3DSP Settles for $10M in Latest Round
By ANDREW SIMONS
Irvine chip designer 3DSP Inc. recently closed on $10 million in funding,far less than the $30 million the company had hoped to close in the fourth quarter.
“This was basically an extension of the C round, which we closed earlier this year,” said 3DSP chief executive Thomas Beaver.
Intel Capital and Alcatel Ventures,the investment arms of Intel Corp. and Alactel,led the funding, as they did in past rounds. The companies’ investment, relative to the $10 million in total funding, remained proportional to the C round the company closed in March.
3DSP had hoped its investors would ante up $30 million by this quarter, but the tough business climate has kept corporate investors from opening up purse strings too wide.
Intel led the first part of 3DSP’s C round of funding in March, which fetched $12.5 million. Alcatel led the $8.5 million investment before that. Private investors ponied up $3 million in seed capital prior to Alcatel’s interest. The most recent funding brings 3DSP’s total to $34 million.
3DSP doesn’t make chips, but licenses its designs to other companies looking to develop advanced communications chips. Companies pay 3DSP royalties for use of its designs.
Closing the $10 million round wasn’t an easy task. The company decided that instead of getting venture investments from companies as it had done in earlier rounds, it would try to reach the $30 million goal through private placements.
“But their terms were not to our liking.” said Beaver. “So it was up to yours truly to go around and visit with our investors to extend the C round.”
While 3DSP was able to close the $10 million on favorable terms, it’ll keep company officials watching expenses closely.
“The $30 million was more of a buffer,” Beaver said. “We won’t be doing any layoffs or anything. It just makes us a little more conservative. It makes us selective in our hiring. We’re still doing some hiring, but it makes us a little less aggressive.”
3DSP still plans to open offices in Germany and Taiwan next quarter and expand its San Jose office.
And 3DSP plans to hit the funding circuit again soon. The $10 million will last a few quarters, so the company expects to go after another private-placement funding round in the first half of next year when it can get better terms, Beaver said. In the meantime, he isn’t worried.
“We’re seeing little tiny signs in the networking and communications space that these guys have finally run out of inventory,” Beaver said. “That’s good because if they have to burn off inventory they don’t go license (chip designs).”
The networking gear industry has suffered from a glut of equipment over the past year, which has affected chip designers and manufacturers such as 3DSP, Broadcom Corp. and Conexant Systems Inc.
But 3DSP has managed to grow substantially from last year. Beaver, a former Wyle Electronics executive, joined the company in January and has helped land some notable customers, including National Semiconductor Corp. Last week, company executives said they had landed a large deal with a San Diego-based company, but declined to identify the new customer.
3DSP also recently moved to a 20,000-square-foot office next to fellow chip maker Broadcom and has hired some 25 people over the past year, bringing the company’s total headcount to 86.
