R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

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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B 0

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R 6

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Applied Ventures

Intro

External Use

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G 141

B 142

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R 69

G 153

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G 203

B 0

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G 121

B 1

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G 32

B 44

R 163

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B 232

R 122

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B 0

R 77

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B 83

R 6

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B 60

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

External Use

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R 69

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B 0

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B 1

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G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

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

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

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

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

Exited Companies

Applied Ventures Portfolio Companies

OTHERS

IPO

IPO

External Use

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G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

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.

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

Corporate Venture Capital

trends and overview

External Use

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

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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B 142

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R 69

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B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

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

10

External Use

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

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

11

External Use

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

12

“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

External Use

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B 0

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13

Global Corporate Venture Capital Activity

External Use

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

14

Global Corporate Venture Capital Activity

External Use

R 139

G 141

B 142

R 224

G 225

B 221

R 69

G 153

B 195

R 254

G 203

B 0

R 255

G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

15

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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R 69

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B 0

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B 1

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G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60

16

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

R 139

G 141

B 142

R 224

G 225

B 221

R 69

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B 0

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G 121

B 1

R 205

G 32

B 44

R 163

G 219

B 232

R 122

G 184

B 0

R 77

G 79

B 83

R 6

G 30

B 60