It’s been 31 years since Qualcomm Inc. was a startup. Today the chip maker has revenue of $25.3 billion. Still, it is very much a part of San Diego’s startup scene: Its venture capital arm is a source of capital for a lot of new companies.
Qualcomm Ventures deploys approximately $200 million a year to fund startups. Qualcomm won’t say exactly how its bets have performed, but generally the return has been positive, officials said.
Local recipients have included Brain Corp., Edico Genome, Gimbal and Sotera Wireless Inc. There are plenty of out-of-town companies as well. San Diego’s biggest public company invests worldwide. There are currently 140 companies in its portfolio.
Through Qualcomm Ventures, the corporation has the dual goals of making money and growing the wireless ecosystem that its business depends on, company officials said.
Qualcomm Ventures executives Quinn Li and Patrick Eggen have heard a lot of pitches in their time.
Li acknowledged that a person like him can lose interest if a pitch is not compelling.
He prefers facts from executives making a pitch: What are you trying to build? Does it solve a specific pain point? Is there something that sets your product apart from the others? What is your position with respect to the competition? Who’s on the team?
And — this is important — How will you make money?
A good pitch is succinct, Li said. An executive touches on points “very crisply.”
Eggen said he likes a good story.
“Telling the narrative is so important” for company representatives, Eggen said. “It’s a good reflection on how they’re going to sell the business to their customers.”
The business is looking for future customers and partners, said Patrick Eggen, who leads Qualcomm Ventures’ San Francisco office. “Ventures plays an instrumental role in establishing those relationships early on,” Eggen said.
In a bid for new sources of revenue, Qualcomm is widening its circle, investing in markets such as wireless health care, the connected home, automotive and networking.
It is also looking into what Quinn Li, global head of Qualcomm Ventures, calls “frontier tech” — robots, augmented reality, virtual reality, drones, artificial intelligence and satellites.
The business invested in Cruise, a maker of self-driving cars, which General Motors acquired early this year for more than $1 billion.
Six portfolio companies have exited for more than a billion dollars in the past six years, including wearable fitness tracker maker Fitbit Inc. “That was a very good exit for us,” said Li.
Between 2010 and today, Qualcomm Ventures found buyers for 24 companies in its portfolio.
Qualcomm has had its venture arm since 2000.
Making an investment is just the beginning of a relationship, which frequently involves making introductions to other partners.
“The easier part is actually writing the initial check,” Li said. “The harder part is doing work with a portfolio company to help them grow the business.” It could be five to six years before an acquisition or an IPO.
A decision on whether to invest frequently spurs a spirited debate among Qualcomm executives. It’s not intuitive. “Divided rooms” often produce the best results, Eggen said. And he recalled one firm — which he did not name — that everyone was sure about.
It turned out to be a “massive zero,” Eggen said.