Mirror Image Startups Raise $18M

The first two weeks of January have seen nearly simultaneous and almost identical, but separate, $18 million fundings of two fabless semiconductor startups – Silicon Optix of San Jose, Calif., and MicroDisplay Corp. of San Pablo, Calif. The companies are not head-on competitors; instead they build complementary technology products.

Silicon Optix, announced an $18 million, third tranche of its $48 million Series B round on Jan. 7.

Canaan Partners and Polaris Venture Partners co-led the deal, which included Origin Partners, Primaxis Technology Ventures, Firsthand Capital and Focus Ventures.

The company has raised $57 million to date.

Meanwhile, MicroDisplay announced its $18 million Series C round Jan. 13 from August Capital, 2M Technology Ventures, Nokia Venture Partners and Mobius Venture Capital. To date, MicroDisplay has raised $52 million in venture funding.

Both companies are fabless semiconductor firms that make products for the projection display market. That general description aside, they have quite distinct approaches to the display market.

Silicon Optix, was spun out of Genesis Microchip (NASDAQ: GNSS), one of the largest chip producers for flat panel displays and which also owns other imaging or image processing technology companies such as Sage and Faroudja. Silicon Optix President Paul Russo founded the company in June 2000.

At the time of the spin out “the development of our system on a chip products was too esoteric for a company like Genesis,” says Russo, who also founded Genesis.

MicroDisplay, while also targeting the display projection market, produces Liquid Crystal on Silicon (LCoS) display components that it hopes will become the base technology for next generation video projectors.

Unlike Silicon Optix, which focuses on image processing, MicroDisplay’s builds miniature LCD display systems on silicon. DARPA founded the company in 1995 to build “close to the eye” type displays for military applications, before changing its model to video projector systems.

But to date, there has been little VC funding in MicroDisplay’s market.

MicroEmissive Displays Ltd of Scotland raised a Series B round in early 2002, from investors including 3i.

And a Taiwanese startup in the sector is reportedly set to announce its funding later in this month.

Brian Alger, senior equity analyst at Pacific Growth Securities in San Francisco, says that the competition for MicroDisplay is not from these other startups, but from major consumer electronics providers of video projects systems, such as Sony and Philips, which both have captive LCoS product development teams within their companies.