Chip Startup Backed by Cisco Systems Lands Eighth Funding Round
October 05 2015 - 12:29AM
Dow Jones News
By Don Clark
Most venture capitalists have stopped backing semiconductor
companies. But a Silicon Valley chip maker on Monday is announcing
its eighth funding round, with Cisco Systems Inc. disclosing its
role as a longtime backer.
The $37 million infusion is being raised by Aquantia Corp., a
10-year-old company that specializes in networking chips. The San
Jose, Calif., startup has been talking for more than a year about
the possibility of a rare initial public offering in the chip
sector.
"Our investors have been patient up to this point," said Faraj
Aalaei, Aquantia's president and chief executive officer. He said
going public "has always been the vision of this company."
Investors in the current round include Cisco, Credit Suisse's
Direct Equity Partners, Walden Riverwood and Globalfoundries Inc.,
the chip-manufacturing service. The new round takes Aquantia's
total funding to $199 million. Prior investors include Greylock
Partners, New Enterprise Associates and Lightspeed Venture
Partners.
Many venture-capital firms have given up on the sector because
of the increasing costs of designing chips, plus the fact that
startups in other sectors tend to produce a faster payback.
PricewaterhouseCoopers LLP counted 12 semiconductor IPOs in
2014--10 of them by Chinese companies--compared with 47 for
Internet services and 35 for software makers.
Aquantia has attracted some well-known venture firms, as well as
investments from chip makers Intel Corp. and Xilinx Inc.
Cisco hadn't previously discussed its involvement in Aquantia,
though the networking equipment company said last week it been an
investor since Aquantia's initial round in 2005. The company has
also used Aquantia chips in its switching equipment, said Rob
Salvagno, a Cisco vice president of corporate development who heads
its investment arm.
Cisco, which designs some of its own chips and buys others from
external suppliers, counts about 10 chip companies among its
roughly 100 investments, Mr. Salvagno said.
In Aquantia's case, he said, Cisco was attracted by technology
to boost the speed of moving data between servers in a data center
tenfold, through chips sending 10 gigabits of data a second over
copper wire at distances of as much as 100 feet. The technology was
designed to replace one-gigabit links.
"It was extremely complicated technology and was very
power-intensive," Mr. Salvagno said. "We believed that Aquantia had
an approach that solved the issues."
Aquantia also has developed chips to accelerate the speed of
transferring data from Wi-Fi access points to corporate servers,
Mr. Aalaei said.
The company's chief competitor is Broadcom Corp., the big chip
maker that recently agreed to be acquired by Avago Technologies
Ltd.
In addition to the funding, Aquantia said Lip-Bu Tan, a
prominent figure in the chip industry, is joining its board of
directors. He is chief executive of Cadence Design Systems Inc.,
which makes software for designing semiconductors, as well as the
founder and chairman of the venture-capital firm Walden
International.
His firm is one of few that hasn't shied away from making more
bets on chip companies. "Semiconductors are a very important
foundation," Mr. Tan said. "I decided to double and triple down on
my investments."
Write to Don Clark at don.clark@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 05, 2015 00:14 ET (04:14 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Cisco Systems (NASDAQ:CSCO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Cisco Systems (NASDAQ:CSCO)
Historical Stock Chart
From Apr 2023 to Apr 2024