Raza's Firm Slims Focus
To fund its progress, RMI raised $20 million in a round last week. A new investor is Advanced Equities Financial Corp., a brokerage house and late-stage venture firm based in Chicago. The round also included prior investors Benchmark Capital , Duff Ackerman & Goodrich LLC (DAG) , Kodiak Venture Partners , and Warburg Pincus . (See Raza Micro Raises $20M.)
One chip-industry source suggests RMI had trouble getting other Silicon Valley firms to join the latest round, but RMI says that's more a factor of the company being beyond the early startup phase. "We've had an increased valuation, so why would we want to bring anybody else in?" says Chris Keil, RMI senior director of marketing.
Keil says the 100-employee firm has raised more than $120 million since inception. But the funding history is bit convoluted, given RMI's background.
RMI is a well known quantity in Silicon Valley due to founder Atiq Raza, a microprocessor guru whose previous startups took on Intel in the late 90s. During the bubble, he started Raza Foundries -- kind of a venture capital firm, but one that raised VC funding itself -- which enjoyed a couple of successful startup sales before the telecom crash hit. (See Raza Goes Micro.)
Three of Raza Foundries' projects got combined into RMI, giving that firm three separate chip families. Its first shipping products were microprocessors from a startup called Sandcraft, but RMI also crafted the Orion processor, aimed at boxes like multiservice provisioning platforms (MSPPs), and the XLR, a processor targeting a more general swath of networking appliances. (See Raza's Triple-Threat Revealed.)
XLR and Orion are both shipping, with 3G and wireless backhaul among the primary markets for both. XLR is also getting business in the security space, Keil says.
Sandcraft's chip family has provided the bulk of RMI's revenues so far, but, from now on, "the main focus is going to be around the XLR," Keil says. The Sandcraft line, called XL, will get less of RMI's R&D attention. "We're shipping in large volume, but it's a product we do not believe we will continue to invest in the development of."
A close competitor to XLR would be Cavium Inc. (Nasdaq: CAVM) with its Octeon products, chips that pack multiple microprocessor cores and can be programmed for a variety of tasks.
"We see RMI in the market, but typically in the high end," says Amer Haider, Cavium director of marketing. Keil says the XLR, while a high-end product, can scale down to suit lower-end systems.
Cavium claims it's got the edge over RMI in Layers 4 through 7 by having hardware-based features such as TCP acceleration and pattern matching; RMI counters by saying it's high performance, not individual high-layer functions, that matters, particularly in the security space.
Other competition in the embedded processor space includes heavyweights Freescale Semiconductor Inc. and Intel Corp. (Nasdaq: INTC). Broadcom Corp. (Nasdaq: BRCM) and PMC-Sierra Inc. (Nasdaq: PMCS) have entries in this area as well.
Despite keeping the Raza name, RMI has shed a key part of its Raza Foundries history. Namely, it's moved out of the colossal Raza offices on North First Street in San Jose, to more humble digs in Cupertino, Calif. "We're not in the Batcave any more," Keil says.
— Craig Matsumoto, Senior Editor, Light Reading