Russia drives into U.S. fabless funding

LONDON – Rusnano, the investment arm of the Russian state, has in the last month alone struck three deals with fabless chip companies and is contributing to a turnaround in investment in semiconductor startups. Add to that other deals and the body has committed over a billion dollars to the electronic sector over the last 18 months, but with strings attached.

In its latest deal Rusnano led a $35 million round of funding for Aquantia Inc. (Milpitas, Calif.), a company founded in 2004 that offers a Ethernet PHY chipset to the 10GBASE-T standard. Rusnano is contributing the lion's share of the Series F funding round by putting its hand in its pocket to the tune of $25 million.

Rusnano was founded in March 2011 as an open joint stock company, wholly owned by the government of the Russian Federation, through the reorganization of the Russian Corporation of Nanotechnologies. Rusnano's mission is to develop the Russian nanotechnology industry through co-investment in nanotechnology projects. In most of its deals Rusnano has backed more mature startups and been the lead partner in a round of financing that has drawn smaller sums of money from the established investors.

The conventional wisdom until recently was that venture capital community has abandoned the semiconductor sector and moved on to try and graze and capitalize on other fields such as social media, the environment, health and well-being (see Group tackles declining VC for chips). That may be largely true of U.S.-based venture capital but Russia seems to believe in the potential of some Silicon Valley startups.

In mid-April Rusnano contributed to a $79 million investment round in Quantenna Communications Inc. (Fremont, Calif.), a developer of 4x4 MIMO 802.11n chipsets. Rusnano's contribution was $40 million. And in late April Rusnano acquired 4.97 million newly-issued common shares in photonic IC company NeoPhotonics Corp. (San Jose, Calif.) in a private placement transaction worth $39.8 million. So since mid-April Rusnano has committed $105 million to Silicon Valley startups.

The list of deals done by Rusnano that we know about is becoming long and impressive, at least in terms of the sums of money promised.

Since January 2011 Rusnano has committed to provide funding in the electronics sector of more than $1.1 billion:

Aquantia – 10GBASE-T Ethernet – $25 million

NeoPhotonics – photonic ICs – $40 million

Quantenna – 4x4 MIMO 802.11n Wi-Fi chips – $40 million

SiTime – MEMS-based silicon timing chips – $15 million

Crocus – MRAM magnetic memory – $300 million

Plastic Logic – organic transistor backplanes – $700 million

Of course, for Rusnano it's not just about the financial return on investment. Almost all of these deals have come with requirements that the recipient companies must open up manufacturing or design facilities in Russia. The fabless chip companies Aquantia, NeoPhotonics and SiTime are all slated to open design offices in Russia.

The two deals with Crocus and Plastic Logic are considerably larger because they involve the constructions of manufacturing facilities in Russia.


Related links and articles:

www.rusnano.com

News articles:

GSA spies venture capital investment uptick in April

Silicon Ventures tips plan to stem fabless VC drought

Group tackles declining venture capital for chips