Chip developer Quantance Inc., which has just closed a $12 million Series B round as a follow-on to its $7 million Series A in 2006, says that should be enough for it to bring its products to market next year.
"Never say never," says CEO Vikas Vinayak when asked if there will be a Series C round. "We don't know how and when the financial markets will evolve. But we expect to ship our product in the second or the third quarter of next year."
That product is a chip that Quantance says is both challenging and inexpensive to develop. It is designed to crack the longstanding problem of strengthening wireless signals for cell phones, laptops and other devices, but because it is built on analog technology rather than the digital technology, development costs are more modest.
"Digital chip development involves more cutting-edge tools. Analog development is more about clever circuit design. It's a different discipline," says Eric Zimits, a partner with Granite Ventures, which led Quantance's Series A round and returned to participate in the Series B. The latest round was led by TD Fund, and included participation from DOCOMO Capital Inc. and InterWest Partners, as well as Granite.
Because the sort of chip development on which Quantance is focused is largely design-oriented, the 13-person company says its burn rate is low. Vinayak says that factor, along with its focus on such a daunting problem in wireless, helped it attract investors despite the ongoing financial meltdown. In fact, he says, the company had only sought to raise $10 million.
This latest chip company funding comes at a time of increased caution surrounding all VC investments, which appears to have hit the chip industry particularly hard. One big problem with funding early-stage chip companies is they often require $25 million to $50 million just to launch a single product, before they ever know if it will work well, and if there will be a large market. Unlike software, it's much harder to tweak a chip after it's been launched.
"We understand the risks," says Granite's Zimits, who said he nonetheless believes there is plenty of need for innovation in chips and opportunities for early-stage investors to make money. As for investing in any startups at the present time, Zimits said his practice was to try to tune out all "the noise."
"The fact that there's a mortgage crisis, and that a lot of large banks are over-extended, does not take away the fact that there is a real need for a technology that can strengthen wireless signals," he says. -- Andrea Orr
See Oct. 18 story on chip company fundings from The Deal
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