Top Silicon Valley startups but no silicon

-August 20, 2012

It’s interesting and symbolic that the list of top Silicon Valley startups listed by Business Insider has no companies that have anything to do with, you know, silicon.

It’s all about crowd sourcing, faster payments (which is kind of ironic, given the economic outlook), apps and of course, car services. See the full list here: The 15 Startups Everyone Is Talking About In Silicon Valley Right Now.

Of course this isn’t surprising, as few, if any, venture capitalists are willing to pour money into IC startups. I was talking with the CEO of an IC startup last week in the Valley and he was railing against the VC’s reticence to invest in new semiconductor companies. But is railing against VCs kind of like yelling at the tide for coming in? VCs are not a charity and their singular goal is to make money, and right now there's little incentive to focus on hardware. They don't call it 'hard'ware 'cause it's easy.

Multiple reports indicate we’re in for a downturn in the last quarter of the year. Take a look at Semiconductor Intelligence’s report (), with an excerpt below:

TSMC, Texas Instruments, Qualcomm, STMicroelectronics and AMD all predicted revenue declines for the low end of their 3Q 2012 guidance. The midpoints of guidance ranged from -1% to +5.9%. The high end of guidance was over 9% for Intel and Broadcom, but below 6% for the other companies.  Renesas was an exception, forecasting 17.6% growth in 3Q 2012 after an 11% decline in 2Q 2012.

Coincidentally, I stopped by to visit Ali Sebt, president and CEO of Renesas America, and I’m pretty excited about the strategy he laid out that will be the theme of the company’s upcoming DevCon in late October. I like what he’s up to and I look forward to providing more details as the time approaches. Renesas’s growth will continue: They have the elements and the strategy to do it.

So, in general, the semiconductor industry is sluggish. Also, with an IC startup you’re looking at years of design and development with ‘real’, hard, engineering versus crowdsourced ideas and part-time execs (see startups list).

One young twenty-something engineer I chatted with last week talked about how engineering school is less about specifics and more about preparing you for the hard work, long hours, and thinking processes required for engineering. She is right, and does prepare you for anything else you'd like to do after.

Her key point was that her job took long hours, but she has friends in startups and they work ‘insane’ hours, and then the company just goes belly up.

It’s not easy being a semi startup these days. Let’s face it, it’s hard work, the VCs see it as just too long for payoff, and the economic headwinds are against you. So it’s no surprise that many of our youngest and brightest are turning to apps, social media and other faster paths to revenue.

Maybe that’s the ADD generation coming into its own. Or maybe that engineering education, which teaches us also how to optimize systems and streamline processes, is paying off: They’re finding easier ways to make a living.

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