This document provides information about Applied Ventures, the corporate venture capital arm of Applied Materials. It discusses Applied Ventures' structure, investment size and criteria, portfolio focus areas, and exited companies. It also provides an overview of Applied Materials as a company and introduces the Applied Ventures investment team. Finally, it discusses trends in the corporate venture capital environment over the last decade.

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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

2. Applied Ventures Intro

3. External Use
The Most Exciting Industries on Earth
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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

4. External Use
The Global Strength of Applied
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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

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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

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Exited Companies
Applied Ventures Portfolio Companies
OTHERS
IPO
IPO

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Applied Ventures Team
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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.

8. Corporate Venture Capital trends and overview

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The New Realities of Corporate Venture
Crowd-sourced by members of the
Corporate Innovators Huddle’s
Corporate Venture Forum
November 29, 2012

10. External Use
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
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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
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“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

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Global Corporate Venture Capital Activity

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Global Corporate Venture Capital Activity

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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

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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