Last week, while still under the dark cloud of a staggering $16 billion loss in Q3 of 2024, Intel announced the spinoff of Intel Capital, its venture capital unit.[i] This signaled the end of an era in corporate venture capital (CVC). For over three decades, ICAP stood as a gold standard of corporate venture investing, deploying around $20 billion across 1,800 startups and shaping entire technology ecosystems. Its spinoff raises critical questions about what it truly takes to succeed in corporate venture capital.
This development highlights a puzzling trend. While corporate participation in venture deals remains robust (consistently hovering around 50% of total deal value for the past decade), individual corporate venture units are showing surprisingly short lifespans. Our research indicates that the average CVC unit now lasts just four years, down from seven years in the early 2000s. Consider this disconnect: more large companies are launching venture capital initiatives than ever before, yet they're abandoning them faster than the typical startup takes to reach maturity.
The root cause of this dichotomy lies in a profound misalignment between how corporate venture capital actually works and how most executives think it should work. Companies often launch CVC units with vague notions about "learning from startups," "staying close to innovation," or "teeing up future M&A targets." While these goals sound reasonable, they fundamentally misunderstand the mechanics of successful corporate venture capital.
Success requires something far more specific: the "double bottom line" strategy.
The Double Bottom Line Strategy
To succeed, CVCs must deliver both uncompromising strategic and financial outcomes. While this may seem obvious, specific clarity around what these “strategic” and “financial” outcomes are, and why they matter, separates those who succeed from those who fail.
Bottom Line #1: "Strategic" Is About Making Money, Now
Imagine a typical company launching its CVC unit while declaring that strategic value, not financial returns, is the primary goal. When asked what "strategic" means, executives often offer broad definitions about access to innovation, learning from startups, "open innovation," expanding internal innovation capabilities, or identifying future M&A targets. These well-intentioned goals hide dangerous assumptions: that mere exposure to startups automatically translates into organizational learning, that watching innovation from the sidelines creates innovation capabilities, or that small investment checks naturally lead to meaningful M&A opportunities.
When inevitable downturns come, vague benefits like "learning" or "staying close to innovation" won't justify millions in investment. For a CVC unit to succeed, it must narrow the definition of "strategic" to focus on immediate, tangible benefits. The goal isn't broad exposure to innovation.
Specifically, “strategic” in corporate venture capital is about investing in future market leaders that (1) create new customers, (2) open new markets, or (3) create cost reductions for the parent company's core business, in the near-term.
These benefits must show up on the P&L statement within months, not years. To understand the importance of this focused definition, consider this illustration:
A CVC might invest $3 million in a startup that gets acquired four years later, delivering a $30 million gain; a stellar 10x return in venture capital terms. While $30 million would be welcome for a company like Intel, it barely registers for a corporation generating $54 billion in annual revenue. However, if that same startup developed a cost-saving sensor technology that saved Intel $30 million annually in manufacturing costs, over ten years Intel's little $3 million investment would create $330 million in combined profits and cost savings (while also enhancing the cost-competitiveness of Intel's core products). This example underscores the power of corporate venture capital when focused on immediate, measurable impact.
Such outcomes demand focus and discipline at every stage, from deal selection to post-investment support. Yet, maintaining consistent strategic clarity in the face of competing pressures remains one of the greatest challenges for CVC units. Time and again, we observe units drifting from their core mission, pulled in different directions by shifting priorities and the preferences of various corporate stakeholders. This pattern reliably predicts which CVC efforts will succeed, how long they’ll last, and which will fail.
ICAP’s early years exemplify a CVC doing this well. Les Miller, who led ICAP during its first decade, understood exactly how to create strategic value. His logic was compellingly simple: "We own 85% of the market [for PC chips], so if we grow the market, we get 85% of that."[ii]
That's why many of ICAP’s investments weren’t in semiconductor startups, but were instead in software companies, spanning enterprise applications, networking, AI, cloud computing and web services. This wasn't random diversification; it was about accelerating software adoption that would push the limits of current computing power and drive demand for more powerful Intel processors. Intel even had a word for this – “MIPS-sucking apps” – which is nerd slang for applications or software that demand a lot of computational power (MIPS is an acronym for Million Instructions Per Second; a measure of the computational speed of a processor). ICAP sought out and funded MIPS-sucking apps. Make no mistake, it wasn’t about vague notions of innovation tomorrow, it was about selling more chips today.
Bottom Line #2: "Financial" Is About Making Money, Later
Another irony of corporate venture capital is that financial returns are often explicitly deprioritized at the outset. Leaders emphasize strategic impact as the primary goal, yet financial performance inevitably becomes a key metric for success over time (no matter what people say at the start).
While yes, the near-term core business impact of a well run CVC portfolio will almost always exceed the cash returns of the venture deals themselves, but in the end those venture deals too must make money. The more, the better.
