When Intel Capital announced plans to spin out of Semiconductor Giant Intel in January, it was a bit shocked considering the company has been operating as Intel's venture investment division since 1991.
In many respects, the decision marks the end of an era of what is considered to be the first ever corporate venture capital firm. The company was founded almost 35 years ago and supports well-known enterprise high-tech companies, including Docusign, Mongodb and Hugging Face.
However, for Mark Rostick, Vice President and Senior Managing Director at Intel Capital, the transition represents a new opportunity for VCs, allowing the company to maintain many of its profits as a CVC.
Rostick joined the company in 1999 after a friend of Intel Capital recommended that they try to get a job there. At the time, Rostick, who didn't enjoy working as a high-tech licensing lawyer, pulled her up. After he met the team, he said he would do anything – even wipe the floor – to get involved.
“You can work with the smartest people in the world,” Rostic told TechCrunch. “The hardest thing in business is to start something from nothing and literally leave the ground. They do something special, so they're the coolest people to hang out. [combined] Working with people doing the most difficult things in business, it appealed to me. ”
Rostick has been stuck for over 20 years, investing more than $2 billion in over 1,800 companies, while gaining exits for over 700 startups.
Rostick said he believes that the idea that Intel Capital would turn from its parent company was not new and has been discussed many times in the past. The discussion has always been focused on the pros and cons of how quickly a company can move or be more agile, but also on how much the company must give up without the parent company.
However, these conversations began to get worse in the beginning of 2024 and became concrete last fall, Rostick said. He added that he and Inter Capital Head Anthony Lynn were able to make the team comfortable with the idea of taking a strike on their own.
“We thought our track record deserves attention from outside investors,” Rostic said. “We were doing really well, but we were able to position ourselves as a bit of an outlier because a lot of the venture industry couldn't make the exits happen, so we were able to do that.”
He added that last year's exit from Astera Lab helped them with timing. Intel Capital initially supported Astera Labs in 2018. The semiconductor company was published in March 2024 at a valuation of $5.5 billion. A year later, Astera Labs' market capitalization is $9.8 billion, making it one of 2024's most successful venture support outlets.
Rostick said the success could have shown a potential LPS that Intel Capital is a company that has made the right bets, with few exits to venture support and seeing capital returns at once. Last year, US venture support outlets totaled $149.2 billion, according to Pitchbook data. This was significantly lower than $312 billion in years like 2019, and even excluding outward layers like 2021, it excluded $841 billion.
It's not 100% clear that everyone at Intel Capital was actually on the changes. At the Managing Director level alone, there have been multiple departures since the talks on these spinoffs began to get serious. Mark Lidon, Arun Chetti, Sean Doyle and Tamimi Smolinski have been in the company for over 20 years, all reported by Axios.
A spokesperson for Intel Capital said the recent deviations have not been linked to news that the company is spinning.
The move also comes at an interesting time for the parent company of a company that has been undergoing a turbulent year. Former CEO Pat Gelsinger retired suddenly on December 1st. He was discussing spinning with the company, Axios reported. The company has since decided not to bring Falcon Shores AI chips to the market because they had to delay the opening of the Ohio Chip Factory again. We have also added Lip-Bu Tan as our new CEO. This CEO is said to have been a surprising change in the company's mind.
Anyway, the spinoff continues.
The company expects it to be completely independent in the third quarter of 2025, Rostick said. The company, which has not yet been named, is now very similar to Intel Capital, he added. The company will maintain Intel as an Achor investor and invest in early-stage startups in the same sector, including AI, cloud, devices, and Frontiertech. The company could potentially run a fundraiser shortly after an official spin-out.
“We socialized with people about this idea and felt that we've received a pretty good response,” Rostic said. “We're not naive, we know it's going to be a difficult process.”
The success of this new solo company rose to determine the market. But in the meantime, despite everything else, Rostick said the company continues to operate primarily as normal.
“We are investing in new opportunities and are actively looking for them,” Rostic said. “We maintain our portfolio. This is a follow-on that makes sense for everyone. And, as you know, we manage our portfolio as we always do. When we do the switch, we continue at the same speed as we did today, this was always a plan.”