Intel Capital's Future as 34-Year-Old Firm Goes Independent

# cloud # Intel

When Intel Capital announced its intention to separate from Intel in January, it was a surprising move, especially since the firm had been Intel's venture investment arm since 1991. This decision signifies the end of an era for what some consider to be the original corporate venture capital firm, established nearly 35 years ago. Over the years, it has supported notable tech companies like DocuSign, MongoDB, and Hugging Face, among nearly 2,000 others. For Mark Rostick, vice president and senior managing director at Intel Capital, this transition opens up new possibilities for the venture capital firm while retaining many of the advantages it enjoyed as a corporate venture capital entity. Rostick joined the firm in 1999 after a friend at Intel Capital suggested he apply for a job there. At the time, he was unhappy working as a tech licensing attorney and was eager to join the team, even joking that he'd mop the floors if necessary. "You get to work with the smartest people in the world," Rostick told TechCrunch. "The hardest thing in business is starting something from scratch and getting it off the ground. Those are the coolest people to hang out with because they're doing something special. Combining my training with working alongside people tackling the toughest challenges in business was irresistible to me." Rostick has remained with the firm for over two decades, during which time Intel Capital has invested over $20 billion in more than 1,800 companies and achieved over 700 startup exits. The idea of Intel Capital spinning out from its parent company was not new, Rostick noted, having been discussed several times before. The discussions always revolved around the benefits of increased agility and speed as an independent entity, balanced against the potential loss of support from a parent company. These discussions became more serious at the start of 2024 and solidified last fall, Rostick said. He and Anthony Lin, the head of Intel Capital, began preparing the team for the possibility of going independent. "We thought our track record deserved attention from outside investors," Rostick said. "We've done well, even when much of the venture industry struggled to achieve exits. We felt we could position ourselves as an outlier." The successful exit of Astera Labs, initially backed by Intel Capital in 2018, helped with their timing. Astera Labs went public in March 2024 with a $5.5 billion valuation and now boasts a $9.8 billion market cap, making it one of the most successful venture-backed exits of 2024. This success, Rostick believes, may have also demonstrated to potential limited partners (LPs) that Intel Capital was making smart investments and achieving returns at a time when venture-backed exits were scarce. Last year, U.S. venture-backed exits totaled $149.2 billion, according to PitchBook data, a significant drop from $312 billion in 2019, even excluding outlier years like 2021, which saw $841 billion in exits. It's not entirely clear that everyone at Intel Capital was on board with the change. At the managing director level, several long-term employees, including Mark Lydon, Arun Chetty, Sean Doyle, and Tammi Smorynski, have left the firm since these discussions became serious, as originally reported by Axios. An Intel Capital spokesperson stated that these departures were not related to the spinoff news. This move comes at a challenging time for Intel, the parent company, which has faced a turbulent year. Former CEO Pat Gelsinger retired suddenly on December 1, amid discussions about the spinoff, according to Axios. The company has also delayed the opening of its Ohio chip factory and decided not to bring its Falcon Shores AI chip to market. Additionally, Lip-Bu Tan has been appointed as the new CEO, reportedly planning significant changes for the company. Despite these challenges, the spinoff is moving forward. Rostick expects the firm to be fully independent by the third quarter of 2025. The new, yet-to-be-named firm will resemble Intel Capital in structure, retaining Intel as an anchor investor and continuing to invest in early-stage startups in areas such as AI, cloud, devices, and frontier tech. The firm plans to start fundraising shortly after the formal spinout. "We've discussed the idea with people and feel we've received a positive response," Rostick said. "We're not naive. We know it will be a challenging process." The success of this new independent firm will ultimately be determined by the market. In the meantime, Rostick emphasized that the firm is continuing to operate as usual. "We're investing in new opportunities and actively seeking them out," Rostick said. "We're maintaining our portfolio with follow-on investments where it makes sense for everyone and managing portfolio exits as we always have. When we make the switch, we'll keep going at the same pace we have been, as this has always been the plan."

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