Corporate VC - Applied Ventures
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External Use
Corporate Venture Capital
from the eyes of a practitioner
Eileen Tanghal
Managing Director, Applied Materials, Inc.
General Manager, Applied Ventures, LLC
Oct 24, 2014
Startup Alliance CVC Session
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Applied Ventures
Intro
External Use
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The Most Exciting Industries on Earth
3
Applied Materials is a
leading equipment supplier to
the semiconductor, display
and solar industries
OUR STRENGTHS
► Precision materials
engineering (PME)
► Customer engagement
► Providing differentiated
device performance
and yield solutions
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The Global Strength of Applied
4
Stock Ticker: Nasdaq: AMAT
Fiscal 2013 Revenue: $7.5 billion
Fiscal 2013 R&D: $1.3 billion
Founded: November 10, 1967
Headquarters: Santa Clara, California
Global Presence: 84 locations in
18 countries
Principal Locations United States, Israel,
Singapore, Taiwan,
Employees*: ~13,700 worldwide
Patents: ~10,400 issued
Data as of end of fiscal year end, October 27, 2013
*Excluding temporary and interns
External Use
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Applied Ventures – Corporate Venture Capital
Arm of Applied Materials
Applied Ventures Profile
Structure: LLC, wholly-owned subsidiary
of Applied Materials
Investment Professionals: (1 Senior VP, 1 GM, 1 Director,
4 Associates/Analysts)
Fund Size: $50M / year
Assets Under Management: ~$180M
Investment Size: $250K - $3M / round (early stage)
up to $10M / round (later stage)
Investment Criteria:
• Financial return
• Strategic relevance
• Seed through growth stage
• Invest globally
Collaborative Approach: Lead or co-invest with leading
institutional investors
Portfolio Oversight: BOD observer seat
Approval Process: Monthly Investment Committee
decisions
Investment Areas
Advanced Materials
Process advancements
• Progress advances beyond 32nm
• Advanced packaging
• Advanced patterning
• Metrology and inspection
• Software
Display technologies
Solid state lighting
Energy conversion & storage
Medical diagnostic and
technologies
Sustainability & conservation
External Use
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Exited Companies
Applied Ventures Portfolio Companies
OTHERS
IPO
IPO
External Use
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Applied Ventures Team
7
Eileen Tanghal
Managing Director, Applied
Materials Inc.
General Manager, Applied
Ventures, LLC
Tony Chao
Investment Director, Applied
Ventures, LLC
Joseph Jeong
Senior Investment Associate,
Applied Ventures, LLC
Taejoon Park
Senior Investment Associate,
Applied Ventures, LLC
Om Nalamasu
Senior Vice President, Chief
Technology Office, Applied Materials,
Inc.
President, Applied Ventures, LLC
Roopan Aulakh
Investment Analyst,
Applied Ventures, LLC
Rajesh Swaminathan
Associate Investment Manager,
Applied Ventures, LLC
New Business Development,
CTO, Applied materials, Inc.
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Corporate Venture Capital
trends and overview
External Use
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9
The New Realities of Corporate
Venture Crowd-sourced by members of the
Corporate Innovators Huddle’s
Corporate Venture Forum
November 29, 2012
External Use
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The CVC Environment over the Last Decade: Constants
The average life of a CVC program is still only five years
• Instability of Parent Corporation can cause commitment to CVC to ebb/flow
• Rule of Thumb: “Survive three corporate leadership changes before you feel
safe”
CVCs make both “core” (directly relevant to existing business) and “non-
core” (adjacent business or ecosystem building) investments
• CVCs’ processes can vary depending on whether an investment is “core”
versus “non-core”
Unsophisticated corporate venture capitalists still exist
• New CVC entrants may not be familiar with “normal” market terms
• Business units will also make investments with or without coordination of the
CVC program
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External Use
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The CVC Environment over the Last Decade: Changes
CVC practitioners are usually experienced investors
• Many CVCs been investing for 10 years, many financial VCs have joined the CVC ranks
Most CVCs run more efficient processes now, somewhat more like a financial VC
• Rarely see “hairy” term sheets or NDAs from experienced CVC programs
• Decision-making usually faster, commercial terms decoupled from CVC investment
Start-up concerns about competitive conflicts, information management have proven to
be negligible, manageable. CVCs understand importance of reputation in ecosystem.
