In March 2005, the face and mindset of corporate venturing changed forever. That was the year that Arvind Sodhani, the former treasurer of Intel, became president of Intel Capital, the strategic investment arm of the semiconductor chip and microprocessor manufacturer. Today, Sodhani oversees
all venturing investments for Intel Capital, as well as all mergers and acquisitions activity for Intel Corporation. Not everyone has the stomach to sign off on billion-dollar deals, but Sodhani clearly does.
A nose for good returns
Before he took over the helm at Intel Capital, Sodhani’s team, alongside the legal department, had to approve the deals that passed over his desk. “In the beginning we thought the primary benefit [of the unit] to Intel was strategic. We would have been happy if we just made a bit of money on our investments,” Avram Miller, one of the co-founders of Intel Capital, wrote in his blog, Two-Thirds Done.com.
Miller is incidentally one of the minds behind the 1990s breakthrough of PC modem-based cable infrastructure for data transmission.
“Later, we realised that for a company to have strategic impact – help grow our market – it would have to be very successful and that means we would receive a substantial return on our investment. That turned out to be much truer than we could have imagined,” Miller said.
International success
When Intel Capital founder Les Vadasz – one of the pioneers of the microprocessor – formed what was initially called Intel’s Corporate Business Development (CBD), deals had to be signed off in the US, which was not an easy task since Intel insiders could hardly fathom that there might be better technology brewing outside the US.
In many cases, the foreign technology being pitched was already a few steps behind what was already being developed in-house at Intel, but some CBD employees argued that access to non-US technology and markets was crucial to Intel Capital’s objectives of growing the core chip business.
As the years rolled on, India-born, and UK and US-educated Sodhani was signing off more international deals and exits through initial public offerings (IPOs) and trade sales, at eye-popping valuations.
The penny dropped when Intel Capital saw the value of having a global corporate venturing platform and process from which to invest. Sodhani and his team have expanded the unit’s global investment footprint to 54 countries, making first-time investments in Ghana, Estonia and Spain in recent years.
Track record appeal
Two decades on from the CBD days, the advice passed from Intel Capital executives to portfolio companies is simply put, but not necessarily simply achieved: start with a breakthrough idea or technology; build a capable and cohesive team; have a compelling vision; be your best salesperson; think strategically; build a culture where it is okay to fail; listen; lead with integrity; and take risks.
That advice has paid off. In 2013 Intel Capital made 146 investments, 63 of which were new, totalling $333m. A total of 49% of the investments outside North America. Intel also made 33 exits in 2013 – six IPOs and 27 mergers and acquisitions.
Under Sodhani’s leadership, Intel Capital was named Unit of the Year at the 2013 Global Corporate Venturing Annual Powerbrokers Symposium. In 2012, the unit was busier deploying capital than the world’s most active venture capital firm, New Enterprise Associates. In that same year, market research firm Privco named Intel Capital the most active venture firm by realisations.
Face of corporate venturing
A former board member of Nasdaq (1997-2007), Sodhani retains a good relationship with the exchange and personally informs them when one of his portfolio companies is seeking to list. Today, corporations with aspirations to establish their own venturing units come to him and his team for advice. In 2013 Intel Capital was contacted by more than a dozen companies starting new investing organisations “trying to establish themselves in the ecosystem”.
Sodhani has been selected as the GCV 2014 Powerbroker of the Year because he continues to steer Intel and symbolically the greater corporate venturing industry into new sectors and growth opportunities, such as wearable devices and cloud-based security services.
“What is different today is that we are seeing on a daily basis revolutionary new ideas, devices and form factors, not evolutionary advancements,” Sodhani said in a Wall Street Journal interview. “Computing devices are evolving more quickly to adapt to how we live versus the other way around,” Sodhani believes: “This is truly a great time to be living at the cutting edge of technology.”
