Monday, March 20, 2006

New VC funds add luster to Bluespec's prospects

By Efrain Viscarolasaga

Armed with $4.5 million in new funding and a steady revenue stream from a quartet of high-profile customers, Waltham's Bluespec Inc. aims to expand its footprint in the wireless sector of the electronic design automation software market while keeping its engineering staff, as well as that of its customers, in the country.

Bluespec's new funding was supplied by from Atlas Venture and North Bridge Venture Partners, both of Waltham, and brings the company's total funding to $13 million since its inception in 2003.

Company officials say it will be used to help Bluespec take advantage of the growing wireless chip market, an area in which it has already established a foothold.

The company claims four major customers for its electronic system level (ESL) synthesis products: Texas Instruments Corp., Nokia Inc., Switzerland's STMicroelectronics NV and local integrated-circuit icon Analog Devices Inc. of Norwood.

Shiv Tasker, Bluespec's chief executive officer and former president and CEO of Waltham's Phase Forward Inc., said the quartet of industry players is not just toying with the company's products, but actively using them. Tasker would not reveal how much revenue is being generated, but did say it was recurring.

"The milestone is not that we're getting initial sales, be we are getting repeat orders from the same customers," he said.

While the company has about 35 employees, the majority of them are local -- and none of the engineering team is overseas, a contrast from much of the industry. Nokia, for example, last week established a new manufacturing facility in India, with as many as 10 of its suppliers agreeing to establish development centers nearby, according to reports.

Tasker said keeping engineers here is not only part of Bluespec's corporate plan, but also part of the product's value proposition.

"If you can reduce the cost of development here by making people twice as productive, what's the incentive to move the engineering team offshore?" he said.

The majority of the company's sales are coming from the wireless space, according to Tasker. While some analysts predict the overall semiconductor industry may be leveling off, the wireless segment has remained a growing area. Chipsets for wireless LANs alone are expected to grow from $921 million in 2004 to $6.2 billion in 2010, according to iSuppli, a semiconductor research firm in California.

The market for embedded chips in electronics like televisions, cellular phones and other handheld devices is expected to be equally explosive, according iSuppli.

The penetration into such a hot technology is one of the main reasons Bluespec's investors decided to add new funds to the company's coffers.

"The fact that customers are using it on the hottest products is testament to the fact that it works," said Axel Bichara, a senior partner at Atlas Venture.

The EDA software has applications in other areas, such as game consoles and the data communications market, according to Tasker.

Bluespec originated from Sandburst Corp., a fabless semiconductor company in Andover, and the MIT team that created it. Arvind, the single-named MIT professor, used the Bluespec technology at Sandburst as a design tool. Eventually management there decided Bluespec could survive on its own, and Tasker was brought in to lead the company.