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Tech investment - Intel Ignite is a “membrane” for the company, says its Europe lead

Chris Middleton Profile picture for user cmiddleton April 23, 2024
Summary:
Intel is backing a group of European start-ups to succeed. But who benefits most?

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(Image by Gerd Altmann from Pixabay )

Chip giant Intel has been determined to raise its profile of late, as the AI Spring has often focused minds on a rival: the blooming fortunes of GPU maker NVIDIA, whose market cap passed $2 trillion last month. 

By contrast, the total value of Intel’s shares has never exceeded the $509 billion it was worth a quarter century ago, in the halcyon days of dotcom Summer. At the time of writing, its market cap of $145.6 billion puts it just inside the top 90 most valuable companies: hardly stellar, with eight of the top 10 being US technology behemoths.

So, how is its quest to raise its profile going? 

Last month, Intel was rarely off the conference stage at KubeCon + CloudNativeCon in Paris (see diginomica, passim), where its alliance with the open-source and cloud-native communities was a key talking point, especially in AI. 

Also present at that event, which was attended by over 12,000 delegates, were numerous early-stage firms that had benefited from Intel’s Ignite program, a three-month accelerator for deep-tech start-ups.

With deep tech reportedly now the largest venture capital category in Europe, on 22 April Intel Ignite announced its latest European cohort, in categories such as semiconductor manufacturing, silicon, photonics, memory compression, data streaming, and AI processing, plus applications in robotics and satellite communications.

Those start-ups include: 

  • AIRMO, a specialist in satellite-based AI greenhouse-gas analytics
  • Cartken, a low-cost self-driving stack for outdoor robotics
  •  Flink, a multi-robot software platform
  • UBIS EDA, a predictive bug-fixing platform for the chip sector
  • NcodiN, a specialist in laser-integrated photonics
  • Pathway, a provider of unified data processing
  • SCIL, a nanoscale substrate printing company
  • Ultralytics, a maker of open-source and no-code solutions for computer vision
  • Waveye, AI-driven radar imaging for autonomous systems; and
  • ZeroPoint, soft IP for secure, lossless compression.

But Intel Ignite is far from a traditional VC program or investment bootcamp, says the MD of its Europe program, Markus Bohl:

We look into early-stage breakthrough technologies. But even internally we get asked the question: ‘You don’t take an equity stake, you don’t charge, and you’re not selling these technologies. So, what are you doing?’

And the answer is, we're the membrane for Intel. In other words, how does an early-stage breakthrough innovation get into a large corporate like us, when it is normally too early, too immature, or not ready? Even if it's a Series B start-up, it is normally too small to get a handle on. 

So, we have this interface that is designed to interact with these companies in the early stages. It's very founder friendly. We don't take equity, we don't charge, and we don't sell. Our North Star is really the success of the teams. And the proxy for that is funding. So, we have a complete alignment of interests.

Bohl adds:

Plus, the insights that come from that are the workloads of tomorrow. So, what are the requirements of those developers? We get a glimpse into the future.

‘It’s a win for everyone’

By Bohl’s own admission, therefore, the Ignite ‘membrane’ is as much about absorbing deep tech into Intel as it is about helping fledgling companies make their way in the world. A form of enlightened self-interest, in fact, backed by a 12-week US-style accelerator.

But what does he mean by funding being the “proxy” for Intel’s interest, given that it does not invest money itself? He explains:

Ignite is completely non-dilutive. We are not investing capital, but a lot of time and expertise. Plus, a lot of network and know-how. And this is what the start-ups value. 

So, why don't we take equity? It’s very simple: we want to have the best deal flow. And if you take equity - no matter how small it is, or no matter how big your VC investment is - you don't get the best deals.

If you do invest like a VC, OK. But then you are very limited; you cannot do 80 deals a year, as we do. And in that case, those early-stage companies would not make sense. So, for us, it's about where the deal flow comes from.

Intel currently runs its accelerator in four locations: Tel Aviv, Munich, London, and Boston. And it turns out that VCs do have a role in that process. 

He continues:

Almost all of the deal flow comes from referrals. And the vast majority of those referrals come from venture capitalists. So, the VCs send us companies they have invested in, whenever they think that we can help accelerate them. Or, sometimes, it’s companies they would consider investing in, but they're not ready yet.

To do that, we have created a network of 130 or 140 VCs, just in Europe, to provide us with deal flow. But we also have a network of VCs that could write a check for the next round. So, as I said, it’s about the success of the teams in the early stages, and funding is the proxy for that.

In other words, external VC funding alerts Intel of the opportunity: for those backers to accelerate their investments at a large corporate’s expense; for Intel to absorb an early-stage technology; and for the start-up to grow. 

Potentially a win for everyone, with -  arguably - the odds stacked in favour of the investors, but only if the start-up succeeds. A fair summary? He explains:

We want to see that kind of ambition, that potential, become a global solution.

Then he clarifies the nature of Intel’s own investments:

Ignite itself does not provide, let's say, engineering resources or compute resources. But we have a system, a programme, called Lift Off. And they provide access to the Intel Developer Cloud - say, for AI workloads for AI start-ups. This is very close to us. And we constantly refer teams there.

And we have a meeting with each company in the cohort where we say, ‘OK, let's open the kimono. Let’s really find out what your challenges are, what your pain points are, and what keeps you awake at night.’ And I know it’s not the pitch deck or the website, as I've been building companies throughout my career!

My take

We wish the latest cohort luck in their participation over the next quarter.

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