Verific: Rhymes with Terrific
June 23rd, 2016 by Peggy Aycinena
Michiel Ligthart, President and COO of Verific Design Automation, and Rick Carlson, VP of Worldwide Sales, have a proposal for young companies in the EDA industry and adjacent technologies: Come to Verific if your organization is early stage, in need of encouragement and wise counsel, and could benefit from access to Verific software to help you progress towards a commercial product launch.
In a recent phone call, Ligthart and Carlson explained the specifics of the Verific program, and delineated what it’s not: “We are not funding startups,” Ligthart said, “but we have changed our business model over the lifetime of our company to encourage innovation.
“To understand what we are doing, let’s take a jump back in time. Fifteen years ago, if someone had a good idea in EDA, they would write it down and present it to a VC. If the idea was good, it would stick and there would be funding, an office, computers and furniture – and then they would be in business.
“If HDL were required, the company would write a front-end themselves, or go to a company like Verific and ask them to write it.
“Now however, if you have a good idea in EDA it’s very difficult to get VC or even angel funding. The days when people would buy a license from Verific [in the early stages of a company] are long gone.
“Instead, when people have an idea today they have to first build a prototype and then find an initial customer before they can get any traction with angel investors or VCs.
“As a result, we have changed our business model, so a young company can have access to a front-end license from Verific on Day One. We are providing startups with our software and a linkable library to help them develop their ideas and get their prototype together.”
Are monies exchanged between Verific and these promising enterprises, I asked, or does the startup receive a free feature-lite version of Verific’s product?
Ligthart said no on both counts: “The startup does not receive a feature-lite version of our software, but receives for free the very same version we sell to customers. The startup can only use our product for R&D purposes, however, and cannot ship it to end-users.”
“There is no paper work involved,” he added, “because it is all done as a linkable library. Normally, when someone becomes a licensee of Verific products, we ship the source code to them in C++. They can then turn around and ship our front-end to their users.
“The Verific tool [we provide for free] is only intended for use in the initial development space, and is delivered in a binary format the startup can take and use in developing their products.”
This is a pretty bold maneuver, I said. Inspired by other companies, or in response to EDA startups being severely underfunded these days?
Ligthart said it’s mostly the latter: “We believe it’s more important to have a relationship with these customers in the long run, so helping them out at the beginning just makes good business sense.”
“Take NextOp as an example,” Rick Carlson offered. “There were two top-notch, former Synopsys engineers with an idea for their BugScope product.
“Obviously, they came into this with no VC money behind them, and probably no angel capital. But they had saved money from their previous jobs at Synopsys and elsewhere, and felt they could work X number of months without pay.
“We worked with them and gave them access to our linkable library. Customers they subsequently lined up said NextOp saved them 18-to-24 months [in development time], so the guys at NextOp saved 18 months getting their own product to market.”
Is Verific acting as an incubator for EDA, I asked.
Ligthart replied, “We are not an incubator, we are not offering office space. What we are offering is high-value product free of charge up front.”
“And if the startup doesn’t end up making it,” Carlson added, “Verific is not out anything. If the company does make it, however, they are a great reference for us and an excellent paying customer going forward.
“Not completely a surprise, of course. Many people come to us because they had a friend who recommended us, or the developer used Verific in a previous company.
“The impact we have had on the industry is immense – something that can be confirmed by looking at the number of companies [we have been involved with] over the years. We continue to build great value for startups by providing our product [in this manner].”
How can you trust that the recipient of your free software won’t violate the stipulations, I asked, and offer it to a customer?
Ligthart had an easy answer: “The linkable library comes with an expiration date.”
“They have to call us to renew,” Carlson said, “and we ask the obvious questions: Have you built a viable product yet? Have you started talking with customers?
“We also perform several [other types] of random checks to reassure ourselves that real products are being developed.”
Carlson said there’s another aspect to Verific’s ‘mentoring’ that’s proven critical to many early stage enterprises.
“Folks come to us looking for our product, but go away with more. For some of these startups, they think their products will sell right out of the box, and when that happens they have traction with the customers.
“But for other startups, they really haven’t thought about the whole sales channel [issue]. For those people, if we believe in them, we introduce them to various professionals in the field – marketing gurus, sales reps from around the globe, and so on.
“We are able to introduce the startup guys to the best people in the field, and the majority of the time these introductions lead to the success of the startup.”
“Sometimes,” Carlson added, “we even introduce them to the venture folks. Joe Costello, for example, came back into the industry after a 10 year hiatus when Michiel and I were helping out with Oasys.
“Joe was shocked to get a call from me, we met at a restaurant with Paul van Besouw and Sanjiv Kaul, and out of that meeting grew a 7-figure investment. Oaysis went on to develop their product and be acquired by Mentor Graphics, where it continues to do well.”
So Verific serves as a kind of non-monetary VC enterprise, I noted.
Carlson responded, “Yes, we give them money-free access to code that’s valued at hundreds of thousands of dollars.
“We also surround promising startups with people from our Rolodex, and if the company doesn’t have the expertise, we offer marketing and sales advice. In that way, we are providing something like what VCs provide.”
Carlson noted, however, that Verific is not the only company utilizing this strategy.
“I would imagine that if you looked out at other companies that have been successful, a company like Salesforce – they gave a 30-day trial of their product for free, because they wanted to prove to you that using the Internet and the Cloud was the right way to do sales and revenue tracking.
“That model has been happening all around us for some time, the model of providing free access to your product as a way to get people interested in the product.
“In our industry, of course, we have had so few IPOs in the last few years, and the difficulties of raising money has become so [intense], we are seeing startups that couldn’t begin to pay full price for our product, or even half price.
“So for us, it’s about more than just proving our product to potential customers, it’s about [growing this industry].
“The three companies we highlighted in our booth at DAC this month in Austin are just these types of companies: Austemper, Innergy Systems, and Tortuga Logic. They are all betting they’ll get traction in the market, and we are betting on them to succeed.”
This is all terrific, I said. How long have has Verific been doing this?
Michiel laughed, “Oh man, it has been a long time! We started the company in 1999, but it took some time to [initiate] this program. It’s been 10 years at this point.”
Yet you’re still sure Verific doesn’t want to offer incubation space, I asked.
Carlson said, “Most of these companies either work from home or have already rented an office. But what we are offering is far more valuable than office space.”
Michiel again chuckled, “And I want to stay away from that incubation space idea. We would get really, really cramped!”
Successful exits by Verific licensees …
acquired by Ansys …
* Sequence (acquired by Apache Design Solutions)
acquired by ARM …
* Carbon Design Systems
acquired by Cadence …
* Arthimatica (acquired by Forte)
* Safelogic (acquired by Jasper)
acquired by Intel …
acquired by Lattice Semiconductor …
* Stelar Tools
acquired by Mentor Graphics …
* Flexras Technologies
acquired by Synopsys …
* Certess (acquired by Springsoft)
* NextOp (acquired by Atrenta)
* Tenison (acquired by ARC)
* Tharas (acquired by EVE)
Tags: Austemper, Cadence, Innergy Systems, Joe Costello, Mentor Graphics, NextOp, Oasys, Paul van Besouw, Rick Carlson, Sanjiv Kaul, Synopsys, Tortuga Logic, Verific Design Automation