Intel Capital president Wendell Brooks’ update late last year on where the $566m it had invested had gone, and why, was a timely reminder of what it takes to build a world-class corporate venturing unit: thoughtfulness about what the entrepreneurs are looking for, and how they can be helped or be relevant to the parent corporation providing the money.
Brooks had indicated his intentions in his keynote at the Global Corporate Venturing and Innovation Summit in January 2016 when he took over the running of Intel Capital from Arvind Sodhani.
Brooks said two years ago that while it would continue investing $300m to $500m per year, the unit would shift to leading more deals, at an earlier-stage, working with more diverse entrepreneurs, and that they would be more relevant deals for Intel given its shift from developing chips primarily for personal computers into what it now terms a data company, but that the focus would be on “what can we do for our portfolio companies, not what can they do for us”.
The update showed how Brooks had executed on these themes. Along with 25 exits at the time of its update in mid-October, Intel Capital has led more than 70% of its 32 new investments through October 2017. When he took over, Intel Capital had been leading about 40% of its deals.
Brooks also said Intel Capital had moved further to earlier-stage deals, where 60% of its dealflow is now concentrated. The 15 deals it announced with its update were concentrated on the seed and A stages, where disclosed.
The fact one of the newly announced investments, China-based artificial intelligence chip developer Horizon Robotics, was part of a $100m series A-plus round indicates how far the stages have been stretched over the past few years.
Intel Capital’s portfolio companies cover the waterfront of some of the most interesting areas in technology right now. Brooks said it was trying to be the “eyes and ears” for Intel for 2020 and beyond.
In practice, this means the unit’s investments were concentrated on cloud and storage; semiconductors, memory and integrated circuits (field-programmable gate array – FPGA, in the jargon); sports and entertainment; augmented and virtual reality; 5G wireless connectivity; software and security; new technologies and robotics; and artificial intelligence.
What all these areas seem to have in common is an expectation of requiring or creating more data, hence why the 15 selected for showcasing were focused in this “data” world, and why Intel is increasingly referring to itself a data processing and storage company rather than just a chipmaker.
But while the areas might be hot, the type of entrepreneurs being backed has been changing in other ways. Brooks said in 2015 when he joined Intel Capital 6% of its portfolio were diverse, in terms of being female or ethnic minority-led.
The proportion climbed to 15% in 2016, and in the first half of last year it increased to 20% as the entire Intel Capital team began to look at the issue rather than just a few partners.
Brooks also referenced a new program started this year to take one Hispanic sophomore student and four African-American students and give them a summer internship at Intel, before paying for them to come back in 2018 to hopefully work at portfolio companies.
Overall, therefore, Intel Capital’s approach under Brooks is setting new standards in best practices, but the real differentiation comes in its execution and that relies on the team and its Rising Stars:
Mauro D’Amato
Mauro D’Amato, director at Intel Capital, is, so far, unique among the hundreds of candidates selected for the Global Corporate Venturing Rising Stars awards over the years.
When nominated by Wendell Brooks, president of Intel Capital, for his initial financial and strategic results from his first two years at the group, D’Amato asked what the common factors behind the Rising Stars had been.
But, rather than trying to work out the rules of the game to score highly in the answers, D’Amato’s curiosity and interest seemed to drive him to ask.
It is a curiosity that has led to great results so far for Intel Capital, which he joined after a few years of corporate development for one of Intel’s cybersecurity business unit.
One of D’Amato’s deals, internet of things security company ForeScout, had its initial public offering on the Nasdaq stock exchange in October and had an immediate 16% pop in its opening $22 per share price. Forescout is run by CEO Michael DeCesare, former executive at Intel Security, and other board members also worked there. (Intel Security was rebranded back to its original name of McAfee after spinning back out last April.)
As Brooks said: “Mauro is quickly attaining one of the highest IRR [internal rate of return, a form of annual performance measure] track-records at Intel Capital, with a portfolio generating compelling early results in the two years he’s been in his role.
