Chip innovation lures global venture capital

Investors have backed Bridgeco, whose chips make "internet radio" wireless. Linksys

Forget Swiss chocolate and even Swiss cheese, it’s Swiss chips, the ones made from silicon, that are proving irresistible.

Along with the weather, the venture capital scene warmed up in Switzerland, as investors from around the world backed several Swiss technology semiconductor start-up firms.

Announcing additional financing to execute their business plans were Nemerix SA of Manno, Innovative Silicon SA of Lausanne, and Bridgeco AG, based in Zurich.

The largest amount of venture capital of the three went to four-year-old Bridgeco, whose ability to sell its chips and the potential of the digital home networking market enabled it to raise some SFr19.7 million ($16 million) in a third round of financing led by new investor, Fidelity Ventures of Boston, Massachusetts.

Bridgeco is one of the few firms worldwide to make inroads into the emerging home networking market.

Existing investors Benchmark Capital, investing from its London office, Earlybird Venture Capital GmbH & Co. KG of Hamburg, Germany, as well as Munich-based Intel Capital and Infineon Ventures, also participated in the round.

Bridgeco’s chips can be found today in internet radios from Linksys and DVD players from Denon. These consumer electronics items hook up to the PC in the home and can download and play music files that are increasing available for legal use.

According to CEO Angelo Ugge, revenues in the first half of 2004 exceeded sales for the entire year of 2003.

Growth rate

Ugge is hoping to keep up the growth rate with the opening of a California office and the signing of more original equipment manufacturers to integrate its chip into new home-entertainment products.

Innovative Silicon SA, a spin-off of the Swiss Federal Institute of Technology in Lausanne, also brought on board a new US investor, this time in a first round of investment.

The young company is hoping to revolutionise the way in which computing memory chips are made.

It added Highland Capital Partners of Lexington, Massachusetts, which invested an undisclosed amount, topping up the SFr7.4 million the start-up firm raised in July from Index Ventures, Auriga Partners, two Geneva area venture firms, and from Soitec SA, a French chipmaker, in April.

Another top-up round went to Nemerix, which expanded its second round with an additional SFr5.36 (€3.5 million) investment by PolyTechnos Venture Partners of Munich, Germany.

The three-year-old firm announced it raised SFr8.43 million earlier this year from Atila Ventures of Lausanne, Auriga Partners of Paris, and Venture Incubator of Zug.

Nemerix is a fabless semiconductor manufacturer of global positioning system (GPS) chipsets.

Pick-up in venture activity

After a slow 2003, investment has picked up slightly this year.

“The lower of valuation of technology companies and terms for investing in them is once again making venture capital investors ready to put up cash for growth,” said Daniel Settlebach of Vinci Capital, a Swiss venture firm in Geneva.

In the spring, u-blox (pronounced mewblocks), which makes GPS modules that can be dropped into systems developed by original equipment manufacturers, raised an undisclosed amount and attracted a new venture backer in the form of iGlobe Partners, an east Asian venture fund that invests globally, for its sixth round of venture financing. Existing investors include Partners Group of Zug and 3i Group plc of London.

u-Blox, a spin-off from the Swiss Federal Institute of Technology, recently won supplier contracts with Wavecom SA, a French wireless firm, and Thales Navigation of France.

The initial public offering on Austriamicrosystems on the Swiss Stock Exchange in May also contributed to the rally, despite a slip in its share price following the IPO.

The Swiss chip tradition

The technology firms in Switzerland attracting venture funding are at the front of the pack in home networking, global positioning systems, and audio-signal processing.

Other Swiss firms to watch include Xemics SA, a Neuchâtel-based chip manufacturer; Advanced Silicon SA, whose power semiconductors are making their way into newfangled displays, printers, and scanners; Anagram Technologies of Yverdon, which raised seed funding from Banexi Partners of Paris last year; miromico AG, which is intent on making super-miniaturised chips for medical devices; and e-Vision AG of Zurich.

Research at the Swiss Federal Institutes of Technology can be credited for some of the training and even research that led to the success of several of these firms.

For example, Innovative Silicon is a spin-off of the EPFL, while some of Bridgeco’s early R&D was performed in partnership with the ETH in Zurich, for example.

Swiss universities provided an educational foundation for chip pioneer Jean Hoerni, one of the “Fairchild Eight”, a group of eight scientists and engineers.

The group is credited with founding Silicon Valley when they left Shockley Labs in 1957 to start Fairchild Semiconductor.

Besides Hoerni, Intel founders Gordon Moore and Robert Noyce were two other members. Hoerni went on to found more than a dozen semiconductor companies, including Amelco, Union Carbide Electronics and Intersil.

“Switzerland is rapidly evolving from its high-precision engineering roots to a centre for innovative, high-technology electronics,” said Christof Heidelberger, a co-founder of Bridgeco.

by Valerie Thompson