Start-ups are looking more favorably upon CVC investments
• Domain or customer insights, brand association, validation, revenue/channel opportunities
• CVCs can be more flexible on terms and return requirements than financial VCs
• Instability of financial VC funds now on par with corporate funds today
• Some CVCs willing to invest early in areas financial VCs won’t (Bio, semi, energy, etc.)
CVCs need to show HQ financially responsible judgment and advice
• Even if CVC can’t alter HQ’s balance sheet with a home run, HQ expects CVC will not be dilutive.
CVCs losing money may not be sustainable
• The value of CVCs to HQ is now seen as broader than just financial ROI on deals. Like offering
B.U.s assistance w diligence before partnering, sourcing innovation
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External Use
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“Strategic” “Independent” “Blended
Objective”
“Multi-
Corporate”2
Dedicated
Fund?
Probably not Possibly Possibly Fund w multiple
corporate LPs
Primary
Objective?1
Strategic Financial Strategic +
Financial
Financial +
Strategic
Notes Supporting HQ
innovation partners
and ecosystem.
May be non-financial
support.
Use LP name for
financial gain but
some freedom from
HQ.
VC closely blended
with other innovation
tools like M&A to
assist HQ growth
and ecosystem
building, funding
partners
Run by CVCs,
leveraging strategic
LPs
Example Sony, Microsoft SAP, T-Venture Amex, QCOM Aster, Iris
1. All CVCs need to be both “financial” and “strategic” to some degree. When the primary objective is “financial”, it can also refer to
valuation-sensitivity, financial experience of CVC team, independence of investment theses, independence in decision-making.
“Strategic” objective may come from exploration of adjacent businesses of corporate LPs or non-financial support.
2. There are really 3 types of Multi-Corporate funds: 1) “Outsourced CVC” (Granite, Atrium) 2) “Corporate+Financial LPs” (Translink), 3)
Multiple Corp LPs only (Aster, Iris). We are only considering the 3rd type here.
Types of Corporate Venture Capital
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Global Corporate Venture Capital Activity
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Global Corporate Venture Capital Activity
External Use
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Corporate Venturing How can we improve? For our parent cos…
“Strategic” “Independent” “Blended
Objective”
“Multi-
Corporate”
Parent Co
Pros
• Insights?
• Funds partners?
• ROI expected?
• Insights?
• Funds partners?
• ROI expected
• Insights
• Funds partners
• ROI expected?
• Insights?
• Funds partners?
• ROI expected
Parent Co
Cons
• No financial ROI?
• Limited deal flow
• Insights?
• Not funding partners
• No meaningful
financial ROI?
• No meaningful
financial ROI?
• Insights?
• Funds partners?
• No meaningful
financial ROI?
What we need to work on
► Bringing more insights
► More cognizant of financial ROI
External Use
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Corporate Venturing How can we improve? For startups…
“Strategic” “Independent” “Blended
Objective”
“Multi-
Corporate”
Start-up
Pros
• May pay up?
• Passive?
• Knowledge
• Validation
• Faster process
• Follow-on likely
• Knowledge?
• Deal w parent?
• Validation?
• Active?
• May pay up?
• Faster process?
• Follow-on likely?
• Knowledge
• Partnership
• Validation
• Active?
• Faster process
• Follow-on likely
• Knowledge
• Partnership?
• Validation?
• Active
Start-up
Cons
• Not efficient?
• Not active?
• No follow-on?
• Partnership?
• No “Chinese wall”?
• Partnership?
• Knowledge?
• Slower process?
• No “Chinese wall”?
• Knowledge?
• Partnership?
What we need to work on
► Being efficient
► Being active
► Being respectful of information
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