After the recent earnings season, it’s time to measure the corporate venture capital (CVC) units of two of the largest – Intel and Alphabet. In terms of deals, some say that Alphabet already has beaten Intel this year. But in terms of amounts invested, Alphabet passed Intel long ago.
GV and Google Capital make up Alphabet’s corporate venture capital units. Together, GV and Google Capital have invested close to $3 billion as of June 30, 2016. And so far this year, both together have invested $400 million.
So far this year, Intel has only invested approximately $160 million. Overall, Intel Capital has invested $1.6 billion in its portfolio companies. But besides size, Intel lags behind Alphabet in terms of performance.
In SEC filings, both Alphabet and Intel report the fair value of their portfolios. Alphabet values its CVC portfolio at $8 billion and Intel values its CVC portfolio at $2.5 billion. More importantly, Alphabet portfolio has built-in gains of $5 billion while Intel’s has only $820 million as show in the charts.
And here is where Alphabet really beats Intel. Built-gains are the hypothetical profit which could be realized if the entire portfolio was sold. Measured solely on rates of return, Alphabet has done a better job of investing. And since both companies are using other people’s money, that probably matters more than number of deals.