Debate: In pursuit of corporate venturing’s end-to-end value

DEBATE: IN PURSUIT OF CORPORATE VENTURING'S END-TO-END VALUE

Bryan Wolf, vice president and managing director of Intel Capital, and Mike Wall, CEO of Intel Capital portfolio companies Amplidata and Atempo, discuss the value CVCs can provide over a company's life cycle. Their conversation illustrates the value corporate investors bring to entrepreneurs – savvy CEOs recognize this and bring corporate investors in early, rather than waiting for a strategic round. Article originally published by Global Corporate Venturing.

Wolf: Let's discuss what CVCs need to do to remain, and grow, in relevance. Corporate venture investing has experienced quite a surge over the past decade, but with ever more money and financing alternatives flooding the market, it is imperative that CVCs continue to evolve or risk being left behind. CVCs like ourselves are uniquely positioned to provide domain-relevant strategic value to our portfolio companies, and this remains a pillar of our value proposition.

For CVCs to be true industry leaders and continue to compete for the best deals, however, we must continue to enhance our value proposition to help companies throughout their life cycle, beyond the strategic imperative that may initially drive the deal. Intel Capital has been at the forefront of this evolution throughout our 25-plus years of existence, continuing to add new capabilities and partnering our fellow CVCs to help portfolio companies regardless of stage or maturity.

For us this means the ability to:

• Put down a term sheet, lead a deal and bring together a syndicate at the front end of a deal.
• Assist with company building through recruiting, strategic and operational expertise.
• Bring our technology, roadmaps and manufacturing capabilities to bear for early-stage development companies
• Open Intel's global network when a company is ready to go to market.
• Provide guidance during the exit process given the hundreds of deals we have helped shepherd through the M&A and IPO processes.
• And of course, continue to invest in our experienced investors as board members who help orchestrate these and other activities.

To help demonstrate what this means for our portfolio companies, let's explore a real example with Mike's former company Amplidata. Intel Capital became interested in Amplidata back in 2010, which ultimately resulted in our initial investment in 2011 when we led the series B financing and took both a board observer as well as the right to a board seat.

Wall: In 2011, I was CEO of Atempo, spending a lot of time in Paris. Intel Capital asked me to travel to Belgium to meet the Amplidata team and help evaluate the company for investment. Amplidata was founded in 2006 in Ghent, Belgium. They perfected an erasure code-based object-storage solution for big data customers. The value proposition was amazing, as they could provide much greater data resiliency, requiring only half the capacity compared with legacy solutions.

I really liked the company, the technology and the market opportunity. They needed working capital to implement their go-to-market strategy. Intel Capital invested in the company and, based on my domain expertise, asked me to join the board. Within the year the Amplidata board asked me to become executive chairman, and ultimately CEO after I successfully closed the sale of Atempo. Seeing Amplidata's growth prospects, customer attraction and the need to expand into the U.S., combined with the backing of Intel Capital, I was excited about taking on this expanded role.

Wolf: Beyond the investment, Intel and Amplidata also signed up for a number of strategic engagements covering technology optimisations, roadmap alignment, reference designs and joint customer engagements.

Wall: Intel provided much more than working capital. In the eyes of the market, the fact that Intel invested provided validation of the technology. We also conducted a lot of joint marketing, which provided exposure to large potential customers in the U.S., Europe and Asia. Several large customers adopted our solution and several more became original equipment manufacturer (OEM) partners, which helped our sales activities with major telecoms providers in the U.S.

Finally, Intel Capital helped broaden the relationship between Intel and Amplidata's technical team. We had regular meetings with Intel's product groups to discuss silicon roadmaps, platform and mother-board reference designs and evolving business opportunities, so we were always at the leading edge.

Wolf: Along the way you were fortunate to have other CVC investors in Amplidata, including Swisscom, Quantum and Western Digital, the last of which ultimately acquired Amplidata. Can you discuss the value in having multiple corporate investors involved and some of the considerations in bringing each of them aboard?

Wall: Swisscom was an early investor. They were very supportive of the company. They got us involved with their in-house cloud development team and introduced us to a number of investors. Quantum invested, became an OEM partner, managed our supply chain, and is still shipping those solutions today. Later, Western Digital invested in the company, agreed to OEM the product and got us tremendous exposure to large customers.

Wolf: Western Digital ultimately stepped up to acquire the company after some pretty intense competitive dynamics and deal negotiations. You also accomplished this without a banker. Aside from relying on your own experience, can you talk about how you leveraged Intel Capital in the process?

Wall: We were quite fortunate to have interest from Verizon and AT&T in building their cloud platforms with Amplidata. The AT&T activities resulted in a large multinational company engaging us as an OEM partner. Within nine months, they made an offer to buy the company. The good news for us was that Western Digital also wanted the technology.

We did not have a banker. This all happened really fast. So Intel Capital worked hand in hand with me on the negotiations, legal issues and other matters. You [Bryan], Intel Capital investment manager Mark Rostick, and the Intel Capital head of Europe, the Middle East and Africa at the time, worked around the clock between Belgium and California to get the best outcome. Together, the three of you brought considerable expertise garnered from Intel Capital's history of facilitating hundreds of exits over the years.

Wolf: Beyond the money invested, how would you summarise the value your CVC investors helped drive to get this exceptional outcome for the company, the employees, the shareholders, and yourself? How does this influence your decision to bring CVCs into your next company?

Wall: I came to appreciate the full-service relationship with Intel Capital and our other active corporate investors. They can lead a round, provide working capital for follow on rounds, provide access to the latest technologies, help with supply chain operations, introduce us to OEMs and large customers, and help us recruit board advisers and employees. We had a great experience. The added expertise of acting as a virtual banker and providing cross-functional value at all stages of the company, from building investment syndicates to company operations, is hugely important for a startup.

Wolf: Intel Capital president Wendell Brooks has chartered Lee Sessions and myself to develop the ecosystem for corporate venture capital. We strive to leverage the unique value proposition CVCs bring to the table. Collectively our value proposition is exponentially greater when we work together and each of us brings our own unique value to a portfolio company. We look forward to working with great startups like Amplidata alongside other corporate investors.