A semiconductor start-up targeting the networking market has lined up $1 million in financing from Japanese electronics giant NEC and is finalizing agreements with several venture capital firms for another $10 million to $15 million.
(In other news, Silicon Access Networks, which has a research and development office in Raleigh, announced closing on more than $30 million in later-round financing.)
Protean Devices was formed last May after a group of Cisco Systems engineers decided to commercialize a technology developed in NEC’s labs. The group, led by Protean Chief Executive Marc Edwards, learned about the idea for the reconfigurable chip from an NEC white paper, began studying the concept while still at Cisco and later licensed the technology when they went out on their own.
The application-specific standard product, or ASSP, is an off-the-shelf chip that can be redefined to handle everything from packet classification to encryption, says Angelo DeVita, an IBM veteran who joined Protean last fall as chief operating officer. The firm is initially targeting the chip at networking companies such as Cisco and Nortel Networks to provide more speed in their routers.
“We call it a turbocharger,” DeVita says of Protean’s product, which is still in development. “You put it in your system to get a boost. It takes on some of the work from existing processors, which have been overloaded with features over time.”
The ASSPs also provide more flexibility at a cheaper cost than custom-built application-specific ICs, he says, adding, “Once you get an ASIC in there, you’re stuck with it even as your needs change.”
NEC backing to continue
NEC recently provided $1 million in bridge financing to Protean to allow it to continue developing the technology as it lines up venture capital. The Japanese firm will likely also participate in Protean’s first funding round, which is expected to close in April, DeVita says. A number of venture firms nationwide, including some in North Carolina, have talked with the company about the round, he says, but he declines to name them.
“They get the technology developed much faster by an experienced, outside group, they get a piece of the company and, once production starts, they get to fill some capacity at their fabs,” DeVita says of NEC, which has been contracted to manufacture the ASSPs for Protean.
The venture funding will allow the company to move its first chip into production and to expand its sales and marketing efforts. He expects the 28-person firm to double in size by the end of the year.
But Jeremey Donovan, an analyst with Gartner Dataquest, says tough times may be ahead for the firm. The networking components market was off by some 40 percent last year and has yet to rebound, and other firms have struggled to find adequate uses for similar reconfigurable chips, he says.
“The reconfigurable processing market for communications hasn’t really happened yet,” Donovan says.
Silicon Access funding
In other financing news, Silicon Access Networks has obtained $39 million in fourth-round financing. The San Jose, Calif.- based firm, which produces a 20-gigabit-per-second network processor and a suite of co-processors for data path functions like address look-up, billing and statistics, and packet classification, has a research and development operation in Raleigh.
Soros Private Equity Partners and Norwest Venture Partners co-led the round. New Investors include Pilgrim Baxter, Van Wagoner Capital Management, Parker Price Venture Capital and Glynn Capital. Existing investors that participated include Sprout Group, Tallwood Venture Capital and Synopsys.