The Global Semiconductor Alliance's Capital-Lite Working Group Publishes "A Startup's Guide to Surviving an Investment Drought"
The Global Semiconductor Alliance (GSA), the voice of the global semiconductor industry, and its Capital-Lite Working Group, whose primary focus is to help semiconductor startups improve their chance of success by providing new business models, partnerships and tools, published “A Startup's Guide to Surviving an Investment Drought.” The white paper focuses on invigorating semiconductor startups to enable high quality innovation, increased investment and subsequent returns, and stimulate sustainable M&A, as well as new IPOs.
“The GSA has taken a very relevant, yet challenging situation, and used it as an opportunity to help strengthen and bring innovation to the semiconductor industry,” said Jodi Shelton, co-founder and president of GSA. “GSA's Capital-Lite Working Group has created a viable solution to develop, promote and execute expanded investment models that can be used by semiconductor startups to innovate and prosper.”
In addition to the white paper, GSA's Capital-Lite Working Group in conjunction with IPextreme and its Xena technology created a powerful resource portal that provides a centralized location for entrepreneurs to gain access to vital tools and services from the entire semiconductor supply chain. The Capital-Lite model greatly increases the likelihood of success for the startup venture with pre-defined and substantial equity outcomes for entrepreneurs and investors.
Along with the resource portal, GSA's Capital-Lite Working Group is advocating new funding models such as Silicon Ventures. Co-founder of Silicon Ventures, Ken Lawler, stated, “We are looking to reverse the current decline in venture capital investment in the industry by re-balancing the risks associated with semiconductor start-ups. Our model does this through active collaboration from inception between a startup, a strategic partner/acquirer and the investors, which will reduce product development costs, speed time to market, and provide compelling acquisition opportunities for the strategic partners.”
The Capital-Lite program includes companies from the whole of the semiconductor supply chain including: Altera, Battery Ventures, Broadcom, Cadence, Cavium, Cypress Perform, Dialog Semiconductor, Integrated Device Technology (IDT), Ernst & Young, Foundation Capital, GEO Semiconductor, Greenlane Advisors, Inphi, Intel Capital, J.P. Morgan, Kilopass Technology, LSI, Marvell, Morgan Keegan Technology Group, NEA, Open Silicon, Pagemill Partners, Pillsbury Winthrop Shaw Pittman LLP, PLX Technology, PMC Sierra, PricewaterhouseCoopers (PWC), Semitech Semiconductor, Shearman & Sterling LLP, Tabula and U.S. Venture Partners.
“GSA's Capital-Lite portal provides entrepreneurs with invaluable resources and industry contacts that are required to start a viable semiconductor startup today,” said Amer Haider, co-author Capital-Lite working paper. “The new Capital-Lite white paper proposes innovative and tested business models that establish new relationships between investors, existing semiconductor companies, startups and entrepreneurs. Similar to the early eighties when the Fabless model was born, the Capital-Lite model holds the potential and promise to enable a new wave of semiconductor startups and innovation.”
The capital needed for research and development (R&D) in emerging semiconductor companies and the rate of return on invested capital (ROIC) have escalated to levels leaving many venture capitalists (VCs) hesitant to participate in early stage funding. Instead, many VCs are abandoning semiconductor investment opportunities for other less capital-intensive alternatives such as Internet and software development companies.
However, despite the unfavorable risk/reward perception that many investors have toward the semiconductor industry, 2002 – 2011 data collected for mergers & acquisitions (M&As) and initial public offerings (IPOs) indicate something different, leaving the question of: how does the industry re-attract VCs and other investors?
To help answer this question, the GSA initiated the Capital-Lite Working Group. The working group is comprised of industry leaders from VCs; fabless semiconductor and IDM companies; semiconductor suppliers; and Finance, Banking and M&A executives. All of these supporters are working together to develop and promote expanded investment models for semiconductor startups to utilize as they continue driving innovation into technology.
To read the GSA Capital-Lite Working Group's “A Startup's Guide to Surviving an Investment Drought” white paper, please visit: http://www.gsaglobal.org/docs/2012/1025_Capital_Lite_Report.pdf.
For more information about IPextreme's Xena technology, please visit: http://www.ip-extreme.com/news/releases/rel121030.shtml.