I talk to many of you often about the challenges facing our start-ups. From CEO’s and top management, to those considering joining a Start-up, the chorus of concerns and frustrations about the complexities of dealing with Start-Ups is not uncommon, rather, it is something so many of you voice frequently. Be it growing a Start-Up, to going to a Start-Up, the recurring theme it seems is, “how do we compete with the Goliaths” (my word not yours, writers get to choose their words) that make it so difficult for smaller companies to succeed.
Start-ups start with a dream…for EDA it is slightly different as the product is a more industry-focused tool or IP or such, with a specific solution that, for the most part, has a very exacting targeted usage. Granted, things can change as development progresses but in EDA, we know where it should fit, how it will be used and who must be brought on as a partner for it to work. This is what differentiates us from most of the other Silicon Valley Start-Ups…they get an idea and they are out to change the world. So many kids (by kids, I mean big kids) today have these somewhat crazy ideas, and start a new company with the belief that they will significantly change how something is done, or change the convention if you will, from old to new with amazing implications on the future, making them a overnight million or even billionaire.
This is what differentiates us from them…While I am getting slightly off track, this is a problem our community faces…the ability for an amazingly successful exit strategy. I do think that those that have chosen the field of EDA have a different outlook than most other tech businesses, as we see the success of the “concept” as the glory and are not quite as motivated by the money. We seem to see the broader range implications of the actual development, and marvel at what we create.
Anyway, back to my initial point. An EDA start-up faces quite different obstacles than most others in that whatever you do, for the most part, must work within the Big Boys (or as I previously called them, the Goliaths) existing flows, for the most part. This forced cooperation presents very specialized challenges as some start-ups are building totally new dimensions in flows, others are trying to build a better way of doing something someone else sort of does, but no matter the project, all of them need to work with the Goliaths. The exit strategies have been (for the most part) a sell-out to these Goliaths, either because it was the best option available or the legal challenge made it -shall we say- simpler.
So where am I going with all this set-up. In my discussions, many a talk has been had to building stronger partnerships within the smaller company communities by coming together and sharing, joining forces, and cooperating more. The result is to make each company’s flow more important and allow it to cover more ground by working in tandem. Even stronger mid range companies benefit from this as they can better compete for their little piece of the pie and keep the Goliaths more at bay. Some start-ups find other Start-Ups to compliment what they are building by helping each other gain traction in their area…we have seen this done successfully over and over. This type of partnership, collaboration must continue and even escalate. The logical next step is similar to what Ansys did with Apache; find other companies that can acquire or join forces to better compete with the Goliaths. More companies need to find common ground to merge, and while I know that VC’s are throwing up reading this, we must not ignore the bigger picture, which is to grow and build a better infrastructure around the Start Up EDA community. This should ultimately net better results when selling. We have the companies, the brain power, the technologies and long term, this can prove to be the best and most profitable solution for these small companies, allowing for an even stronger value proposition on exit than if they relinquish separately.
On another good note, EDA industry rose by 6.8% for Q3 2013 when compared to the same quarter the year before. Q3 was 4.2% ahead of the previous quarter while comparing the last 4 quarters to the same previous 4 quarters and showed a nice increase of 5.8%. Stable, steady, and I think reassuring…no records broken…just nice clean and hopefully sustainable growth. Now may it only continue for my /our 401k’s.