American VC Walden International will begin investing its $100 million India semiconductor venture later this year and has already identified four startups, two each in Bangalore and Hyderabad.
The EE Times said that Walden’s new fund comes at a time when the central government has also announced new initiatives for the semiconductor industry. Last month the Indian government gave an “in-principle” approval for two international consortia to establish India’s first semiconductor fabrication plants with a set of incentives and subsidies. One consortium comprises Israel’s Tower Semiconductor, India’s Jaypee group, and IBM, while the other has Franco-Italian STMicroelectronics, Hindustan Semiconductor Manufacturing, and Malaysia-based Silterra as members.
“It [semiconductors] is a very valuable space and exits are generally large, over $300 million or more,” said Lip Bu Tan, chairman and co-founder of Walden International.
Only a few technology firms such as Tejas Networks and Cosmic Circuits have successfully raised capital. “In India, funding of semiconductor startups which are in chip and systems designs is [quite rare],” says Sanjay Nayak, founder of telecom products maker Tejas Networks, which first raised angel funding of $5 million from investors including technology entrepreneur Gururaj Deshpande. Tejas later received around $73 million in risk funding from global investors such as Goldman Sachs, Battery Ventures, Sandstone, and Intel Capital.
What this means
The prevailing wisdom is that Korea, Taiwan and China are the Asian countries to turn for relating to any activity in semiconductors, with the exception of software. Walden is challenging the status quo, something that good VC excel at. Let’s watch if their investments go beyond fab-less companies.
