Silicon Valley Nation
Silicon Valley Nation: VCs still hate you
Brian Fuller
1/24/2013 1:27 PM EST
Moving past denial
Some of the lowered funding is due to lack of interest or the perceived long-return windows or frustrations about the global macroeconomic environment. But some of it undoubtedly is due to the fact that semiconductor start ups are leaner than they were 15 years ago, fewer engineers, better tools delivering more productivity, more robust global supply chain to leverage. In other words, semiconductor startups are less expensive to invest in.
It's time to move past denial. The good news is engineers are getting amazingly creative in bringing their creative ideas to life. Exhibit one is our friend Andreas Olofsson and his very small team at Adapteva, which recently crowd-sourced $900,000 on Kickstarter to fund a new mask set for its Epiphany processor to build the next generation of their signal-processing device. Even before that, he'd already done many-core processors at 65- and 28-nm for just $2 million.
The other trend I cling to is that all the amazing innovation of the past decades in hardware and software is not only putting accessible, affordable hardware and software tools in the creators' hands, it's enabling more and more affordable applications for the consumer market. Remember, this is a relatively new opportunity for an industry that has long been a slave to behemoth segments like mil/aero, computing and telecommunications.
When a kid can conceive of aftermarket driver-assist system that uses low cost, stick-on sensors communicating via WiFI with your smart phone or tablet, it's a whole new ballgame (I will find this guy). And it's a ballgame that allows more engineers and entrepreneurs to play without the VC stranglehold. Greater risk perhaps, but more freedom, control and potential reward.
Related stories:
--Silicon Valley Nation: You want how much?!
--How to make a processor for (way) less than $100 million
--Silicon Valley Nation: Forbes innovation list disses electronics
--How Kickstarter created a community for Adapteva
--Adapteva Kickstarts a $100 supercomputer
Some of the lowered funding is due to lack of interest or the perceived long-return windows or frustrations about the global macroeconomic environment. But some of it undoubtedly is due to the fact that semiconductor start ups are leaner than they were 15 years ago, fewer engineers, better tools delivering more productivity, more robust global supply chain to leverage. In other words, semiconductor startups are less expensive to invest in.
It's time to move past denial. The good news is engineers are getting amazingly creative in bringing their creative ideas to life. Exhibit one is our friend Andreas Olofsson and his very small team at Adapteva, which recently crowd-sourced $900,000 on Kickstarter to fund a new mask set for its Epiphany processor to build the next generation of their signal-processing device. Even before that, he'd already done many-core processors at 65- and 28-nm for just $2 million.
The other trend I cling to is that all the amazing innovation of the past decades in hardware and software is not only putting accessible, affordable hardware and software tools in the creators' hands, it's enabling more and more affordable applications for the consumer market. Remember, this is a relatively new opportunity for an industry that has long been a slave to behemoth segments like mil/aero, computing and telecommunications.
When a kid can conceive of aftermarket driver-assist system that uses low cost, stick-on sensors communicating via WiFI with your smart phone or tablet, it's a whole new ballgame (I will find this guy). And it's a ballgame that allows more engineers and entrepreneurs to play without the VC stranglehold. Greater risk perhaps, but more freedom, control and potential reward.
Related stories:
--Silicon Valley Nation: You want how much?!
--How to make a processor for (way) less than $100 million
--Silicon Valley Nation: Forbes innovation list disses electronics
--How Kickstarter created a community for Adapteva
--Adapteva Kickstarts a $100 supercomputer
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EREBUS
1/24/2013 4:04 PM EST
I am not surprised. Fewer than one in ten great ideas ever end up as great products. Since we are experiencing a transition in electronic device use, that makes each technology advancement more risky.
I learned a long time ago that you need to look very carefully at your product/innovation, your projected market, and define the acceptable features list with deliberation.
Many great ideas are just overcome by events before the device can reach maturity. In other cases, the FAD environment for that "type" of product passes, so you have the last great old device.
Venture Capitalists want low risk high payoff/profit devices. There are a lot of different ways to get there, but the VC must be persueded that yours is the one that makes them the money.
When you pitch your idea, make sure that you speak their language. They are not as technically astute as you are, but they know when the numbers work, so show them a low risk path to the pot of gold.
Just my opinion.
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Stefan.Ahlqvist
1/25/2013 7:29 AM EST
If you really do have a low risk to the pot of gold, and could convince other people of this - go to a bank.
VC should be all about medium-to-high risk and large pots of gold.
But I do agree, some VC companies has started to act like banks in their risk portfolio.
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TJones
1/25/2013 2:15 PM EST
Wow, did not realize the Viet Cong were such a hi-tech investment powerhouse!
;-)
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Hughston
1/28/2013 10:41 AM EST
I think part of the reason is increased capital gains taxes. Other reasons are that most semi startups are outside the 5 year investment window that VCs look for and the perceived return on the investment is 10 to 1. VCs are wanting more than that. I wonder how many good semi investment opportunities there really are today?
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BobsUrUncle
1/31/2013 5:09 PM EST
VC are just leeches and fleas on the backs of entrepreneurs. They *will* steal your company. Just ask the founders of Cisco. Use the lean startup model and places like kickstarter to fund your company. If you have a good product, the money will come to you and you can negotiate on your own terms. NEVER loose control of your company. Running a business is not rocket science as Steve Jobs once said.
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jlinstrom
2/4/2013 2:11 PM EST
also look to 'angels' - less pressure to hit a grand-slam, more freedom to innovate and decide, keep more control. Fills the niche between kickstarters and V.C.s
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Honkers
2/13/2013 7:53 PM EST
If there an easy 3 step process to access capital, i would like to know.
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