mannerisms

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

VCs No Longer The Best Source Of Start-Up Money

VCs are no longer the go-to source for start-up capital, it was said at the GSA’s Entrepreneurship Conference at the BritishMuseum.

A presentation from the Dublin start-up DecaWave, which has a technology which can locate indoor objects to a precision of 10cm, said that the company had raised $20 million with not a penny coming from VC sources.

 

20% of DecaWave’s funding has come from advance orders. The company has talked with VCs at each stage of the company’s funding only to be told the company has to get further down the path to revenues before the VCs will invest.

 

DecaWave is now looking for $5 million to get them to break-even. It moves into mass production in Q3 with revenue in Q4.

 

“If you can get the money from a customer rather than a VC you get a better return,” said Sir Robin Saxby, founding CEO of ARM.

 

Customers can give start-up companies projects to get them going. An early example with ARM was an IC design project from TI.

Saxby is enthusiastic about crowd-funding sites like Kickstarter. “There’s a whole load of Internet stuff,” said Saxby, “I have more hope for that than traditional VC money because the time-scale of VC pay-back time often is too short to be successful. To grow a global business to true value takes a ten year minimum.”

Tags: 10cm, crowd, dublin, entrepreneurship conference, pay back time

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3 Comments

  1. Mike Bryant
    March 25, 2013 22:36

    I don’t think that’s such an attractive business model nowadays :-)

  2. David Manners
    March 25, 2013 19:58

    Well he might if TI were still as keen to get into Nokia handsets as they were in 1991

  3. Mike Bryant
    March 25, 2013 17:57

    Kickstarter is great for software – an old acquitance recently raised over $6m. But it needs to have a direct commercial application.
    Would you put funds into a new process development company or EDA tool startup producing something you’ll never use yourself ?
    And semiconductor IDMs are notorious for wanting numerous ‘proofs of concepts’ before they part with any cash. I don’t think even Saxby could have got early money out of TI nowadays.