U.S.-based equity fund KKR led the round for the chip-tester. Founder Danny Glotter: ‘We’re going mobile.’
Israel-based Optimal+, which tests semiconductors and computer chips, scored $40 million in funding in a round led by U.S.-based equity fund KKR. This was first reported in Hebrew news site Calcalist and later confirmed by independent Geektime sources.
“According to our numbers, we test a billion chips every year and around 1% turn out to be faulty,” founder and CEO Danny Glotter told Calcalist (Hebrew), a value of $150 million in lost revenue according to his estimate.
Optimal+ focuses on making the semiconductor manufacturing process more efficient at each stage of development and improving company-wide communication. The company’s revenues total in the tens of millions of dollars with long-term contracts in effect with several clients. Optimal+ counts some big names among those customers, including Qualcomm, Nvidia, AMD, TSMC, Broadcom, and Marvell (not the comics).
Prior to this round, investments have also come from Israeli venture capital firms Carmel Ventures, Pitango Venture Capital, and Evergreen Venture Partners, totaling $30 million. All three of those investors joined the new round.
“With the downsizing of major cell manufacturers in recent years, chip companies have become dependent on a smaller number of clients whom they simply cannot afford to lose. So, the importance of our tool is extreme for them.”
Glotter told Calcalist that they have seen increased interest from investment banks and other venture funds, something they capitalized on for a round aimed at funding their entrance to the mobile market. The company is aiming for an IPO in 2018, optimistic that “the entrance barrier is very high” for their segment of the industry and that no new competitors might outpace their services before they go public.
“A company that wants to enter our field would need years of development work,” Glotter said, highlighting the possibility they might be aggressive in trying to maintain their edge. “We might go for another big round to make an acquisition; we have our eyes on several companies right now.”
The company is based in Holon, Israel and currently employs about 200 people, hoping to bring on another 100 in the near future to work on data and algorithms.
Israeli semiconductor startups are some of the most successful in recent years
Israel has long been known for its semiconductor work, part of why Intel’s largest research and development center outside the U.S. is located in Haifa. In 2014, the semiconductor sector actually garnered more than a third of Israel’s total hi-tech exits, landing $5.7 billion of a total $15 billion made in tech startup acquisitions, making it the most successful field in Israeli hi-tech exits. In January, Amazon acquired secretive semiconductor platform Annapurna Labs for $370 million, which was one of the three largest tech deals so far this year.
So when Optimal+ says they are planning for an IPO, they may actually have a chance.
Laura Rosbrow contributed reporting.