August 20, 2007
Helpful Advice for Entrepreneurs. Also post-silicon validation, debug and in-system bring-up from out of the ClearBlue by Dafca
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Peter Levin, CEO of DAFCA, has an impressive, diverse and quite atypical background for a CEO in the EDA industry. Dr. Levin earned his degree at Carnegie Mellon University. He began his academic career at Worcester Polytechnic Institute where he set up Computational Fields Laboratory. He was a Humboldt Fellow and spent a sabbatical year at the University of Darmstadt as a guest professor of Mathematical Physics. He was the associate dean for research and graduate studies at the College of Engineering at Boston University. He worked in the White House, first for the Director of the Office of Management and Budget as a White House Fellow, then as Assistant
to the Counselor to the President, and finally in the Office of Science and Technology Policy. Peter was a general partner in Techno Venture Management (TVM) in Munich Germany. He led the investment in several firms including Neolinear that was acquired by Cadence in 2004 for $78 million. I had a chance to interview Peter recently.
How long were you a venture capitalist?
I was in venture for four years. I went directly from Boston University where I had previously been on the faculty and was research dean. I focused primarily on infrastructure technologies from device simulation to semiconductor fabrication and anything having to do with IT and software generally.
In the interest of full disclosure my wife graduated from BU and I got a master’s degree in computer science in the evenings.
No kidding. When were you there?
A long time ago. Also, I saw that you were at Worcester Poly (WPI).
That’s right I was on the faculty there. I began my academic career actually at WPI. I was on the faculty there for almost 10 years. I went through the tenure cycle. Happily I went thought it successful and stayed on a little while after that. I had a variety of off campus appointments towards the end including one year over in Germany as Humboldt Fellow and two years down in Washington DC during the Clinton administration.
My nephew graduate from WPI and I did my undergraduate work at Holy Cross also in Worcester.
Oh, my gosh. It looks like I have been shadowing you.
I am out here in California now. The difference between winters in Worcester, Mass and California is tremendous.
I’m actually calling you from a Greek Island. Let me tell you that the difference between weather on this island and Worcester is also pretty profound.
I am curious. When you were a VC what attracted you to those firms that you invested in or seriously consider investing in? Was it the team? Was it the technology? Was it the market opportunity?
It is all four of the major criteria. You got three of them right. Absolutely, positively the team! Without the team, you would not take even a second look. Often it had to pass through some other market filter before it ended up on my desk. Somebody who had been a CEO before or had been a VP of Marketing or played some operational role general would want to have a harsh look at it before they would lewt me take a look. Then I would do a deep dive on the technology assessment. The two of us, typically we worked two on a box, would work together on the financial engineering, on the economic structure. How much money was it going to take to
build the prototype? How much money was it going to take to commercialize? Did the market already exist? Did we think it was going to come? If it was, how large was it going to be? When was it going to actually be? It sounds perhaps somewhat formulaic. I don’t mean for it to sound like you can sort of plug it into a TI calculator and come up with an up or down decision. There is a lot of nuance and a lot of subtlety in the decision to move forward. But it really is all four criteria. But I would certainly focus Somehow I seemed to have a knack at both team dynamics and technology assessment.
For the firms that you did seriously consider, how did you learn about them? Unsolicited business plans over the transom? From other VCs already involved?
Generally not things that came in over the transom. Of course back in the late 90s and early 2000, you wouldn’t be surprised if you put up website that was tantamount to putting out a sign on you house like a doctor or dentist saying you were in business. All kinds of people would come and talk to you. We went to a lot of those meetings for sure. Almost all of the deals that I did came in through a let me say proprietary network. It sounds elitist and I do not mean it to be. These were typically people with whom I had personal experience through my career or people who were in very close proximity to people I trusted. So for the most
successful deal that I did, the deal that led direct to DAFCA which is where I am now was a Carnegie Mellon spinout. That’s where I went to college and grad school. The two founders of that deal (Neolinear) you may know were both CMU professors. You may not know that they started their academic careers during my last year as a Ph. D. student in the ECE department. They were more social acquaintances than technical colleagues. But they were guys that I knew pretty well at the time. We had been tracking each other’s career. It was 15 years before we pulled the trigger and put some money in.
I started a venture funded company once. Two of the VCs had been my manager at one point. They sort of recruited me to run the development part. I know that there a lot of readers who would like to become successful entrepreneurs that do not have the contacts.
It is certainly not something you can turn on in the course of a few days or even a few weeks. I would warmly encourage, in fact I actually encourage young entrepreneurs. It ends up that I have been recently honored by an appointment at Stanford. One of my jobs there is to provide these kinds of mentorships and advice to people who in their case because of age and lack of experience have not yet had the opportunity to build relationships, long standing relationships of trust and mutual dependence. But you can do that. And I encourage people to get started. It begins by cold calling these guys and saying “I am eventually going to want to start a company. I definitely see that in my career, in my future but obviously I am not ready to do that today. Are there any things that I can do with and for your firm that would allow us to get to know each other a little bit but you would also have a benefit doing due diligence or technology assessment, participating in some kind of venture forum?” A lot of VC firms run different kinds of conferences and activities. Participating in anything that is collectively sponsored by the venture capitalists is a very good way to meet them. But what you do not want to do is to show up at one of these events and say “Here I am. I have been working
on this business plan in my garage for 5 years and it is ready to go. All you have to do is write a check for $3 million.” Besides being hopelessly naïve it is likely unfundable because the venture backer needs to get to know you much better as a person.
How did you get involved with DAFCA?
As I mentioned I had participated in a CMU spin off. At that time it was on the venture side. It was one of the most successful deals TVM ever did. One of the cofounders is a man named Rob Rutenbar. He was familiar with Miron Abramovici and Al Dunlap. AL was one of the cofounders of DAFCA and had gone to CMU. He was part of the CMU Mafia as we affectionately refer to it. I knew that there was this DAFCA company out there but it was unfunded at the time. It was just Miron and LA working on it, literally in Miron’s kitchen. Then I heard about it again. The second time I heard it from Isadore Katz whose a pretty famous guy in EDA and who I had gotten very friendly with very much along the lines I just described to you. I was actually thinking of that relationship when I was talking about slowly building relationships of thrust. Isadore is a perfect example of how I would have done and did do that with someone who was well known to that segment of the EDA marketplace. To make a long story short, Isadore and I became very friendly and he told me that there was a company out there that quote “ I would be perfect for” . That got my undivided attention. It
was the same one Rob had told me about. So I figured two people in my intimate trusted network were telling me I needed to get off my butt and give Miron a call. That was enough to get me to call him. The rest is history. We hit it off extremely well on the phone and then met in person. We decided to go forward together.
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