“Mauro has had one IPO recently announced, and several companies in his portfolio have received M&A offers or completed material up-rounds.
“Importantly, Mauro has also helped drive strategic value for Intel, aiding the development and acceleration of Intel’s own strategy in several new and adjacent domains.”
D’Amato’s other deals include computer security and antivirus developer Carbon Black, which has raised about $190m and saw cofounder and chief technology officer Ben Johnson leave last year to set up peer Obsidian Security; AlienVault, which crowdsources computer threat intelligence and has raised about $116m; HyTrust, which looks to protect data and raised $36m last summer’s series E round; Synack, an enterprise security company that raised $21m in April’s C round; SecurityScorecard, a cybersecurity rating and risk-monitoring platform that closed a $27.5m C round in October; and R3, a consortium of companies collaborating on and exploring blockchain technology that raised $107m in the first part of its series A round in May.
D’Amato said he was “focused on partnering companies driving lasting positive change across a variety of technology categories, including enterprise artificial intelligence, blockchain and fintech, and cybersecurity.
“The opportunity set in enterprise investing is starting to feel unbounded, and in this context innovative applied AI can be a force for good if managed properly. We at Intel have a unique, long-standing platform but I think the opportunity ahead of us is even more attractive.
“We have been fortunate to back incredible, mission-driven entrepreneurs in a variety of domains, from Mike DeCesare and Pedro Abreu at ForeScout; to Patrick Morley at Carbon Black; Barmak Meftah at AlienVault; John De Santis and Eric Chiu at HyTrust; Jay Kaplan at Synack; David Rutter, Todd McDonald and Jesse Edwards at R3; and many more.
“There is a common thread – these companies are all doing something greater and driving positive societal impact.
Before Intel, D’Amato was a member of the investment team in the venture capital and growth equity division of Bank of America Merrill Lynch in New York City and San Francisco.
And supporting entrepreneurs is a path that runs deep for him as well as giving back as a volunteer with non-profits, including Pastor Paul Bain’s ProjectWeHope, helping the unhoused in East Palo Alto, and the Future Leaders Institute, an education-focused org aiding youth micro-entrepreneurship.
D’Amato said: “Some of my fondest memories revolved around helping fix motherboards at my parents’ startup as a regular Italian kid in the 1990s.
“That startup would over time launch one of the first consumer-facing applications permitting full-capacity permanent recording of data on CDs, taking our family on an incredible journey from Rome to Silicon Valley.
“If you ever burned a love-song mix CD for your significant other back in the day, you can probably thank my parents and their co-founders.
“This deep, innate respect for the entrepreneur as a catalyzing force led me to the world of venture and investing. There were several routes, including other investment firms. I ultimately believed Intel Capital, a world-class platform with a stable capital base, stage-agnostic global mandate, and top-tier strategic value add capabilities, would provide the most opportunity for impact and accelerate my own path as an investor who can add demonstrable value.
“After we invest, one of the main ways we add value is through customer access from Intel’s global network. Intel is the architecture of choice for many companies, and we have been able to unlock value for customers from product collaborations with portfolio companies.
“HyTrust for example is helping global enterprises and EU member states drive General Data Protection Regulation compliance to protect citizen data assets across geographical boundaries with Intel Trusted Execution Technology, and it has been a pleasure helping foster this partnership.”
But, as shown by the flotation of ForeScout and up-rounds for other portfolio companies, security is attracting plenty of venture interest, which brings its own challenges for corporate venture capital.
D’Amato said: “With pervasive capital availability, top companies and their boards have many fundraising alternatives. CVCs can play a unique, additive role in a company’s journey through a differentiated set of capabilities spanning domain expertise, technology resources, and an accessible GTM footprint.
“Companies and their investors are starting to view these attributes as non-trivial, so the challenge of overturning negative generalisations is becoming less important during our dialogues. Conversations are more focused around our complementarity and long-term orientation.
