Unless you've been trekking in the Himalayas the past decade, you've noticed a big change in the nature of semiconductor and EDA startups. (And if you have been out wandering, welcome back! There's some cool new mobile technology you're going to want to know about).
Semiconductor and EDA startup companies are being funded differently, and, in a lot of cases, for a lot less than back in the day.
Venture investment in semiconductor startups, for example, is roughly half what it was in 2002. That's usually the mark of a maturing industry, yet ours not only matures but the technology gets more complex every year. That creates an unusual tension: Startups are developing amazing new technologies and need funding to do it, but just what level of funding?
Semiconductor Startup Malaise
Cadence CEO and longtime venture capitalist Lip-Bu Tan is by
his own description
"doubling
and tripling down" on his own semiconductor investments. That's great but he's
the exception rather than the rule.
That said, semiconductors and EDA startups are nothing if not adaptive.
The industry has spent the past decade giving itself an expectations haircut. On top of that, new forums for investment have sprung up in just the past several years that fund more than just music and movie creation.
Some recent highlights:
- I first met Andreas Olofsson and his team at Adapteva while I was driving around the country for a year interviewing engineers on the Drive for Innovation. That was just as the idea of crowd-funding was forming itself in his mind. He and his team later used Kickstarter to get funding toward a $100 supercomputer.
- In February 2013, I talked to a gentleman named Elliot Small, who was trying to fund a better lithium-ion battery charger system. Small was just starting when I talked to him, but it looks like things have turned dramatically for Small and his company, Potential Difference.
- EE Times a year ago posted a story on the Top 10 engineering Kickstarter projects.
- And now a test and measurement startup, Red Pitaya LLC, is leveraging crowd-funding.
So there's momentum building for crowd-sourcing some technologies. But the news is not as rosy as Kickstarter or its fans would have you believe.
Project Fail
Independent analysis suggests that more than 40% of Kickstarter projects fail to achieve their funding level, although investors overwhelmingly tend to back the right horses (see the related info graphic below) with their overall dollars.
On top of that, technology projects rank second-worst in terms of success on Kickstarter, with just 39 percent achieving goal. What works? Dance and theater projects (liberal arts majors, rejoice!!).
Dance, by the way, had the fewest number of projects (758) submitted for the period covered in the infographic, followed closedly by technology (806). Dance projects sought an average of $2,374 each, while technologists were asking for $12,282, which may have contributed to technology's high failure rate. (Then again, the average film and video project brought in $40,000).
All that said, crowd-funding is here to stay. Kickstarter reports that 2.2 million people contributed $319 million last year, funding more than 18,000 projects.
And right now, you'd be wise to jump on the Arduino-Raspberry Pi-Android and wireless bandwagons if you're looking to fund a project, at least according to the visualization (right) of the successfully funded technology projects on Kickstarter today.
Co-existence?
The larger question is not whether crowd-funded and venture-funded projects will co-exist but in what proportion?
Right now the technology projects skew toward the easy, understandable and consumer-friendly, but as people get savvier, conceivably smaller investors could be investing money into new and interesting semiconductor and EDA strategies (a la Andreas Olofsson and Adapteva).
What do you think?
Brian Fuller
Related stories:
--Interview with Lip-bu Tan, Part 2: Energizing the Electronics Industry
--Cadence CEO at DAC 2013: 'I've Doubled, Tripled Down on Semiconductor Investment'
