Great article and a wonderful effort. Can you point to any success stories to date? I heard rumours of an option/call setup like this being used by one of the few startups that have been able to raise significant amount of funds, but of course I don't have the details..
Based on my own painful 5 year fund raising journey, there have been two challenges that have stood out.
1.) High Risk: Most VCs I have interacted with believe it's going to cost >$20M at minimum to get to an exit and there is a real risk that it will cost upwards of $100M (based on historical data points). I have been standing on my soap box for years shouting that these numbers are inflated, but it's an uphill battle. My point is that thanks to IP availability, EDA tools, and the general "virtual startup" trend it's cheaper than ever to design chips. Adapteva created four silicon tapeouts for less than $2.5M. The risk equation changes completely if the funds needed to exit is less than $10M.
2.) Bad exits. It pains me to say that many semiconductor companies are..cheap. Hah I said it.:-) Maybe conservative is a better word. If only there there would be a few bubble exits like the $4.7B Chromatis exit to Lucent back in 2000. Things would get better in a hurry! There have been a few decent exits recently, like the $500M sale of Anobit to Apple, but in general exit valuations have been pretty low. System-On-Chips are the tails that wag the dogs. A key chip technology can actually move the needle by billions of dollars for large system companies. Samsung, Apple, Huawei, and Orcale are examples of companies that "get it".
Especially as I am the co-founder of an EDA start-up company :-) At Synflow we are reaching out to semiconductor companies to find our first client/strategic partner. This company will be the first to experiment with our product Synflow Studio, and they will have the opportunity to give us important feedback and help us improve our product, before others start using it. Take a look at our blog and our YouTube channel to learn more!
As we unveil EE Times’ 2015 Silicon 60 list, journalist & Silicon 60 researcher Peter Clarke hosts a conversation on startups in the electronics industry. Panelists Dan Armbrust (investment firm Silicon Catalyst), Andrew Kau (venture capital firm Walden International), and Stan Boland (successful serial entrepreneur, former CEO of Neul, Icera) join in the live debate.