Fresco Microchip, a Markham, Ontario-based chipmaker that builds semiconductors destined for televisions, has raised $10 million from Celtic House Venture Partners and Ventures West. While I don’t have the most recent venture capital data for the third quarter, I know that raising any amount of money right now is a difficult thing, never mind trying to raise money for a capital-intensive chip company. In the first half of this year, only 4 percent of venture deals were semiconductor investments, according to Money Tree data, down from 5 percent from the same period the year before. And because the funding environment is so dismal, total chip deals during that time dropped by 55 percent.
The secret to the company’s success so far is that it makes a small, cheap chip that filters image distortions from radio, analog and digital signals. Fresco is banking on the fact that consumer device makers, which are always keen on lowering their expenses, will use its silicon instead of higher-cost options from competitors. Its chips can go inside televisions, DVD players, converter boxes and set-top boxes, and being able to make them cheap counts for a lot.
The company is profitable and has raised $30 million since its founding in 2004. It competes with Panasonic and NXP, smaller vendors such as Microtune and Xceive, as well as Silicon Labs, a $400 million public company, which sells about $25 million in tuners every year.