Valence Seeks Funding, Cuts Staff
By ANDREW SIMONS
Valence Semiconductor Inc. is the latest Orange County technology startup to trim operations.
The Irvine-based chip designer recently laid off 75 people, mostly from its operations in Toronto, the United Arab Emirates and Russia, said Joe Formicelli, Valence’s chief operating officer.
The company now has some 150 workers, including about 100 in OC.
“We’ve been really tightening our belt,” Formicelli said. “We’ve been trying to get the burn rate down to where we want it to be.”
Among the cuts were workers in Valence’s marketing department,including all of its public relations staff.
“I got rid of the PR team,” said Formicelli, who added that between an engineer and a PR person, “I knew which one to do.”
The cuts come as Valence is close to landing a fifth funding round worth $30 million, Formicelli said. The new funding stands to nearly double Valence’s total raised from $35 million to $65 million.
“It’s been dragging on for a couple of months now. The terms are all out. We’re just waiting until everyone agrees,” Formicelli said. “It’s in the lawyers’ hands now.”
Valence declined to specify who is taking part in the new round. Among the company’s prior investors are Newport Beach’s Conexant Systems Inc., Lake Forest’s Western Digital Corp. and Huntsville, Ala.-based AdTran Inc.
The company also has investments from several unnamed venture capital and private equity funds as well as European and U.S. banks.
Like other chipmakers before it, Valence hopes to capitalize on the trend toward smaller, cheaper, faster semiconductors.
The company’s chips handle both digital and analog signals and house on a single chip what used to be separate components. The result: more efficient broadband systems that could make connection to the Internet,through either wireless or wire connections,more pervasive.
Valence released its first product,a chip designed to handle communications across global positioning systems,a year ago. The chip, which can be implanted anywhere from a car or bike to a wireless phone or handheld computer, helps global positioning systems locate and link with other devices.
Valence’s chip is made of material that allows for a function on a single chip that once required many chips, reducing its power usage,the Holy Grail for mobile electronic device makers.
If Valence stays on track, the company could post $10 million in sales this year,the first year the company will have recorded revenue. Valence had been looking to a public offering this year. But continued market sluggishness convinced the company to find other sources of funding. Executives had hoped an offering would give the company the ability to make acquisitions.
Other startups haven’t fared well as of late.
Irvine-based Y Media Corp., an OC startup and venture capital favorite that sought to make money designing better, cheaper chips to run digital cameras, closed its doors last month. The 3-year-old company had raised almost $16 million in funding but couldn’t convince investors to pony up more money.
Earlier this month, Irvine-based go2 Systems Inc., a maker of software that lets users order and locate services via their mobile phones, said it laid off workers and is seeking a buyer or more funding.
