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Intel invests as much as $500 million in startups each year. Here's what it's looking for in new investments, according to one of its top VCs. (INTC)


Intel Capital senior managing director and chief operating officer Nick Washburn

  • Intel Capital, the venture capital arm of the giant chipmaker, looks for more in its potential investments than the possibility of big returns.
  • It scrutinizes startups for ones to which it can add value, either through its technical expertise or relationships with customers, Nick Washburn, a senior managing director at the organization, told Business Insider.
  • Intel Capital often seeks to match up portfolio companies that are working on solving particular problems with customers that are contending with those specific issues, he said.
  • Intel also invests in startups that could benefit from its chip, memory, and other technologies, he said.
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Intel's venture capital arm approaches startup investing a bit differently than other Silicon Valley investment shops.

Sure, like other venture capital organizations, Intel Capital is looking for tech companies with the potential for significant growth and outsized returns, Nick Washburn, a senior managing director at the division, told Business Insider in a recent interview. And like other corporate venture shops, Intel Capital favors companies that make sense strategically, that could help boost its future business, he said.

But one of its biggest criteria for potential investments is that the companies need to be ones that will benefit from having a relationship with Intel.

"It's really important that we need to be able to add value," Washburn said. "If we don't have value beyond our dollars," he continued, "we're really not doing what we need to be doing for our portfolio companies."

Read this: VC investor explains how he finds surprising startups by focusing on the founders' opinions instead of their initial product idea

Intel Capital, which invests about $300 million to $500 million in some 30 to 40 startups each year, can help its portfolio companies in at least two big ways, he said. The chipmaker has relationships with lots of big corporate customers, who use Intel-powered computers in their data centers, among other things. Its interactions with those customers give Intel insight into some of the problems many of them are facing. The company can serve as a kind of matchmaker, pairing up portfolio companies whose technology solves particular issues with clients that are looking for ways to solve those problems.

"We can open a lot of doors to Intel's...customers and bring a lot of credibility to our startups," Washburn said.

The other kind of help Intel offers is through its technical expertise. The chipmaker doesn't force portfolio companies to use its technology, Washburn said. But it often invests in companies that can benefit from it. For example, many of the artificial intelligence companies it's backed run their software on computers that have Intel chips, he said. Intel has helped them optimize their AI applications for those processors, he said.

What's more, Intel has a program where it essentially loans out some of its senior engineers to its portfolio companies. To reach the upper ranks among Intel's engineers, workers need to do projects outside the company, Washburn said. Intel tries to pair up engineers who have expertise in particular areas with startups in need of assistance in those exact areas, he said. The chipmaker pays the salaries of the engineers, and any intellectual property they develop while working for the startup belongs to the startup.

The program is "a really good win-win" for portfolio companies, Washburn said.

Intel's been focusing its investments in areas including not just AI, but data center hardware and software and cloud computing; advanced chip manufacturing; the internet of things; and autonomous computing systems, he said. Last week, Intel Capital announced it led a $15 million series A investment in Mesmer, a California startup that's using artificial intelligence technology to do quality assurance testing of apps.

SEE ALSO: This pitch deck helped a 65-year-old company raise $50 million and show investors why its personality testing service was suddenly growing like a hot startup

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