GCV Powerlist 2019: Rajesh Swaminathan

Rajesh Swaminathan was made head of chip and display designer Applied Materials’ Applied Ventures unit in June last year upon former head Tony Chao’s departure. Since that time, he and his team have doubled the pace of the unit’s investments. In addition, the unit led or co-led five out of the 11 deals approved in 2018.

Applied Ventures counts more than 80 deeptech companies in its portfolio and has deployed approximately $300m in capital so far. The unit invests $50m per year in different stages.

Observing the “valley of death” for deeptech startups due to lack of semiconductor fab access in the US and limited access in Asia, Swaminathan closely worked Applied leadership team and the state of New York in the establishment of an $850m Materials Engineering Technology Accelerator (Meta centre) in State University of New York at Albany.

Omkaram “Om” Nalamasu, senior vice-president and chief technical officer of Applied Materials and president of Applied Ventures said: “For over a decade, Applied Ventures has been investing in and collaborating with startups to transform disruptive possibilities into reality by leveraging the materials engineering expertise of Applied Materials.

“Rajesh has played a critical role in identifying and accelerating venture investments across many inflexions, where our leadership in materials engineering is enabling new growth markets like AI (artificial intelligence), AR/VR (augmented and virtual reality), life sciences, 3D printing and batteries.

“With his passion to address a significant pain point for deeptech startups, Rajesh closely worked with executives from Applied Materials and the state of New York to enable the establishment of an $850m state-of-the-art semiconductor fab in upstate New York.

“I am proud of Rajesh and his Applied Ventures team’s progress in enabling successful initiatives and partnerships with startups across the globe and look forward to many more accomplishments near-term.”

Swaminathan added: “What attracted me to Applied Ventures is the incredible talent pool of Applied Materials that startups and our ventures team can tap into.

“Applied Materials enables scalable, high-performance devices for our partners by sharing our expertise across equipment, processes and new materials. This allows us to add significant value to companies without creating technology or business model or channel conflicts.

“We sincerely think of a win-win strategy in our strategic investments. We have co-invested with many top-tier deeptech CVCs and VCs and look forward to building a strong ecosystem of partners for our deeptech portfolio.

“Over the past many years, I have had the opportunity to identify and invest in over 16 companies, while also managing eight additional companies from or with other partners in the fund. In my current role, I look forward to supporting the success of our team across multiple inflexions and plan for the next growth phase of Applied Ventures.”

Applied Ventures, whose assets under management (AUM) nears $300m, has conducted 80 deals to date. Swaminathan’s personal AUM is $73m, which includes $56m directly invested by him and $17m inherited from other partners and currently managing – with that, he has invested in 17 companies and manages seven companies from the previous team, overseeing a total of 24 investments.

Applied Ventures has invested in 13 countries and in seven sectors – semiconductor technology, display, AR/VR, autonomous vehicles, 3D printing, medical device and life sciences. The unit is stage-agnostic and invests from seed to series G in around 35 unique rounds.

In the last quarter of 2018, it co-led a $52m series B round for US-based magnetoresistive random access memory technology developer Spin Memory in November and participated in a $25m series B round for US-based advanced computer processor developer Syntiant in October.

The unit has had 35 successful exits so far, of which five were overseen by Swaminathan. He said: “The companies that I invested in and supported were acquired [or filed initial public offering] for a total transaction value and a market cap of around $433m – this is not just Applied’s return, it is the overall market cap and acquisition value of the companies I was involved in.”

The unit acquired two portfolio companies in recent years and has “strong engagement and operating rhythm between our business units (BUs), Applied Ventures and our portfolio companies. Applied is a strategic investor and therefore about 70% of our recent investments have joint development area and collaborations with our BUs, enabling strong technical and product development support for startups from Applied Materials”, Swaminathan said.

Swaminathan developed Applied’s roadmaps in new inflexions, driving venture investments in companies in complementary metal-oxide-semiconductor image sensors, AR/VR, additive manufacturing, medical devices, life sciences and autonomous vehicles.

The unit, which has expanded by 25% within the past year, has hired new team members including investment director Frank Lee in October and investment manager Rajesh Ramanujam in January. Michael Stewart, former investment principal, was promoted to investment director upon receiving his GCV Rising Stars award in January.

Swaminathan said he was proud of the diverse and highly talented team he worked with. “Frank Lee joined us after 20 years of venture capital experience from UMC Capital, where he led the venture arm’s US operations, and Vertex Ventures in Singapore. Frank is driving our display-related investments and is also driving some major initiatives – soon to be announced – in Asia.

“Michael Stewart, an entrepreneur in the past, brings tremendous experience from Intel, Applied Materials’ semi and solar groups, and is now driving our AI investment strategy.

“Rajesh Ramanujam was an Applied veteran before he left for a two-year stint at investment banks and another couple of years at Lam Capital. He is driving our investments across semiconductors, additive manufacturing and other inflexions.

“Jackie Kossmann brings a lot of experience from her entrepreneurship and generalist VC experience, and currently driving our AR/VR and other semiconductor investments. Juan Cueva brings tremendous entrepreneurship experience and is driving our life sciences investment strategy. Most recently, Saewook Lee joined us from 3M Ventures, and will be driving new market inflexions with our roll-to-roll team among others, and also managing our Korea Innovation fund.”

Regarding this year’s outlook, Swaminathan added: “2019 is going to be a year of execution across many areas. We plan to offer key infrastructure and expertise to new and existing portfolio companies through our new Meta centre in New York.  We also plan to pursue key investment opportunities in Asia, Europe and Israel. We plan to engage with a diverse set of partners – VCs, incubators, law firms – to build a robust ecosystem and infrastructure for financing and supporting deeptech startups.”

Prior to joining Applied Materials in 2009, Swaminathan had spent two decades assisting and investing in disruptive startups. Over the past decade, he led Applied Ventures’ investment thesis and investments across many deeptech inflexions including advanced displays, batteries, AR/VR, Lidar image sensing, 3D printing, medical devices and life sciences.

Before that, Swaminathan worked at hedge fund Third Point developing the firm’s venture and public investment strategy in cleantech and semiconductors. The role had followed a brief stint at Deutsche Bank’s investment banking group in the renewable energy team, during which time he pursued his MBA at Harvard Business School as part of a shift into finance after five years leading Lucent Technologies’ engagement with startups across optics and radio frequency devices.

He started his career at Nokia Bell Labs, where he held business development positions, driving the due diligence process and successful partnerships in several nanotechnologies, optical and III-V semiconductors startups.