SAN DIEGO – This beach town tucked away in the southwest corner of California is about as far away from Israel as one can get, but the spirit of the Start-Up Nation was in the air at the Intel Capital Global Summit, which took place here this week. The world’s largest venture capital firm on Tuesday announced that it was adding 11 companies to its investment portfolio – two of them Israeli.
Both Ramat Gan-based Sckipio, which is developing technology to speed up Internet connections to fiber-speed levels, and very early stage start-up Parallel Networks, which is developing a machine learning-based predictive analytics system, received investments from the firm. Amounts per company were not disclosed.
But investments in local firms was just part of the Summit’s Israel connection. Many of the other companies present at the event showed off solutions that were based on technologies developed at Intel’s Israel R&D facility – technologies like RealSense, the 3D vision system, and the new Intel Skylake SoC (system on a chip) processors for connected IoT (Internet of Things) devices, both of which were developed at Intel’s Haifa R&D center.
The Summit is the premier annual business event for one of the world’s biggest tech firms, and provides an environment for companies to meet investors, potential partners, and Intel executives. Now in its 16th year, the Summit held in San Diego this week hosted more than 1,200 entrepreneurs, business leaders and industry executives. Eleven start-ups, including SckIpo and Parallel Networks (still in stealth mode), received at total of $22 million. In September, Intel Capital announced that it had invested $67 million in eight Chinese start-ups.
Intel Capital claims to be the most successful venture capital firm in the world – a claim that is backed up by the numbers. PitchBook Data, a leading provider of data and technology to the private equity and venture capital industries, recently tallied up the numbers and discovered that since 2005, 256 Intel Capital-portfolio companies experienced merger and acquisition exits – 82 more than the next closest firm, while the firm was number two in exits via IPO, with 50 (New Enterprise Associates was first in that category, with 56).
“With today’s announcement, we’re on track to invest more than $500 million in startups in 2015,” said Wendell Brooks, Intel corporate vice president and incoming president of Intel Capital. “Together with another robust group of exits, we’re poised for one of the organization’s strongest years ever.” Brooks is taking the helm at Intel Capital from Arvind Sodhani, who has been in charge of the fund’s investments for the past decade.
At a joint press conference, Sodhani said that one of the secrets of Intel Capital’s success was looking for tech anywhere, from Africa to the Far East – to Israel, where over the past two decades, the firm has invested in 75 Israeli companies. “Outside of the US, Israel stands out, and is the number one source for tech among foreign countries.”
There was good news for Israel in Intel’s plans for the future as well.
With valuations on later stage tech companies so high, Brooks said that his investment strategy leans to investing in earlier stage start-ups – which is Israel’s forte. “Valuations are very high in the tech field, but we don’t see the corresponding IPO exits that you would expect to see. When valuations are this high, we have to be very cautious when investing. In general, we look for opportunities that are driven by growth and disrupt markets,” the very definition of a start-up. Given a choice, “we would rather invest in emerging tech than get involved in an M&A game that we would have to get into in order to pursue the later stage deals,” added Brooks.
Also good for Israel is the fact that the technology developed by Intel teams there has become a major part of the company’s growth, and many of Intel Capital’s partners and portfolio companies have begun adopting cutting edge technology like RealSense, Intel’s version of advanced gesture-based computing. Built into a camera designed for smartphones, tablets, or any other Internet of Things networked device, appliance, or object, the system allows users to interact with the camera and computers, allowing them to, for example, change TV channel by moving their fingers in the air.
One of the Intel’s portfolio companies using RealSense technology, Body Labs, is developing a system to precisely measure an individual’s body size and shape using a RealSense 3D camera in a far more accurate way than has been done in the past.
“Unlike scans or photographs, Body Labs’ body models offer precise point-to-point correspondence to articulate each body’s unique — and constantly evolving — shape, pose and motion without the need for multiple scans of the same subject,” the company said. “Unique human characteristics are inherent in this digital body model, such as soft tissue deformation and breathing.”
Using the precise imaging available with a RealSense camera and combining it with the unique algorithms the Manhattan-based company has developed, said the company, it would be possible to develop an online model that could be used for anything from shopping to clothes to developing precisely-constructed prosthetics.
Along with the start-up stars that Intel featured at the conference, the fund brought back several veteran companies of its existing portfolio of 1,400, including several from Israel. Among them was Fortscale, which in 2014 secured $10 million in a funding round led by Intel Capital and Blumberg Capital.
“We were very happy to work with Intel Capital because they take a long-term view of investments,” said Fortscale CEO Idan Tendler. “That’s very important to us, because we were looking for someone who would be a partner on what we expect to be a long journey. Start-ups seeking serious investments need to realize that it’s not just about the money – it’s about the connections and help an investor can give, and Intel is in a great position to offer both.”