For venture capital investments, concentration to what one knows is an important factor. The venture capital arm of Intel plans on selling about a fourth of its portfolio companies. A sale that could be worth about $1 billion.
After restructuring its venture capital unit in January and with President Arvind Sodhani’s retirement after 35 years with the company, Intel aims for a more concentrated portfolio of ventures and a tighter alignment to the firm’s strategy. In a first step, Wendell Brooks, former head of mergers and acquisitions, replaced Sodhani as president of Intel Capital. Now, the portfolio of companies is put at question.
Since its start in 1991, Intel Capital has invested about $11.6 billion in more than 1,440 companies. Investing in more than 57 countries and many different industries such as security, wearables or digital media, the portfolio was large and diverse. Last year alone, the venture capital unit invested $514 million in 143 companies about equally split between new and follow-on investments.
With currently 430 active portfolio companies, rumours say that a quarter of them are to be sold - primary due to strategic reasons and a changing focus of Intel. The sale could be beneficial for Intel, the companies as well as new ventures. For Intel, it allows to build a venture portfolio that is aligned with the company’s strategy and can contribute most effectively to achieving its goals. For the sold companies, new investors can be found that are due to their own strategic interest more committed to the companies. Finally, selling part of the portfolio allows Intel to pursue investments in new ventures that fit to its strategy and is thus beneficial for those start-ups.