Intel, the chipmaker, about which Andy Grove wrote Only the Paranoid Survive, is aggressively investing in startups as a VC. The Chief of Intel Capital APAC, Sudheer Kuppam, talks to YourStory.in on Intel’s vision behind foraying into investments in startups. Technology has become an all-pervading aspect of life and Intel is specially focusing on it by allocating a separate fund for automobiles and apps. Besides these funds, Intel is interested in a wide array of areas for investment with scalability as an important factor.
You worked with Intel’s engineering team for a little over 3 years. What made you take the shift from Intel's engineering team to the capital arm?
I joined Intel and worked as an Engineering Manager overseeing R&D, manufacturing and HVM transfer in Intel's Technology & Manufacturing Group. However, I always had a strong interest on the business side of products. Moreover, the start-up space intrigued me. This made me join Intel Capital in 2000. Since then, I have been responsible for a diverse group of investments in Asia, Europe and North America supporting Intel’s strategic initiatives.
What is Intel Capital's investment philosophy in India?
Intel Capital, Intel’s global investment organization, makes equity investments in innovative technology start-ups and companies worldwide. We are a stage-agnostic VC and invest in a broad range of companies offering hardware, software and services targeting enterprise, digital media, mobility, health, consumer Internet, semiconductor manufacturing, and clean-tech.
Our goal is to achieve both strategic alignment with Intel Corporation and a strong financial return for its investments.
How do you see Intel's investments in India aligning with Intel's overall vision?
Intel Capital invests in companies that fit into Intel’s vision of extending computing technology to connect and enrich the lives of every person on earth. PC and broadband penetration rates are very low in India. One of our biggest goals is to evangelise technology so that more and more people get onto the internet. So, while investing in any company we look at both its financial and strategic objectives, which need to be well aligned with our long term vision. So far, Intel Capital has invested over $300 million in 80+ companies across 10 cities in India.
What are the criteria that Intel Capital looks at before investing in companies?
There are various aspects that need to be evaluated before we decide to invest in a company. Some of them are:
- The product or the service to begin with, what problem it is solving and for whom
- Size of the market opportunity and viability of the business model
- The differentiated value proposition that the company will bring to the market
- The environment that the company operates in; the competition, government policies etc. (ideally investors want these policy/laws to be a constant)
- The strength of the management team and its co-investors
- Exit options: What are the potential exit options
Tell us a bit about the startup and entrepreneurship culture in other APAC countries as opposed to India
Some of the key differentiators between companies in India and other APAC countries are:
- Companies in the rest of APAC have been able to scale up faster than Indian companies
- There are better liquidity options for IPO or Merger and Acquisitions [M&A] in other APAC countries as opposed to India
- There is more focus on product innovation in countries like Japan, Taiwan and Korea compared to innovation around services in India
What are the learnings for India from other APAC regions in terms of innovation?
Some of the key learnings for startups and entrepreneurs in India, I believe, are:
- Thinking big and staying aggressive
- Seeking options to scale-up the businesses faster
- Focus on product innovation
- Explore all exit options [especially IPOs in the US, Singapore, Hong Kong etc.]
What is the typical stage at which Intel Capital partners with companies?
Intel Capital is a stage agnostic company. This means we invest in companies in all stages: early stage to mid-stage to late stage. We are also in PIPE deals.
What kind of support can companies expect from Intel Capital's team?
Intel Corporation being our parent company, there are some obvious benefits of working with us for our portfolio companies.
- Global Reach: With offices in more than 25 countries, Intel Capital calls on a vast network of resources in markets around the world. We have insights into these markets, contacts with local customers and suppliers, and the ability to match our portfolio companies with customers across oceans and continents.
- Worldwide Customer Access: As markets emerge and infrastructures evolve, access to the global marketplace is critical. Intel Capital is connected with customers in every major market in the world and we are eager to share our contacts with our portfolio through personal introductions.
- Recognized Brand: Intel is among the most recognized brands in the world. Intel connotes quality, integrity, and innovation. It’s a cachet that opens doors for us and our portfolio companies, a sort of coin of the realm in places near and far with customers and co-investors around the globe.
- Technology Expertise: Intel plays a lead role in the continued rise of technology around the world. Our portfolio companies are privy to our architecture roadmaps, gain access to our manufacturing and engineering knowledge, and they can benefit from the work of our labs and factories.
Tell us a bit about the connected car and appup funds, how much of it is expected to be deployed in India?
Intel Capital has created a $100 million Intel Capital Connected Car Fund to accelerate technology innovation in the automotive industry. Intel Capital Connected Car Fund is targeted at technologies that will deliver new in-vehicle infotainment solutions, seamless mobile connectivity, compelling applications and advanced driver assistance systems.
The $100 million Intel Capital AppUpSM Developer Fund (August 2011) invests in software tools and services companies, developing applications and digital content for the mobile and PC ecosystem available at the Intel AppUpSM center, Intel's convenient, personalized and secure app store for netbooks and consumer laptops.
These are both global funds and if an Indian company meets the eligibility criteria set by these funds, we will certainly look at them.
What are Intel Capital's plans for 2012?
We will continue to look at investment opportunities in technologies which support our vision of extending computing technology to connect and enrich the lives of every person on earth. In India, specifically, we would like to help grow the broadband user base to enable over 300 million in the next 3-5 years. So, we will look at companies that can directly or indirectly help us achieve this goal.
How does Intel Capital measure success internally? Considering the impressive list of IPOs and follow-on rounds in your portfolio.
In terms of financial metrics, we use the Investment Return Ratio [IRR], which is a standard practice in the Venture Capital Industry. From a strategic standpoint, we gauge at whether or not the deal accomplished what we wanted it to. These metrics define the success measure for Intel Capital.
What are your observations on big opportunity areas and trends in technology in India? E-commerce, Cloud, mobile, enterprise software - what are your biggest bets? And, why?
Cloud computing is positioned attractively for tremendous growth. With cloud computing offering unparalleled convenience and portability to the user, it is definitely the future of the personal computer.
Also, e-commerce offers tremendous potential in the country as the burgeoning middle class with rising disposable incomes is buying products and services online.
Finally, what would be your three pieces of advice to entrepreneurs trying to build tech companies from India and take them to a Global scale?
I think the key for any of these companies to make it big would be:
- Think big: Be aggressive in their approach and not be afraid to take risks.
- Financial viability: It’s important to explore foreign exit options, be it in the US or fast developing APAC countries like Singapore and Hong Kong.
- Scalability: Create avenues for faster scalability of their businesses
For further details on Intel Capital, do visit their website.