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 shifted the industry from specificity to commoditisation. Against this backdrop the semiconductor crisis caught many manufacturers unaware and underprepared.
In the years since 2020 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 and brands struggling to get products to consumers. 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 a need for complex and more specialised chips. To insure against further disruption OEMs are now exploring alternative production methods and novel ways to bolster chip design skills.
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 sector. 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 in-house software engineers to design and test custom ICs at a fraction of the cost and complexities they’re used to. The portal enables hardware design using Amaranth, a Python-based language, and allows for customer simulation before connecting 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 mid volume players – companies with less bargaining power – 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, and strong connections to a closed and finite semiconductor ecosystem: barriers to entry that ChipFlow has overcome. The founding team, led by twice exited CEO Rob Taylor, have lent into their experience to drive the movement towards open-source tooling for hardware, with key hires from the open source community 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 we should meet please get in touch with the InMotion Ventures team, either via LinkedIn or through our investment form.