It seems obvious that a venture capital portfolio should make money. Yet in corporate venture capital, this fundamental principle often gets lost. While everyone notionally agrees that financial returns matter, the real test comes deal by deal.
Consider a common scenario: a startup is developing technology that perfectly aligns with current corporate priorities, but shows little potential to become a market leader or generate strong returns. Should the CVC invest?
The answer must be "no".
No matter how strategically relevant a startup's technology appears today, CVCs must maintain strict discipline about backing only companies that can deliver both near-term strategic value and strong financial returns. This isn't just about making money - it's about avoiding a perilous cycle that begins the moment a CVC starts compromising on either bottom line.
If CVCs begin to compromise by funding startups that are unlikely to generate strong financial returns, they find themselves walking through a door to the abyss.
The first pitfall stems from the temporal nature of venture capital: it plays out over time, not all at once.
Let me illustrate how, despite best intentions, the temporal nature of corporate venture capital creates a trap for unwitting CVCs over time. Consider a young corporate venture group just starting out. When 5G technology emerges as the defining strategic priority for the c-suite, they naturally invest in several promising 5G infrastructure startups. Next, edge computing becomes the new corporate imperative, drawing their investment attention. Soon after, machine learning captures corporate imagination, leading to investments there. The pattern repeats as quantum computing emerges as the next frontier, followed by web3 initiatives. Each investment wave aligns perfectly with the c-suite’s strategic priorities in each moment, yet over time the accumulation of these deals creates vulnerability for the dutiful CVC.
Years later, what began as a series of strategic investments at various moments in time has transformed into something quite different: a portfolio spanning multiple technological eras, each representing yesterday's version of the future.
Then it happens: today's executives, who are focused on immediate priorities (such as Generative AI, perhaps), look at the portfolio one day and it seems fragmented, misaligned and of questionable strategic value. Put bluntly, the portfolio looks like an incoherent grab-bag of mostly non-strategic, random startups. It looks like a mess that's begging to be cleaned up.
ICAP found itself at these crossroads multiple times. For instance, in 2016, the company announced plans to sell its stakes in over 100 companies, valued at approximately $1 billion, only to later cancel those plans. Under a new CEO at the time, one key reason for this shift was Intel’s recognition that many of these investments no longer aligned with its evolving strategy. The company sought to reallocate resources toward initiatives more closely tied to its core technologies and markets. In particular, Intel aimed to divest from consumer technology companies (considered strategic in years past) and refocus on startups specializing in drones, wearables, and the Internet of Things.[iii] Sound familiar?
If you were a CVC professional who, despite best intentions, found yourself in that scenario, ask yourself: would you rather defend a portfolio that’s making money, or one that’s losing money? Consider which position will be more defensible when corporate priorities inevitably shift, and budgets tighten. This is one key reason why CVCs must make money on the deals themselves, no matter what.
Going a step further, when a CVC unit fails to generate strong financial returns, it usually signals a deeper issue: their portfolio companies aren’t achieving significant market success.
This creates a cascading negative effect; startups that struggle to grow and capture market share are unlikely to deliver meaningful strategic value to the parent company. After all, a mediocre, zombie software company isn’t going to drive much demand for Intel's processors. So by prioritizing strategic objectives over financial objectives, CVCs are likely to end up with neither.
Said differently, by not sufficiently prioritizing financial returns as part of the double bottom line, CVCs often end up backing companies that are vaguely "strategic" in the moment, rather than potential market leaders. As a result, they end up with a portfolio full of lackluster companies that neither generate attractive returns nor deliver strategic impact - they're simply not successful enough to move the needle on either front. This combination of poor financial performance and limited strategic value is a sure-fire formula for getting a CVC unit shut down. The evidence is stark: while poor strategic alignment might be tolerated (at least for a while), sustained financial losses rarely are.
It may be surprising, but during certain years, Intel Capital was "the second-best business unit in the company in terms of profitability."[iv] Consistent financial returns protect a CVC unit during inevitable periods of corporate belt-tightening (which also gives promising investments time to deliver their full strategic value).
M&A: A Misguided Goal for CVC
One of the most common reasons companies create CVC units is to identify potential M&A targets for the parent company. The idea is simple and seemingly logical: instead of acquiring a company with high risk, the parent company can invest a smaller amount to de-risk the process. By becoming an investor, it can work with and get to know the startup better, potentially positioning itself to acquire the startup later with reduced risk. While this approach can indeed yield benefits and might even result in successful acquisitions occasionally, it should never be a primary reason for creating a CVC unit.
Empirically, companies almost never acquire their CVC portfolio companies. It happens, but our data shows it occurs less than 1% of the time. The reasons for this low frequency are speculative, but the data is clear: M&A outcomes are not a reliable output of CVC efforts. Therefore, if a company establishes a CVC unit with the expectation of teeing up future M&A, that unit is destined to disappoint. Failure to deliver on misguided M&A expectations is another common reason CVC units get shut down.
