A Look Inside Qualcomm Ventures

In March, Qualcomm Ventures and its parent, Qualcomm, announced its new $100 million Snapdragon Metaverse Fund to invest in immersive experiences involving augmented, virtual and mixed reality technologies as they relate to the metaverse.

At first blush, the metaverse seems a long way from the wireless tech and chips the San Diego giant is known for. However, the deal is a good reminder of the deep reach Qualcomm has into varying sectors. That reach is due to its foundational technologies and the mission of its 22-year-old venture firm to continue to build out that ecosystem.

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“We supply most of the metaverse with semiconductors,” said Quinn Li, senior vice president and global head of Qualcomm Ventures. He oversees the firm’s $2 billion global venture investment portfolio of more than 150 companies.

While not as old as other large corporate venture arms like Cisco Investments and Intel Capital, Qualcomm Ventures—founded in 2000—is approaching nearly 500 total investments, according to Crunchbase data.

Investments

Some of those investments include early deals into companies that have become the next generation of big-name tech companies such as Cloudflare, Fitbit, SentinelOne and Zoom.

“We realized we needed to invest in the ecosystem where we didn’t make a product,” Li said of when the firm was started. “We wanted to gain insights and invest in companies that advance our technologies.”

In 2021, the firm took part in 31 different rounds for 30 different startups. It was its most active year since 2017, according to Crunchbase data.

“In recent years, we have expanded to 5G, AI, automotive, IoT and (different) connectivity tech,” said Li, who took over leadership of Qualcomm Ventures in 2016. “Our investment mandates are aligned with our business verticals.”

Some of the firm’s biggest deals in the past year include:

In August, it participated in a $500 million Series E for Brazil-based Nuvemshop, which provides SMBs in Latin America with the tools to set up and manage their online business.
Last July, it took part in a $200 million Series C for Israel-based Wiliot, an IoT company whose tags can be attached to products to sense a range of data.
Also in July, the firm participated in a $235 million Series C for Israel-based AnyVision, a developer of an AI platform for safety.

The fund

Like most corporate venture firms, Qualcomm invests out of an evergreen fund, which usually has a budget of around $150 million to $200 million a year, Li said. The firm invests anywhere from institutional seed rounds to Series A, B, C and up. The initial investment ranges from $1 million to $10 million, he added.

While Qualcomm Ventures is not known for leading rounds—it only has led eight rounds since 2021, according to Crunchbase—it will lead in scenarios where it has domain knowledge and a lot of conviction, Li said.

Since it does not lead many rounds, the firm usually does not get a board seat but may play an observer role, Li said. It also does not ask for “right of first ” terms—where an investor gets the first shot at buying the startup before any other suitor.

“Our concern is building great businesses—building both return and the ecosystem,” he said. “We help navigate them through Qualcomm and our network.”

Exits and unicorns

That network and those connections have helped Qualcomm Ventures realize 122 exits since being founded, according to Crunchbase data. In those numbers are some recent M&A deals, including:

AMD’s $1.9 billion acquisition last month of Pensando, a developer of edge services and programmable processors for cloud computing.
Microsoft’s agreement to acquire 5G software maker Affirmed Networks valued the company at about $1.35 billion in May 2020.
Marvell announced last August it had reached a deal to acquire network solutions provider Innovium for $1.1 billion.

Of those exits, 17 have come through IPOs, including Matterport, Cloudflare, SentinelOne and Zoom.

Qualcomm Ventures also has helped build out a significant stable of unicorns. While the firm has had two dozen unicorns exit over the last two decades, it still holds 22 in its portfolio currently, more than other venture arms of companies like Cisco, according to Crunchbase data.

That stable includes the likes of San Jose-based storage startup Cohesity, San Francisco-based cybersecurity firm Lookout, Florida-based VR developer Magic Leap and San Mateo, California-based open-source semiconductor startup SiFive.

Building the portfolio

To help companies become unicorns or prepare to exit, Qualcomm Ventures works closely with its parent company. Qualcomm actually helps the venture arm vet some of the companies it is looking at, said Carlos Kokron, vice president and managing director of North America for Qualcomm Ventures.

“We are in this to make money, but also look for startups that are part of the ecosystem,” Kokron said. He spent more than a decade investing for the firm in Latin America before moving to the US four years ago. “We look at startups we can help with product or go-to-market operations…We have different avenues of collaboration.”

Qualcomm Ventures’ reach is wide. While the majority of its investments are in the U.S., the firm has made a dozen or more investments since 2018 in China, India and Brazil.

Merav Weinryb, the firm’s vice president and managing director for Europe and Israel, said Qualcomm’s strong reputation for innovation and tech knowledge makes the firm very appealing for startups to have on their cap table.“We can easily connect (startups) with the expertise they need,” she said.

Growing the portfolio

As those exit numbers grow, Qualcomm Ventures continues to look to replenish its portfolio.

Li said the firm plans to increase investment in artificial intelligence. This is especially necessary as more companies look to AI processes closer to the edge instead of sending data back through to the cloud.

“Companies are leveraging the processing capabilities they have now,” Li said. “AI has increased because chips are better.”

The metaverse will also continue to be an area of interest, especially with all the different technologies such as AR and VR that it encompasses, Kokron said.

“The metaverse is going to be big,” he said.

New technologies around the IoT involving drones, robots, 5G private networks and even predictive maintenance also fall within Qualcomm’s ecosystem. Something like robotics can often scare off investors due to its intensive research and development budgets. But it can be a perfect investment for a corporate venture arm of a huge corporation known for devices and chips.

“We like hardware,” Weinryb said. “We understand it and have a long horizon.”

The current down market

It can be fun to look ahead. But some aspects of the immediate future may be a little scary for venture capital investors

After the venture market experienced a record-shattering year in 2021, the market seems to have turned. However, that will not change Qualcomm Ventures’ approach as it continues to cultivate its parent’s ecosystem.

“Our pace is a fairly systematic approach,” Li said. “Markets go up and down…We have a consistent approach. We look for gaps and disruptions in a particular space.”

Kokron said it seemed like a correction was overdue. The current pullback has some positives like lower valuations and more time to vet new investment opportunities, he said

“The world got totally crazy last year,” he said. “But innovation does not go away. (The pullback in the market) doesn’t change our approach.”

“Investing is an art,” he said. “It’s a great time to invest.”

In these times it’s even more important to stay both consistent and disciplined, said Li.

“We’ve gone through financial crises,” he said. “You can weather those storms.

“We have patience since our interests, the founders’ interest and the other investors’ interests align,” he added.