Two initiatives, both wanting to improve the lot of the humble semiconductor startup, have been sighted. What are their chances of success? Can they turn back the ebbing tide of venture capital support?
LONDON – Like the proverbial London bus, you wait ages for an industry initiative to address the challenged funding for semiconductor startups and then two come along at the same time.
There are actually good reasons in operational theory that explain why that happens with buses. The case of industry initiatives is different but the rule is to follow the money.
What we have here is enlightened self-interest amongst proposer communities on each side of the ocean which see an impact to their own future sales if the supply of fabless chip company startups dries up.
So what are the chances of success for these groups? What are the differences?
First off it must be mentioned that they both have essentially the same aims; of reducing the costs and time to market for fabless startups. And they both have similar ideas on how they can help; mainly by getting the various players in the ecosystem to combine to reduce the cost at the early-stage in the hope of getting more successful startups and more sales later on.
But will small IP licensors be willing to forego some revenue in the short-term which could jeopardize their own existence. Similarly the option is already there for the EDA companies to provide no- or low-cost tools to startups or for foundries to provide free shuttle runs. If it is such a good idea, why would it need an industry initiative to make it happen?
Wade Giles, vice president of operations and program development at GSA, was able to share a list of participants at the series of Capital-Lite Working Group meetings that have taken place in recent months in Silicon Valley. It's a lengthy and impressive list which gives the impression of some traction.
Also I understand from Giles that the Cap-Lite WG is thinking about some robust equity-for-tools and equity-for-IP funding proposals, as well as trying to wrap its arms around those counter-cyclical semiconductor-friendly VCs.
Meanwhile the EMA is being a bit more coy and nebulous. Apart from Mentor and venture capital firm NESTA there does not appear to be a lot of support in place yet. That said the list of the great and the good on its board of directors and steering committee is also impressive.
Not sure I agree with your gravity and water analogy Peter...that analogy somehow implies some fundamental property...free market does certain things well but it is not the only system that can produce results...China growing 10% is not really a free market, neither are Scandinavian countries where standard of living are the highest in the world...sometimes governments, standard bodies, or wide industrial initiatives are needed to change the way things are getting done...whether these two initiatives that you are describing manager to do anything that remains to be seen ;-)...Kris
Actually the London bus analogy may be apt. When systemic blockages (traffic, finance, regulatory, lack of demand) are resolved, the traffic queued up behind a barrier is released to come through in a flood. In the business environment, this puts the vendors under particular pressure to differentiate themselves so they can capture the pend up demand. (In the London bus case, passengers typically seek the less congested bus since buses are commodity items without differentiating features.)