That Intel Capital is selling off some of its portfolio should not be a surprise. Since coming new management under Wendell Brooks, who took over for former Intel Capital President (and my former boss) Arvind Sodhani, there has been a strong indication that the strategy of the group would change. In fact, Brooks stated in his first public discussion on ICap that the group would be focusing longer-term strategic investments.
However the announcement has certainly stoked the fire of speculation and fear in the market, principally around what this means for Intel Capital, corporate venture capital (CVC) and ICap's investment portfolio. There are a few things worth noting here.
First, this is a portfolio, not an organization or strategy that is for sale. Despite news headlines to the contrary, it doesn't appear that Intel Capital itself is up for sale. In fact, it looks like Intel plans to invest at a strong pace in the near future.
Second, this is not an indictment of corporate venture capital. CVC is thriving and not going away, as the 2015 investment numbers indicate. CVC has become integral to many company's strategy. The need to access new technology, learn from start ups, identify hedges, build out ecosystems, and invest to support sales strategies has never been stronger and CVC is the most tacit way of doing it. As a small barometer of interest in corporate venturing, I was contacted by two companies in the last two weeks alone that are interested in starting their own investment arm. CVC is not going away.
Finally, fear mongers speculating about the impact that Intel's sale may have on private portfolio company valuations shouldn't be worried. First the risk that any individual deal's valuation will ever reach the light of the public is unlikely as this will, in all probability, be a bundled sale. Second, this is a large-scale strategic sell-off, not a "mark to market"-able event. The sale represents the current ability of Intel to sell off their assets and the interest in buyers to pick them up en masse, and is not a good indicator of any individual company's value. As always, the company's motivation for selling one company vs. another may be based on many factors which could be reflected in the price. Have the sales of a bundle of corporate assets ever gone for a premium?
In the 25 years that Intel has been pioneering in corporate venture capital investments, they have invested almost $12 billion dollars in more than 1,400 companies. During that time, they've seen the rise of the personal computer, the Internet, WiFi, mobile, smartphones, wireless broadband, cloud-computing, SaaS applications, the digitization of media, the rise of the digital enterprise, the Internet of Things, and more. It's only natural that an investor that has invested so widely would have companies that are no longer interesting to them, probably some that have outlived their own corporate strategy. Whatever form Intel Capital takes post any sale of its portfolio, and I'm sure it will be a different organization. It will surely take the shape of whatever Intel needs at this time.
We can't expect any organization, especially one that is designed to foster innovation, to remain the same, not matter what the circumstances around it, can we?