Where are the Entrepreneurs?

This week I attended the UpWest Labs event in San Francisco. UpWest Labs provides seed funding and incubation for a wide range of domains including Enterprise Software, Internet of Things, Infrastructure Technologies, Artificial Intelligence, Consumer Applications, Drones, Cyber Security, Augmented Reality / Virtual Reality, and Marketplaces. Uniquely, UpWest seeks out entrepreneurs in Israel and helps them gain a foothold and build momentum in the US. It is a formula which seems to be thriving.

I visited Israel last year to speak on a couple panels, one an electronics industry event and the other an event at the engineering school of Bar Ilan University. At both events I was struck by the energy, enthusiasm and creativity of the local engineers attending the event. As I went about my week I learned that there are hundreds of high-tech start-ups in Israel attacking a diverse array of markets and challenges. Within the semiconductor and EDA community, we have not seen such a large number of start-ups in a very long time. It was quite refreshing.

The UpWest event was hosted at UpWest investment, HoneyBook’s SF headquarters. HoneyBook’s mission statement claims they are on a mission to connect the different parts of the events industry by reimagining the way creative professionals work with their colleagues and clients. For anyone planning an event, HoneyBook’s goal is to organize your job(s) seamlessly, so you can focus on what you do best: creating unforgettable moments. While it is not as complicated as the wide array of problems solved by EDA tools, it is valuable. HoneyBook was only founded in 2013, already has over 60 employees and is profitable. Also note that BVA (where I am now an advisor), a recruiting firm that staffs and invests in start-ups, has built and invested in multiple UpWest deals, including Clicktale, and CoMeet.

A quick look at the portfolio of UpWest Labs will reveal many interesting companies, including some with a high-tech flavor. One of these at this that caught my eye at the event was, AR-Cadia. AR-Cadia’s CEO and founder, Teddy Bercovitz, gave me a demonstration of some mobile apps that were using the AR-Cadia platform. “AR” here stands for augmented reality. Augmented reality glasses can display additional information to the wearer while letting them still see their environment. This has enormous possible uses. Two examples are in the medical field giving doctors the ability to see different images or scans superimposed over the person’s body, or inventory management by showing the organization or location of products within a warehouse. AR-Cadia has built a platform that allows mobile app developers to support a wide array of AR glasses from many manufacturers without needing to write drivers for each manufacturer – a fantastic idea that may dramatically accelerate this new market.

Alas, there were no EDA start-ups present, although I did see Jacques Benkoski, former CEO of Monterey Design Systems and current USVP partner, in attendance. I also saw some other VCs at the event who invested in EDA 15 or 20 years ago. Many believe that the heyday of EDA start-ups is over, never to return again. The economics are certainly different now. Larger EDA exits seem to take more than 10 years. The exits are mostly confined to selling the business to one of the major EDA companies who can then deploy the new technology through their much larger sales channels. This leads most people familiar with the industry to conclude that EDA start-up companies should not raise more than $6M over their lifetime in order to have a worthwhile exit. These start-ups also need to have products in a niche or underserved space, or have a defensible breakthrough technology in an existing tool area – both are difficult.

I was recently heartened to see a new EDA company – SnapEDA. The CEO of SnapEDA, Natasha Baker, is young, energetic and passionate about being in EDA. In years past I was always complaining at EDAC (now ESDA) meetings that we were not spending the effort to attract enough young engineers into EDA to even have an EDA community in the future. I had nightmares of rolling down the aisles at DAC in 25 years and only seeing participants in wheelchairs and walkers. Natasha and SnapEDA give me hope that my nightmares will not come true.

Randy Smith is an advisor atBrown Venture Associates (BVA). Randy and BVA are experienced masters of team building. As a former EDA and semiconductor IP executive, Randy has repeatedly built winning teams. BVA has been doing the same for more than 20 years while building a proprietary recruiting methodology that is geared for the modern recruiting environment. BVA also has invested in 50+ companies with 20+ liquidity events – the teams they build, win.