Silicon Capital, a new European-Indian venture capital fund focused exclusively on semiconductors, has funded its first start-up and has several more in the pipeline.

“Silicon Capital is the world’s first sector-focused venture capital fund. We believe that the success rate of start-ups can be dramatically increased by having specialised knowledge in the sector you invest in,” Rahul Sud, founder of Silicon Capital, told Electronics Weekly.

Sud, formerly the founding CEO of Lattice Semiconductor and more recently a vice-president for emerging businesses at STMicroelectronics, believes that a European-Indian VC fund is a natural evolution.

“The cost of designing a single chip of $35m to $50m has started to exceed the total funding available to a start-up through its first three funding stages,” said Sud.

“The funding doesn’t cover the cost of designing the chip. By using an India-centric design platform we can drastically lower the amount of venture capital required to go from start-up to sales and profits.”

Asked by how much it would reduce the VC funding, Sud replied: “By 50 per cent. If it costs $30m to $40m to develop a chip in Europe, doing it in India would cost $15m to $20m.”

Silicon Capital’s first investment is what Sud called: “The world’s first silicon RF design services provider.”

Called RF Logic, the company has its first customer, a Swiss company, for which it is designing a mobile TV chip to be made in IBM’s 90nm process.

“RF Logic didn’t just provide design to this customer, they chose the foundry and took the customer to meet the IBM people in Burlington and helped them to establish a strategic relationship,” said Sud.

For the future, Silicon Capital has, among other projects, a possible microprocessor start-up in the pipeline.