The problem runs deeper than simply accepting that M&A is a poor primary goal.
Even when companies acknowledge this, they often continue to treat their CVC units as though M&A is the underlying objective. This misalignment is usually more subconscious than conscious. For example, it can manifest in how portfolio companies are evaluated and the questions executives ask. For instance, a CEO might claim, “We don’t do CVC with the goal of M&A,” but then inquire, “Is the startup in a business we want to be in?” or “Is the startup in a business where we have core competencies?” or “Is this technology something that aligns with our R&D efforts?”
These are valid questions for evaluating internal projects or potential M&A targets, but they are usually unimportant distractions when assessing a CVC’s portfolio. A well-run CVC invests in startups that drive Bottom Line #1 (selling more of the parent company’s core products) and Bottom Line #2 (generating strong financial returns). Whether or not the startup aligns with the parent company’s existing internal competencies could be beside the point.
Consider the hypothetical example of Intel investing in Netflix during its early days. At the time, Netflix might have seemed irrelevant to Intel’s core business of semiconductor manufacturing. But Intel’s CVC team could have seen a broader opportunity: Netflix’s streaming platform, if successful, would create massive demand for faster consumer devices, high-speed internet, and cloud infrastructure; all of which required more powerful Intel CPUs. Viewing Netflix through an M&A lens might have led Intel to dismiss the investment entirely. After all, Intel was not in the entertainment business and had no strategic imperative to acquire a streaming platform. However, as a CVC investment, Netflix could have been a significant win by driving external demand for Intel’s core products. This distinction is critical. A CVC’s success isn’t about owning or operating the startups in its portfolio but about leveraging their growth to benefit the parent company’s core business.
Nobody really cares how many ICAP portfolio companies went on to be acquired by Intel, and that’s a good thing. During its better years, ICAP followed the double bottom line strategy so effectively that M&A outcomes didn't matter. It delivered core business benefits and sufficient financial returns to justify its existence. If a CEO decades ago had judged ICAP’s value solely by its M&A outcomes, it likely would have been shut down within four years; mirroring the average lifespan of today’s corporate venture capital units.
Builder Thinking vs CVC Thinking
It's worth repeating that there's a big difference between how executives, managers, engineers, scientists and other corporate "builders" think, and how a skilled CVC needs to think. Neither is better or worse, they're just different; the same way a surgeon needs to think differently than a pro basketball player. The key is to (1) know they're different, and (2) know why each skillset is important, and (3) not confuse them. Don't slice your basketball with a scalpel, and don't dribble on your patient's heads. This is easy in principle, but it's something companies find distressingly difficult in practice; the habits of builder thinking run deep.
"Builder thinking" sees the world sequentially from the inside-out. They make magic inside a company, then bring those results out into the world. It's about optimizing internal processes, core competencies and focusing (then doubling down) on whatever action the company believes to be its best single choice. It's about operations, control and creating an integrated system of production.
In contrast, "CVC thinking" sees the world from the outside-in. They look for magic outside a company (in the market) that can bring in new customers, new markets, or cost reductions. As a result, it's about largely ignoring internal processes and competencies, and hedging bets (rather than doubling down) under the assumption that there isn't a single best winning action; adopting a portfolio approach instead. It's about capital allocation, influence, and creating a network of pragmatic alliances.
Builders need to be skilled operators, CVCs need to be skilled capital allocators and influencers. Builders want control, CVCs must operate under the assumption that they don't (and can't ) have it.
The most effective CVC programs understand they're not there to operate startups. Their role isn't to direct innovation but to discover it - finding companies already creating solutions that could bring new customers or efficiencies to the parent company. They know success comes not from controlling these relationships, but from influencing them while preserving the independence that makes startups valuable in the first place.
ICAP and the Challenges of Maintaining the Double Bottom Line
ICAP’s history illustrates both the power of the double bottom line and the challenges of maintaining it over time. Like any large organization spanning decades, it went through multiple leadership changes, strategy shifts and organizational evolutions. What’s particularly instructive is how its commitment to the double bottom line fluctuated not just year to year, but often deal by deal, even during its strongest periods.
The challenge wasn’t just maintaining strategic focus at a high level; it was the day-to-day reality of how deals actually got done. Within ICAP, like many corporate venture units, internal politics often influenced which deals moved forward. Investment professionals, naturally eager to get deals done, would sometimes champion opportunities based on their likelihood of gaining internal support rather than their alignment with the double bottom line strategy. The political dynamics of getting deals approved could sometimes override the strategic discipline that made the model work in the first place.
