mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

VCs In Manchester

It was quite shocking to hear last week that the most difficult part of the start-up process for a UK high-tech start-up was getting an introduction to a venture capitalist. In the end the company had to pay to get an introduction.

 

 

In a world of incubators, national microelectronics initiatives, networking organisations and  business stimulus bureaucracies, it is awful that a fledgling engineering company should have to pay for an introduction to a VC.

 

The company in question was Silistix, which produces software for the design and synthesis of customised on-chip interconnect using clock-less circuits.

 

If Silistix had been in Bristol or Cambridge would it have had this problem? Somehow one can’t see it. Someone close to the founders would know a VC, or would know someone who knows a VC.

 

Stan Boland, who has probably raised more VC money for a semiconductor start-up ($230m) than anyone else in the industry’s history, points out that that all four of Icera’s founders had existing links to VCs when they founded the company.

 

He reckons “It is important to either have an existing link to VCs so that they trust you, or to link into VCs via a trusted third party who has pre-vetted the pitch. This is very key. If you hit the wrong note on the first slide you’ve probably lost the pitch.”

 

Silistix’s problem seems to have stemmed from the fact that it’s based in Manchester.

 

Some of these governmental agencies entrusted with encouraging UK high-tech start-ups should go and get this situation in Manchester sorted.  

Tags: bureaucracies, organisations, silistix, stan, start ups

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10 Comments

  1. David Manners
    April 22, 2009 16:20

    Thanks David. That explains things

  2. David Fritz
    April 22, 2009 16:15

    While this thread is now a bit dated, I believe that it may be useful to provide a little more context. Silistix has been very fortunate, even in these difficult economic times for our industry, to continue to have strong financial support from all of its VCs. Also, to clarify a point, Silistix has never paid any VC for an audience as seems to be implied elsewhere in this thread. The statements made by Dr. Bainbridge and Professor Furber that apparently fueled this topic concerned their decision back in 2003 to hire a contractor to help them put together a business plan and to introduce them to potential VCs. This doesn’t seem an unreasonable thing for two “techies” to do and clearly accomplished the desired results. Finally, having dealt personally with VCs in Silicon Valley, Europe, the Middle East, and most importantly to the point of this topic, the whole of the UK, I have found the VCs in the Northwest of England to be very experienced, knowledgeable, and very supportive. Any good VC today will tell you that a company’s geographic location is irrelevant as long as it resides where the talent resides. Since Manchester is at the epicenter of asynchronous logic research, the very same technology upon which Silistix’ product is based, it makes perfect sense that Silistix and its financial backers should also be located there.

  3. David Manners
    March 24, 2009 11:01

    Thanks a lot Stephen, that’s very helpful

  4. March 24, 2009 09:39

    I think I have to agree with one of the earlier comments that if you can’t find a way to get introduced to a VC then there is probably something fundamentally wrong with the business plan. An introduction is the first test of credibility for any start-up … if you can’t find someone in your network with connections to VCs who are interested in what you are doing, then you are clearly doing the wrong thing.
    I’ve just posted a list of some of the ways we generated introductions to VCs in the early days of Air on my blog. I hope this is helpful:
    http://www.electronicsweekly.com/blogs/uk-technology-startups/2009/03/starting-up-3-getting-introduc.html

  5. David Manners
    March 19, 2009 23:24

    Well Yes Roberto, but Steve Furber is Professor of Computer Science at Manchester University where the Silistix founders came from.

  6. Roberto
    March 19, 2009 20:51

    There is an issue, and it is not clear there is an easy answer.
    I’ll agree with FormerVC and Tom: it is not that hard to get to speak to a VC – Google will get the phone numbers.
    The difficvulty is in knowing what to say, how to frame the conversation and -ultimately- how to get them to listen to you.
    A problem in UK is we are short of people who have done it before: there are few role models, and admirable of those few are, it takes time for people to learn from them.
    This is where silicon valley is strong: everyone knows everyone: you learn from peers / friends / classmates / people yoiu meet for a beer in the bar. Someone with a good idea will get coaching, suggestions, dry run – and introductions. (They may also get ripped off & idea stolen, of course).
    That happens in Cambridge too, or Bristol – but less so. And beyond those, even less so.
    But the same is true in USA. It would be easirer raising money if I’d had a good idea in Stanford than University of West Virginia…
    But I’m not sure this is the best example to prove your point, as others have said. Manchester is probably #3 or 4 in terms of best places for VC introductions in UK – Steve Furber is well connected for example.

  7. David Manners
    March 17, 2009 14:11

    Tom, I couldn’t agree more about EDA and UK VCs – it was just that here was this young chap just out of university being forced to pay for an introduction to a VC. I thought that was wrong.

  8. Tom
    March 17, 2009 13:56

    There is no secret about the VCs that play in semiconductor space in the UK – their contact details are easy to find.
    I’ve done a lot of due diligence work for UK VC’s and they are a smart and open minded bunch of people. Its the technology and business opportunity that is important to them.
    The trouble is that EDA is not a great sector at the moment – it might be hard to persuade a VC there is an exit.

  9. David Manners
    March 16, 2009 17:17

    Thanks, FormerVC, but what bothered me was not the quality of the Silistix pitch, but the fact that the Silistix founders couldn’t get an introduction to a VC and ended up having to pay someone for an introduction. That seemed wrong.

  10. FormerVC
    March 16, 2009 16:52

    David,
    Did you ever consider that the reason why Silistix is having difficulties in raising capital might not be because they are in Manchester?
    Almost everybody in the industry ends up looking at the same deals and it is certainly not because they’d be in Manchester that they’d be passed upon, if the deal had any legs.
    For the reason behind Silistix woes, you might have to look at the 1) the industry, 2) the market, 3) the product and 4) the management. I have heard the CEO pitch at an investor’s event (with dozens of investors in the room), and anyone with any meaningful semiconductor experience would have heard a lot of hot air coming out of his mouth. And that, in the mind of an investor, is a definite no-no…

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