R.I.P.

Small EDA companies seem to be falling by the wayside. Over the Christmas break Blaze DFM (insert cremation joke here) and Liga Systems both reached the end of the line. Blaze will certainly get picked up; it has customers and a valuable royalty-bearing relationship with TSMC. Liga not so much. Agility (née Catalytic) has also run out of money and its technology is apparently up for auction.

Even before the current downturn it was very difficult for EDA startups to raise money. VCs don’t like the EDA business model of selling licenses. There isn’t any opportunity for a big surprise upside. With only Synopsys rich enough to pick up technology at a premium if it wanted to, and with the IPO market already closed to small companies due to Sarbanes-Oxley, there is just no route to a liquidity event. The current downturn is making things worse. So expect more startups to shutter in the months to come as their current money runs out and even their existing investors prove unwilling to put in any more.

I heard of one company, that I’ll leave nameless since I don’t want to make things any worse for them, that is unable to raise money despite having marquee customers, revenue and competent management.