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Transcript of Intel Capital
Elisa Mentula a1267981
Cecile Post a1268507 Introduction Case Introduction History Intel Capital Strategic Investment Investment Strategy Development 1. Ecosystem Development investments included companies building technologies that supported or improved the value of Intel’s
products in the marketplace.
* Itanium processor 2. Market Development Market development deals are designed to stimulate demand for Intel's products in the marketplace.
* RU-Net holdings 3. Gap-Filling Technologies 4. Eyes and Ears Opportunities "Gap-Filler" deals are focusing on technologies that complemented Intel's products and would be required to marketplace but that Intel did not intend to manufacture or sell directly itself.
* Micron Technologies Smallest part of investments (10%)
Centered on opportunities that might be extremely useful & profitable down the road but faces significant challenges and risks along the way. Staff Recruitment & Responsibilities 100 investment professionals
Each Intel Capital executive also participated as a member of staff of a Business Unit (BU) and was expected to take part in business decisions.
Important that the executive is able to add strategic value and is trusted by the business unit's senior leaders Types of Staff: 1. Business/Investment staff
2. Finance staff
3. Legal staff Concept: Anything you can measure will get better Portfolio Management 75% Intel Capital Investment Professionals and 25% Intel Business unit executives Provides significant administrative resources for investment Biggest successes to portfolio companies: 1. In dept technical knowledge
2. Global brand recognition and reach
3. Comprehensive customer base Financial Performance Realizes significant ROI After 2000 a year with losses due to the shrinking territory.
Then saved on:
Recruitment more senior executives
Reduced rate on investment Table of content: 1. Case Introduction
4. Specific Problems
5. Facing the accounting issue
6. Other VCs & Strategies
7. Next steps Specific problems faced Facing the Accounting Issue:
an example Next Steps Any Questions? Thank you for your attention! Critic towards Intel Capital's investment policy
-> at the same time growing interest
To make Intel the center of "Digital Home" Intel was founded in 1968
Focused on memory devices and associated advantages, DRAM
EPROM and microprocessors
Supporting services and devices in addition to microprocessors needed
1980's focus shifted on PC's + motherboards
Future= Communications + Computing Intel Capital's precursor 1991
Mid 1990's focus to whole ecosystem
Investments grew, Intel Capital was born
Strategic aspect in investments! Intel, Intel Capital and Digital Home Fund 2004 : 200 million $ venture fund for "Digital Home"
Digital Home -division became one of the major divisions
Challenge: Positioning and capitalizing
Vision: Altering the supply chain and delivery dynamics -> Needed the big consumer electronic companies to align How to prioritize the investments?
How Intel Capital could drive
new standards and technology? Organizational design The matrix structure of Intel required a high information flow among all organizational entities
Strategy Challenging for entrepreneurs to work with Intel
Cooperation Joint investment with domestic and foreign VCs required a greater level of cooperation
Financial crisis In response to the downturn Intel reduced their rate of investment
Product delays could lead to losses and company failures
Accounting Public companies have to include the value of venture investments in their P&L (Profit and Loss Statement) A company investor pays 1 million dollar for shares in a private company
The company goes public and the market value is 100 million dollar
The P&L statement reflects a 99 million dollar profit , which is marked at market
After a six month lock up value of shares drops down to 10 million dollar, which records at 89 million dollar loss at P&L
But in reality the investor made 10 times the original 1 million dollar investment Other VCs - Other strategies Taxes Instruments
Microsoft Approach designed to leverage VCs expertise and TI's industry knowledge Business unit investment supported by the VC partnership Panasonic corporate venture group invested smaller amount of money over longer period and maintained close contact to build stronger relationships and leverage institutional knowledge MS did investment in technologies that either complemented or directly supported the MS core products (e.g. MSN)
The investment philosophy changed over time from large monetary investments to providing technical and marketing assistance