Intel Capital modified its investment structure in 2016 and pledged to cut its portfolio by around 25% in the next five or six years while increasing its investment sizes.
Intel Capital, the corporate venturing subsidiary of semiconductor technology producer Intel, adapted to its new organisational structure in 2016, promoting team members to managing director roles and pledging to cut its portfolio by at least 25% by 2022.
Wendell Brooks took over full control of Intel Capital at the start of the year as long-time president Arvind Sodhani retired but speculation soon arose that he was planning a $1bn sell-off of the unit’s investment assets following a large-scale portfolio review.
Brooks subsequently poured cold water on claims of a massive stake sale but elected to change the investment structure at the unit, directing it toward more strategically relevant deals for its parent and giving more power to managing directors who are now responsible not only for VC investments but M&A deals and business development.
Vice-presidents Lisa Lambert and Marcos Battisti left Intel Capital in May amid speculation that changes in the unit’s compensation scheme in 2014 had unsettled some team members, but Ameet Bhansali, Anthony Lin, Trina Van Pelt and Bob Nunn were all promoted to MD positions while Marcin Hejka, Ken Elefant and Ramamurthy Sivakumar were each granted new or expanded roles.
Although Brooks had dismissed talk of a sell-off earlier in the year, he announced at the Intel Capital Global Summit in October that the fund’s portfolio would be gradually downsized from over 400 companies to between 250 and 300 in the next five to six years as part of a “small is beautiful” strategy.
Intel Capital still expects to invest substantially, and Brooks specified a $300m to $500m range for annual investment rates. The strategy will involve increased focus on later-stage deals, and Brooks told attendees at the Global Summit its average investment size had already doubled to between $6m and $10m a deal.
Accordingly, the unit recorded a string of exits in 2016, with some 25 portfolio companies being acquired or going public. In a year that was sparse for IPOs most of the deals involved the former, though item tracking technology provider Impinj raised $67m in July, floating at the top of its range, while India-based online travel booking platform Yatra listed on Nasdaq this week through a reverse merger.
The pick of the M&A deals was perhaps Allergan’s $639m acquisition of Vitae Pharmaceuticals, which took place two years after the small-molecule compound developer had floated in a $55m IPO, though Intel’s stake was relatively small. Advertising exchange HookLogic was bought by Criterio for $250m in October while India-based short-term accommodation platform OneFineStay was acquired by AccorHotels for $168m in April.
In terms of investments, the highlights this year included the $160m series E round closed by France-based internet-of-things platform Sigfox last month. Intel Capital co-led a $120m round for gesture control technology company Thalmic Labs in September and took part in a $41m series D round for cloud storage technology provider Cloudian the following month.
Looking forward to 2017, Intel will seek to invest out of the $250m autonomous car fund it announced in October as well as its $125m Diversity Fund, which was expanded in October to include LGBTQ and disabled founders as well as those that are military veterans. It will also be interesting to see if the rate of exits remains steady, particularly with prospective IPO candidates like DocuSign, Mirantis and Cloudera in the mix.
