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