This created a subtle but important pattern: during periods of strong leadership and clear focus, ICAP was better about backing companies that could both grow Intel’s core market and generate strong returns. But during other periods, more deals might get done simply because someone figured out how to navigate the internal approval process and convince the right stakeholders using whatever criteria seemed most persuasive at the time. The result was a portfolio that reflected this oscillation; some investments perfectly aligned with the double bottom line model, others less so.
Talent Scarcity: The Double Bottom Line Skillset
The expertise required to deliver this double bottom line is both specialized and scarce—even more so when considering the organizational dynamics at play. Success requires not just the ability to identify promising investments, but the political skill to maintain strategic discipline in the face of internal pressures and competing agendas.
Companies attempting to staff their CVC units typically fall into one of two traps. The first is turning to internal operational talent. This is understandable; venture capital has the illusion of being intuitive. Everyone thinks they have an eye for promising startups and "strategic" opportunities. Shows like Shark Tank reinforce this notion, making venture investing look like a matter of good business judgment rather than a highly specialized discipline.
This is a dangerous misconception, made worse by internal politics. Having an operations executive run a CVC unit is like having an attorney do your accounting just because they’re intelligent. While both roles require intelligence, they demand fundamentally different skills, experiences, and patterns of thinking. Operating executives, while skilled at running businesses, often lack not just the pattern recognition needed to identify promising early-stage companies, but also the ability to resist internal pressure to do deals that drift from the double bottom line focus.
The second trap is attempting to recruit venture capitalists from private firms. The problem? The VCs willing to take corporate venture jobs are often the industry’s underperformers. High-performing venture capitalists enjoy substantial financial upside, operational freedom, and professional autonomy. They have little incentive to accept a salaried corporate role with more constraints, less upside, and the additional burden of operationalizing benefits between portfolio companies and the corporate parent.
What companies often end up with are the washouts; VCs who couldn’t cut it at traditional firms but can still spin a good story. They’re great at throwing around venture capital buzzwords and exuding confidence, but they often lack the specialized expertise to deliver the double bottom line and the ability to translate investments into meaningful, lasting core business impact.
While there are certainly exceptions (this isn’t a blanket critique of all CVC professionals), it’s crucial to recognize that CVC demands a unique skillset distinct from both traditional venture capitalists and corporate operational managers. Acknowledging this reality is essential for identifying and addressing the gaps that determine whether a CVC initiative succeeds or fails.
Legacy and Lessons of ICAP
Intel Capital's legacy teaches us fundamental lessons about corporate venture capital. When it maintained strict focus on the double bottom line - driving both strategic core growth and financial returns - it created extraordinary value for Intel. For nearly three decades, ICAP showed how corporate venture capital could simultaneously grow core business opportunities while generating strong financial returns.
Yet ICAP's story also reveals the persistent challenges that can derail even the most successful corporate venture programs. The pressures are constant: shifting corporate priorities, the allure of vague strategic benefits, the difficulties of finding and keeping specialized talent, to name a few. These challenges compound over time, gradually eroding strategic discipline until, as we saw with ICAP's spinoff, even legendary programs can become vulnerable during times of corporate stress.
The lessons are clear but counterintuitive. Corporate venture capital is not an extension of ordinary business judgment or strategic planning. It is a specialized discipline requiring rare skills and insights that often run counter to conventional corporate wisdom. When executed well, it can profitably grow a business, create new customers, open markets, and reduce costs. But this success demands both precise strategic focus and uncompromising investment standards.
Like early explorers who charted treacherous waters, ICAP's three decades of experience now provide a clearer map for those who follow. The opportunity remains vast: corporate venture capital, executed with discipline, stands as one of our most powerful tools for driving innovation and growth. Yet as ICAP's recent spinoff reminds us, even the most established programs must maintain both strategic discipline and financial rigor, or risk becoming another victim of corporate cost-cutting. The question before us is straightforward: will future CVC units learn and benefit from ICAPs lessons, or will they repeat its costly mistakes?
[i] Reuters, “Intel to spin off its venture capital arm”, January 15, 2025 < https://www.reuters.com/markets/deals/intel-spin-off-its-venture-capital-arm-2025-01-14/>
[ii] Press, Gil. "What Corporate VCs Can Learn From The First Decade Of ICAP." Forbes, June 18, 2019. < https://www.forbes.com/sites/gilpress/2019/06/18/what-corporate-vcs-can-learn-from-the-first-decade-of-intel-capital/>
[iii] Primack, Dan. “Intel Capital Cancels $1 Billion Portfolio Sale”, Fortune, May 27, 2016. < https://fortune.com/2016/05/26/intel-capital-cancels-1-billion-portfolio-sale/>;
[iv] Press, Gil. "What Corporate VCs Can Learn From The First Decade Of ICAP." Forbes, June 18, 2019. < https://www.forbes.com/sites/gilpress/2019/06/18/what-corporate-vcs-can-learn-from-the-first-decade-of-intel-capital/>