In what is likely a harbinger of a difficult winter for startup tech companies, two startups developing next-generation USB technology announced a merger and pulled $20 million from their existing investors.
San Diego’s Staccato Communications, which develops next-generation USB chips, merged with Artimi Inc. of Mountain View to leverage its USB software and end-hardware solutions, the two companies said Nov. 20.
The merger will result in an undisclosed amount of layoffs. Staccato, founded in 2002, had 75 people at the time of the merger, said Staccato spokesman Jeff Chang. The combined head count for the two companies will be 85 people.
“I think Artemi was a bit smaller. Unfortunately there have been some reductions in San Diego,” said Chang, who would not say how many people here would lose their jobs.
The combined entity will be called Staccato Communications. Marty Colombatto will maintain the role of CEO for Staccato, and Andrew Vought, previously CEO of Artimi, will be COO.
The companies develop ultra wideband USB technology. Staccato makes a single-chip “Ripcord2” silicon that supports frequency band groups for a wireless USB, and Artimi develops software and end-product hardware solutions.
“As a result of this merger, we now have all the silicon and software assets necessary to the drive the mass adoption of UWB in the largest semiconductor markets that exist today , personal computers, PC peripherals, consumer electronics and mobile handsets,” said Colombatto.
As the IPO market has dried up, analysts say venture capitalists are reserving cash for existing investments and they expect more mergers to follow as executives look for new funding sources.
“They’re VCs hunkering down, trying to maintain the most promising opportunities in their portfolios,” Chang said. “In this case it made a lot of sense not only in the complementary nature the two (companies) have but also the investment teams coming together.”
Investors in the latest funding round were: Allegis Capital, Amadeus Capital Partners, Bay Partners, Charles River Ventures, Formative Ventures, Intel Capital, Interwest Partners, Khosla Ventures, Noble Venture Finance, Oak Investment Partners and Vision Capital.
, Ned Randolph