“That said, CVCs should continue to constitute their offering toward helping their portfolio companies, and less on activities that could be detrimental to company building.”
This is an area he said the industry as a whole could do more on. D’Amato, a relatively new father, said: “There’s an opportunity for CVCs in co-investment situations to collaborate together for the benefit of a portfolio company, producing more meaningful outcomes. Finally, CVCs can take a leadership role promoting ethics and diversity in the industry.”
Nick Washburn
Nick Washburn, managing counsel in North America for Intel Capital, has the distinction of being the only full-time, active attorney in this year’s Rising Stars list.
He originally joined Intel Capital as a senior attorney in October 2014 and was recently promoted to managing counsel (North America) in June last year.
In this role, he manages the legal team in the US overseeing all investment and portfolio management matters for Intel Capital’s North American portfolio. In addition, he works closely with Wendell Brooks, president of Intel Capital, on central policies and procedures spanning across the corporate venturing unit’s worldwide operations.
Washburn said: “It is often said that the most effective in-house attorneys ultimately serve as business counsellors, understanding the goals of their organisation and optimising risk to achieve those goals.
“Whether during investment committee discussions surrounding a particular deal, broader strategy sessions about new investment theses or while grabbing coffee thinking through tricky issues for an existing portfolio company, I really strive to use analytical thinking and judgment deployed through a business-minded approach to help out our team.”
When nominating Washburn to this year’s Rising Stars, Brooks said: “Nick is one of the most business-oriented attorneys I know, both in working directly on deals, and also in bringing a fresh perspective to rethinking our organisational infrastructure. Our team relies heavily on Nick, and I trust his thoughtful and practical guidance on any matter.”
Washburn added: “We have a great worldwide legal team at Intel Capital, and most importantly we strive on being true partners and members of the deal team. One of the best aspects of working at Intel Capital is that the legal team is not simply viewed as a check-the-box organisation.
“The reality is the collective experience of our worldwide legal team is very deep. We have pretty much seen everything over the years. I view the collective knowledge base of our team as a large value-driver for the organisation.”
As has Washburn himself. Prior to joining Intel Capital in October 2014, he was with law firm Simpson Thacher & Bartlett for six years, practicing with a heavy focus on mergers and acquisitions and private equity buyouts.
After joining the order of the coif having come in the top 10% of students graduating as a juris doctor (JD) from Villanova University Charles Widger School of Law in 2005, Washburn began his legal career in New York City at law firm Jones Day, similarly focusing primarily on M&A.
He said: “Prior to joining Intel Capital, I was working at Simpson Thacher on large-scale, M&A transactions that were extremely complex and challenging. For example, I was the lead associate in representing Silver Lake Partners in connection with the $24.6bn take-private of Dell. I think the broad-based skill set I developed working on these types of matters provided me with the foundation for my current role at Intel Capital.
“Ultimately, I was drawn to leave private practice and join Intel Capital as I had a calling to start working with companies at their earliest stage of development. I particularly enjoy being able to work on a seed-level initial investment, and then continue watching the company grow, raise additional capital, and ultimately scale into a mature business.
“The entrepreneurs in our portfolio are amazing to work with, and Intel Capital has a platform that offers tremendous value to our portfolio companies.”
Washburn said one of the biggest challenges in his new role has been trying to continue to utilise the deep institutional knowledge of the organisation, but also take a fresh look at how everything is done.
He said: “Intel Capital has a tremendous team and has been successfully scaling CVC since 1991. While I do not want to discount the years of learnings, in my new role I have been given the runway to really think through a practical approach to all aspects of our organisation.
“It is always a balance to use past knowledge as a resource, but also not be held back by how things were done before. With the ever-growing competitive environment of trying to find the best deals, we are always thinking through ways to put Intel Capital at the forefront of the ecosystem.”
Outside of Intel Capital, Washburn spends most of his time being active, as an “avid triathlete, backcountry skier, climber, and hiker” and as a father to twin toddler boys.
