Electronics and IT companies made a strong showing in the Wall Street Journal's third annual list of top venture capital-backed companies, published in September. By dominating the top of the list and taking 28 of the 50 spots, electronics and IT beat out other categories that had gained prominence in recent years, including Internet and healthcare.
The list was compiled by the research firm VentureSource. To qualify, a company had to be based in the United States, receive an equity round of financing in the past three years, and be valued at less than $1 billion. Key criteria in the judging were fundraising success, recent growth in value, and the track record of founders and board members.
Four of the top five companies were wireless networking or chip companies.
Genband Inc. (ranked No. 1): Genband supplies voice over IP infrastructure and applications to telecommunications companies such as Sprint Nextel and Comcast. The company is neither new (founded in 1999) nor small (1,700 employees). It has grown primarily by acquisitions. Genband was the top fundraiser on the list, having raised more than $500 million from venture capitalists.
Xirrus Inc. (ranked No. 2): This is the second year Xirrus came in second on the WSJ list. The company provides high-performance wireless networks based on a distributed architecture that uses an array of access points incorporating radios, antennas, and integrated controllers. Its network has higher capacity and better coverage than typical wireless LANs, according to the company, which has raised $100 million in VC funds. The WSJ cites the background of Dirk Gates, the founder of Xirrus. He founded the wireless networking company Xircom, took it public, and sold it to Intel Corp. in 2001.
Tabula Inc. (ranked No. 3): This fabless semiconductor company is developing three-dimensional programmable logic devices (PLDs) for logic, memory, and signal processing. It says its ABAX devices are cost effective enough to use from design through volume production. Other PLDs often require the design to switch to semi-custom chips once a product reaches a certain volume. Tabula has raised $215 million in funding. The WSJ cites the experience of founder Steve Teig, the former CTO of Cadence Design and the founder of four other technology companies. The executive team includes many former Xilinx employees, including Dennis Segers, who serves as Tabula's CEO.
SpiderCloud Wireless (ranked No. 5): SpiderCloud Wireless has designed a small-cell managed services platform that improves cellular and WiFi coverage for businesses whose employees are increasingly bringing their own smartphones and tablets to work. It has raised $106 million in funding.
Other companies on the list include Aerohive Networks Inc. (enterprise wireless networking technology), Quantenna Communications Inc. (chipsets for 802.11n WiFi), and Neoconix (new interconnect technology for printed-circuit boards).
The really interesting thing about this list was that it was NOT dominated by IT companies in healthcare or in the consumer Internet space (like social media or online buying sites), as it has been over the last several years. Maybe that's just an indication that the enthusiasm over those areas has waned and we're getting back to basic IT plumbing.
Well not surprised at all. In IT companies the risk and capital investment is low compared to the revenues or profit it generates. Here in Bangalore one can find IT companies like grocery shops. And there are so many Engineering colleges that you need a good database if one has to list out :-)
No doubt Venture capitalist put in their money on IT companies. While in other sectors its difficult for start-ups to get funding. This also leads to lots of inequalities when it comes to employees compensation if they work for IT companies or they work for non IT companies. But then the companies pay what they get paid for eventually.
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