Monday, May 3, 2010

FEI2010 - The VC & Joint Ventures Perspective

C. Engdahl reporting from FEI2010

The VC & Joint Ventures Perspective
FEI2010 Presenters: Stephen Socolof, New Venture Partners & Lisa Su, Freescale Semiconductor

During the Beyond "Open" Summit at FEI2010, Stephen Socolof of New Venture Partners, a venture capital firm focusing on corporations with spinout opportunities¸and Lisa Su, who had been the CTO of Freescale Semiconductor at the time this story took place, walked through the trials, tribulations, and ultimate success that would become Everspin Technologies.

Freescale Semiconductor, itself a spinoff of Motorola in 2004 found itself a few years back in possession of some interesting technology known as MRAM, a promising semi-conductor memory with substantial promise. Although Freescale has historically invested upwards of $100 million in basic research throughout the years to develop technologies such as this, it pondered the question of whether to further develop MRAM or somehow create a new venture around it. After much internal discussion and a comprehensive search to find an external partner, Freescale opted to collaborate with New Venture Partners to create an entirely new business.

Negotiations to form the new venture between Freescale and New Venture Partners took time. Freescale wanted a $20 million commitment from the syndicate New Ventures was forming. Financials needed to be worked out. Intellectual property rights needed to be negotiated. The process required personal commitment and patience. In the end, Everspin Technologies was formed and today enjoys a product portfolio of over 60 products. And although Everspin operates independently, Freescale remains and important, integrated part of the Everspin operation.

The telling aspect of this story is this: Although Freescale could have arguably raised the necessary capital to fund the technology development itself, Ms. Su made an insightful comment worth taking note of. In a situation such as this, “It’s not just about the money,” she said. “It’s about the focus the business demands.” Had Freescale attempted to go it alone, the MRAM magnetic semiconductor technology likely would never have grown to the success that it is today.

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