InMotion Ventures has participated in a £1.2m pre-seed round for semiconductor startup ChipFlow. The round was led by Fontinalis Partners, with participation from Fuel Ventures, and APX.
Sam Nasrolahi, Principal at InMotion Ventures, explores why we invested
The market
An over reliance on third-party chip design houses has impacted the pace of semiconductor innovation. Resource and capital intensive R&D projects – led by a limited group of specialised engineers – have gradually shifted the industry from specificity to commoditisation. Against this backdrop the semiconductor crisis caught many manufacturers unaware and underprepared.
Increased demand coupled with geopolitical tensions and trade disputes led to a scramble for integrated circuits (ICs) that exposed a wide-spread dependency on uncontrollable upstream supply chain dynamics. The severe deficit led to manufacturers falling short of production targets, with brands struggling to get products to market. Stockpiling (typical due to the nature of contract structures across the industry) picked up, exacerbating the issue for those with less bargaining power.
As production levels and supply chains begin to stabilise manufacturers are rightly taking stock.
From an automotive OEM perspective, the arrival of new technologies such as automation and EVs signals the beginning of an increased demand for complex and more specialised chips. OEMs are now exploring novel ways to bolster chip design skills and alternative production methods to insure against further disruption.
In the wake of slowed economic growth, governments are also wading into the debate. The US has committed $50bn to its semiconductor sector. The EU have followed suit with a €43bn investment to negate supply chain issues. The UK government’s semiconductor strategy will see £1bn invested – a step in the right direction – but private sector funding has a major role to play in revitalising the sector.
What ChipFlow does
InMotion Ventures believes an open-source approach to silicon design will increase innovation and contribute to greater optionality in the semiconductor ecosystem. Sheffield based Chipflow – the latest company to join the portfolio – is at the bleeding edge of this technological shift.
ChipFlow’s end-to-end platform-as-a-service (PaaS) solution enables manufacturers to use existing in-house software engineers to design and test custom ICs at a fraction of the cost and complexities they’re used to. Their portal enables hardware design using Amaranth, a Python-based language, and the platform enables simulation before connecting customers directly to foundries for production and delivery.
This pioneering approach puts manufacturers firmly in control, allowing them to drive their own innovation and supply chain resilience. Crucially, it enables low-mid volume players – companies with less bargaining power in a crisis – to design, customise and produce chips in a commercially viable way.
Why we invested
Using open source tools to democratise chip design is no small feat. As we reflect on a turbulent period for the consumer electronics sector the transformative potential of this approach cannot be underestimated. Once the benefits of open source are realised industries rarely look back, and as foundries look to partner with new incumbents the stage is set for disruption.
Successful execution is dependent on a combination of specialist skills, deep sector knowledge, the ability to build strong connections within the closed and finite semiconductor ecosystem: high barriers to entry that ChipFlow has already overcome. The founding team, led by twice exited CEO Rob Taylor, have lent into their experience and network to drive the movement towards open-source tooling for hardware. Key hires from the open source community will focus on cementing ChipFlow’s place in the ecosystem via customer led growth.
In a shift that we expect to become the norm for a broad segment of technology, the returns potential, both financial and strategic, cannot be underestimated. Open source developer ecosystems utilise network effects to drive a winner takes all dynamic, inferred by the large valuations these companies typically command – seen in Microsoft’s acquisition of GitHub for $7.5B, and IBM’s acquisition of Redhat for $34B. Strategically, as JLR seeks to reduce chip development cycles and strengthen business resilience, ChipFlow’s open-source approach offers exciting possibilities for their next generation of vehicles and services.
Congratulations to Rob, Tomi and team for their impressive traction on a bootstrapped budget. It’s exciting to see a UK startup pioneering semiconductor innovation and we look forward to supporting the business as they expand the team and refine their go-to-market strategy.
We’re always interested in speaking with exceptional founders setting new benchmarks in quality, technology and sustainability. If you are a founder, or know a company in the space, please do get in touch with the InMotion Ventures team, either via LinkedIn or through our investment form.