New Leader at Intel Capital Adjusts Strategy as Global Summit Opens
Intel Capital has identified 12 technology startups that have received a total of $38 million, highlighting its venture investment focus on innovations in self-driving cars and machine vision, the Internet of Things, sports and health, drones, and virtual reality.
The recent funding deals that Intel Capital laid out in San Diego Monday, on the first day of its 17th annual global summit, also reflect the strategic thinking of Wendell Brooks, who took the helm at Intel Capital about a year ago as longtime president Arvind Sodhani retired.
Intel Capital is the corporate venture and deal-making arm of Santa Clara, CA-based semiconductor and technology giant Intel (NASDAQ: INTC). Brooks joined the division in 2014 after spending 23 years as an investment banker in Europe and the United States, but his strategic vision for the future of digital technology and computing is only now becoming manifest.
In an interview last year, for example, Brooks voiced his enthusiasm for investments in automotive-related technologies like advanced driver assist systems and 3-D camera technology—and his interests were reflected in several deals Intel Capital disclosed Monday:
—Perrone Robotics, based in Charlottesville, VA, has been developing a software platform for autonomous vehicles and general robotics that founding CEO Paul Perrone said would be to robotics what Windows is to computers and Android is to smartphones.
—Embodied, based in Pasadena, CA, and founded by USC computer science professors Paolo Pirjanian (the former iRobot CTO) and Maja Matarić, are developing robots to care for people.
—Chronocam, based in Paris, France, has been developing computer vision technology that mimics the biology of the eye for use in self-driving cars and IoT devices.
Including the 12 startups highlighted yesterday, an Intel Capital spokesman said his organization has invested $291 million in 31 new companies so far this year, with another $155 million put into 53 follow-on deals (for a total of nearly $447 million). That’s roughly the same investment pace as 2015, when Intel Capital invested a total of $514 million in 63 new companies and 79 follow-on deals.
Brooks said he is looking to invest between $400 million and $500 million a year in tech startups that currently lie just beyond the “virtuous cycle of growth,” but whose technologies Intel Capital expects to become more widely adopted in the future. The idea is to invest in startups that are not already part of Intel’s corporate business units, which comprise everything from cloud and data center technologies to the Internet of Things and mobile devices.
“We think of the virtuous cycle as the way things are going to work five years from now,” Brooks said in an afternoon keynote address to some 1,100 executives and entrepreneurs who attended the summit. But Brooks said Intel Capital should focus its investments on disruptive technologies that lie just beyond Intel’s core business strategy.
“We need to be on a path-finding mission to find tangential investments,” he told reporters. “We’re aligned, but not overlapping, is the way I like to look at it.”
In a significant change, Brooks said he wants to reduce the number of companies in Intel Capital’s portfolio—a shift that precipitated a slew of reports in March that Intel Capital was exploring the idea of selling a big part of its portfolio investments. By May, Brooks said Intel Capital had decided not to sell part of its portfolio—a position he restated yesterday.
“There is not going to be a sale,” Brooks said during his keynote.
Rather, he wants to make bigger investments in fewer companies—and to gradually reduce the 400-plus portfolio companies he inherited to what he regards as a more manageable number, probably somewhere between 250 and 300 companies.
Under Brooks, Intel Capital has continued to invest consistently across the gamut of early through late-stage technology startups. Intel Capital’s average investment this year is probably about $10 million, Brooks said, but he noted that Intel Capital invested $80 million of the $120 million that went into last month’s Series B funding at Thalmic Labs, a wearable technology startup based in Waterloo, Ontario (Canada). Thalmic has developed an armband that uses the electrical activity of your muscles to control computers and other electronics with particular gestures.
He sees Intel Capital acting more frequently as a lead investor in syndicated deals, and said he also wants Intel Capital to play a more active leadership role on the boards of its portfolio companies. He also highlighted Intel Capital’s Diversity Fund, which has a charter to invest $125 million over five years in startups led by women and under-represented minorities. “We’re going to encourage talent diversity across all of our portfolio companies,” Brooks said.
Brooks noted that Intel also invests between $10 billion and $12 billion a year on its own technology research and development, with another $5 billion allocated to acquire technology companies like San Diego’s Nervana Systems.
Much of those expenditures are focused on projections that the ecosystem of smart and connected devices—i.e., the Internet of Things—will grow from about 5 billion devices today to more than 50 billion devices by 2020. To make that possible, Brooks laid out four investment themes that show where Intel Capital is headed:
—Better networking through the implementation of 5G networking technologies.
—More cloud computing capabilities, including technologies that accelerate data processing, storage, and retrieval, and new algorithms for deep learning, machine learning, and improved big data capabilities.
—New systems with an emphasis on consumer friendly interfaces.
—Autonomous devices, with more vision, data storage, and processing capabilities in each device.
While he maintained his investment banking demeanor most of the time, Brooks also demonstrated a sense of humor by playing a video that mocked a dubious investment strategy. He also showed his colors as a University of Michigan engineering grad—shouting “Go Blue” when UM research fellow Zhiyoong Foo took the stage at a press briefing to describe the microelectronic sensor technology under development at CubeWorks, a new Intel Capital portfolio company based in Ann Arbor, MI.