LONDON — A two-day conference organized by the European Tech Tour Association and held in Montreux, Switzerland, over Nov. 4 and 5 provided a platform for 30 startups to present to an audience of venture capitalists, bankers and senior industry executives as well as to their peers at similar companies.

The European Tech Tour (ETT) is a not-for-profit association founded under Swiss law by Sven Lingjaerde, a veteran European venture capitalist. He is the co-founder and managing partner of Endeavour Vision (Geneva, Switzerland). This was ETT's second semiconductor summit, the first having been held in Leuven, Belgium in October 2006.

Alain Fanet (picture right), a director on the boards of network-on-chip company Arteris SA (Paris, France) and Coresonic AB (Linkoping, Sweden), served as volunteer president of the Second ETT Semiconductor Summit and helped manage the selection process. Fanet said the aim of the Semiconductor Summit was to select the top 25 privately-held semiconductor companies in Europe and to help them achieve global expansion.

"In fact more than 260 companies applied and 30 were selected and of those 30 about 70 percent are looking for funding in the next 18 months," said Fanet. He added that in this second summit it was decided to increase the number of late-stage companies selected so that there was about a 50:50 mix (see list below). Indeed one of the presenting companies is still privately-held after having been formed in 1995. Two of the selected companies in 2006 have achieved successful exits, Fanet said while five of the companies who pitched in 2006 were selected to present again in 2008. However, four of the companies who presented in 2006 were denied the ETT platform in 2008.

"The selected companies reflected three main trends," said Dominique Pitteloud, investment director with Endeavour Vision and vice president of the selection committee for the event. "Firstly we can observe the consolidation within Europe of the new leading semiconductor startups, with 17 percent of the companies selected this year coming from the 2006 top 25 pool. The second trend reflects the market evolution to multimedia-centric nomadic consumer devices, with new investments in MEMS, power management, RF and innovative display and geo-localization and motion technology. Lastly, the selected companies highlight the excellence of European engineering institutes with a good balance from all European countries."

Warren East (picture right), CEO of ARM, gave the keynote speech at the summit, and he made suggestions as to how to address the economic crisis; "Every problem is an opportunity, recessions are no different, and fortune favors the brave - though not the foolhardy." He told attendees: "We should invest through the cycles, sharpen P&L, and build-in resilience through balance and choice of markets, regions, products and organizational design. There is opportunity out there."

However, the VC-backed model of entrepreneurship in the fabless semiconductor sector has, in the past, relied on the ability to float companies on stock exchanges to pay back those risk-taking investors. And as the Semiconductor Summit was told, the market for initial public offerings (IPOs) of shares in companies is closed and is likely to remain so for at least 12 months. This was the message from Bruce Huber, in charge of European technology investment banking at Jefferies International, one of the largest remaining investment banks.

And because of the high leverage employed in banking, knock-on effects will continue to extend the challenges for startups, Huber said. But he also painted a picture of European entrepreneurship that was creative not only in terms of technology but also in terms of business models, and which could emerge strongly from the present economic recession.

Huber told the summit: "It's a grim time from a capital market perspective." Given the high exposure to consumer spending the industry should expect a particularly severe impact over the next 12 to 24 months, he said.

"The IPO market is closed so M&A [merger and acquisition] is the only path to liquidity," Huber said before going on to point out there is an overhang of public M&A activity that is likely to be more attractive to financiers than private, smaller-scale M&A action. "There's a pile up of companies trading at negative enterprise value. There's a lot of clean-up that has to be done and it will be easier to buy public than private," said Huber.

However, before his audience of other bankers, venture capitalists and startup CEOs could get too depressed, Huber looked to positive trends particularly in Europe.

"Today, analog, MEMS and RF companies require less funding [than leading-edge digital SOC startups] and are more compelling for VCs. And entrepreneurs in Europe have a history of capital efficiency. Semiconductor innovation is not over and it is happening in analog, RF and MEMS," he said. While finance-driven M&As may not happen so readily, many companies may find ways forward in partnerships and coalitions and eventually the IPO market will re-open, Huber said.

"Europe needs a new generation of middle-market companies. Jefferies will certainly be ready to support those IPOs," said Huber before concluding: "It's going to be a tough 12 months."

A number of the presenting companies took the opportunity to spell out their requirements for venture capital. Guillaume d'Eyssautier, CEO of PicoChip Design Ltd. (Bath, England), a developer of processors and software for communications basestations, let slip that his company is about to close a fifth round of finance. He did not reveal the size of the investment, or whether the money is for a specific purpose. Fabless semiconductor startup Air Semiconductor Ltd. (Swindon, England), under recently appointed CEO, Hugh Thomas, is trying to raise e10 million (about $13 million) in a Series B round of financing.

Liquavista BV, (Eindhoven, The Netherlands) a spin-off from Philips Research Labs, which has started manufacturing an electrowetting display, is looking to raise e15 million (about $19 million) in a Series C investment round. The electrowetting display is based on the fact that a water droplet in contact with a water-repellent surface will begin to spread out in the presence of an electric field.

Late stage companies

Enigma Semiconductor from Denmark,

Innovative Silicon from Switzerland,

Inside Contactless from France,

Jennic from the UK,

Liquavista from the Netherlands,

Movea from France,

Novaled from Germany,

PicoChip from the UK,

Redmere Technology from Ireland,

Sequans Communications from France,

STS from Netherlands,

Virtensys from UK

Virtutech from Sweden.

Early stage companies

ACP from Switzerland,

Advasense Technologies from Israel,

Air Semiconductor from the UK,

Alchimer from France,

Crocus from France,

Elastix from Spain,

Energy Micro from Norway,

GreenPeak Tech. from Netherlands,

IPtronics from Denmark,

Light Blue Optics from the UK,

Mapper from the Netherlands,

MESA imaging from Switzerland,

Mirics Semiconductors from the UK, Movidia from Ireland,

Replisaurus from Sweden,

Solar Edge from Israel

Spiral Gateway from the UK.

This story appeared in the EE Times Europe print edition covering November 25 - December 14, 2008. European residents who wish to receive regular copies of EE Times Europe, subscribe here.

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