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How do you start a silicon chip startup?

I live in Silicon Valley, arguably the best place in the world to create a startup, but, the notion of a non-software silicon startup seems like an up-hilll battle on stormy seas, with a few tornadoes thrown in for good measure. You can't exactly create an MVP so how do you do it?

Coincidentally, I do have an awesome idea for an augmentation to computer architect that would address a few security issues that many companies are experiencing. If you are interested then please drop me a line.

13 Replies

Dave Lemley
1
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Dave Lemley Entrepreneur
Consulting Technologist
First, this is not my primary area of expertise, however I ws an EE in a former life, and I have recently worked (as a contractor) at a startup that made custom chips, so here is a couple things that might (hopefully) be useful.
1) MVP; you might consider implementing your idea using FPGA first. You won't need custom silicon to prove/develop the concept, and I imagine having this working prototype will make fundraising even easier. As to whether this is viable depends on your product, of course.
2) Things have certainly progressed since I was an EE, and there are now batch services where you can get chips made sharing a wafer with other folks designs. This may or may not be feasible depending on what process you require. You typically wind up with dice that you send to another facility that will do binding to the leadframe and encapsulation and testing.
hth
Art Yerkes
0
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Art Yerkes Entrepreneur
Computer Software Professional
If you look at the recent stock price changes of several hardware companies, intel and sandisk come to mind, it's pretty clear that even the companies with the best lock-in and economies of scale in silicon production still must fight in this area. azul, a company that used to make custom hardware to run java now produces a java vm for intel hardware.

One other way of creating an MVP is to add your functionality to an emulation environment, which also has the advantage of allowing you to develop the software support and customer interface before you ramp up hardware production.
Peter Haymond
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Peter Haymond Entrepreneur
Account Executive
To me this is no different then building a hardware startup. Here's what Pebble did:

"In 2010, Migicovsky sold more than 150 units of his first BlackBerry-compatible watch, a beta product that demonstrated demand for the underlying concept. By then he had built a small team and a company, Allerta, to design and sell the watches that came to be called inPulse.

In the fall of that year Migicovsky took the concept to Y Combinator, the prominent Silicon Valley incubator that has produced Dropbox, Airbnb and other darlings of the current tech boom. At Y Combinator, he refined the watch, making it compatible with Android phones as well as BlackBerry. And he opened up development on the watch to other programmers, allowing them to build apps for the watch themselves."

sfgate.com/business/article/How-the-Pebble-became-a-Kickstarter-success-story-3517131.php

Obviously you first have to prove the concept with a prototype and users first before you do anything else.

My best recommendation is to reach out to folks at Intel and AMD on LinkedIn.You can ask them for lunch and get their feedback. After awhile you'll collect enough data and make enough connections that you can find someone to build an affordable prototype in China for you. Foxconn comes to mind but they only do large orders.

My point is you need domain expertise so you don't waste time and money. Once you have your schedule, scope and resources you do your best to build and execute.

It's going to cost you money and will take longer than you expect, but all that matters is determining whether people want what you're building right?

Get the right team and advisors who have done it before, then go execute.

Note - I'm not an expert in this field but this is what I'd do.
Steve Everhard
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Steve Everhard Advisor
All Things Startup
I'm not clear you are talking about custom silicon - are you? You are talking about the viability of HW vs SW startups as funding targets. The challenge for investors is always that startups based on HW often have higher startup costs, more complex distribution and issues like warranties and return policies that don't affect SW Having said all that there are a number of crowdfunded and VC backed solutions that demonstrate it is certainly possible.

Your MVP is obviously a prototype in whatever form you can construct it. Much depends on who the target market is and what it does and there isn't really enough information here to be able to advise you. Breadboard it if you have to in order to show working principles, and then produce an enclosure 3D printed with a clear plan of how to get the circuit inside -, which might well involve FPGA/FPLA or customised silicon depending on your application. In all probability you are likely to be able to get there with standard components unless security is your target area. Even then crypto chips are available with protocols for loading keys if that is part of your solution.

Obviously hardware has a ticket price and so the business model has fewer variants than an app or website. Much depends on whether software is downloadable/updatable or additional components are available to extend the purchase. Extended warranties and similar are upside purchases.
Craig Hunter
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Craig Hunter Entrepreneur
Founder, Managing Partner at Element Technology Partners
John - Have you tried Silicon Catalyst (sicatalyst.com)? Relatively recent incubator set up just for this space.

Zachariah J. Scott
0
0
Zachariah J. Scott Entrepreneur
CEO at AIO Information Intelligence
I am very interested in what you are working with. Could you please send me an email at: [removed to protect privacy] ?
Jose Bohorquez
0
2
Jose Bohorquez Entrepreneur
Technology Entrepreneur
Honestly, I think the short answer is "you don't". Practically nobody invests in semiconductor companies anymore. It's been a good 6-8 years since that window closed. The only model I've seen work is where the company focuses on IP generation, design services, etc., but in that model, you won't raise VC... maybe angel, and even that's a stretch.
Steve Everhard
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0
Steve Everhard Advisor
All Things Startup
Jose perhaps not in foundries but definitely in silicon design, tools, testing and related infrastructure, with around a dozen last year. Soft Machines is a good example but there are others like Movidius and EPC who are operating in highly specialised fields. August Capital and Cadence, amongst others have a history of investing in this sector but withInternational Business Strategies estimating that it costs $132 million to design and test a typical chip using a 14 nanometer process the pressure is on the vendor to return around $1Bn in revenues to make it an attractive investment. That is a tough ask.
Jose Bohorquez
0
0
Jose Bohorquez Entrepreneur
Technology Entrepreneur
Steve: I don't mean to imply that there is zero chance of fundraising. But in answering the question "How do you start a silicon chip startup" and in the context of the rest of the question, I think it would be extremely hard to fund raise for the rough idea described.

I remember that as recently as 8-10 years ago, semiconductor startups were a common category for venture capital. Today, I'd be surprised if they make up more than a fraction of 1% of investments. The odds are not in your favor. Given the option, I certainly wouldn't start an IC company. It sounds like we're roughly in agreement. Cheers.
Aiborlang Andrew Chyne
0
0
Aiborlang Andrew Chyne Entrepreneur
Bass Guitarist at Klevoans
John, starting a Hardware manufacturing startup is more difficult than starting a software startup. But if you have the passion for manufacturing, I am sure that you would succeed. Good luck John Tobin.
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