technology days and global investment syndicate with 32 venture firms.
Intel Capital aims to invest between $300m and $500m per year and has been leading about 60% of its US deals and about 80% of its overseas ones. Sodhani said it would probably invest between $300m and $500m this year, having provided $526m in 2011. Intel Capital struck 89 deals last year to take its total to about 400 but completed six flotations and sold 28 portfolio companies.
But Sodhani said it was currently "very strategic" in the deals it struck, which has resulted in specific funds to boost the ecosystem for Intel’s product range in Ultrabooks and other areas. Sodhani said it always wanted to deliver financial value over the long-term from its investment but added: "Our job [is also] to be the eyes and ears [for Intel] and be aware of any major technology shift so Intel has the jump on it. What I fear is missing a major trend but we have done a good job so far."