Novafora shuts down

Earlier this year, video processor startup Novafora Inc. acquired publicly traded Transmeta Corp. for $255 million. A few months later, company CEO Naki Rakib and venture backer Robert Genisier (from Vertex Capital) rang the opening bell on the New York Stock Exchange.

Last week, the San Jose, Calif.-based company shut its doors.

The company laid off all 40 employees, after being unable to attract additional venture capital funding. Existing backers Vertex and Gemini Israel Funds opted against another large investment, and no new firm stepped up, a source said.

“VC appetite has really dried up for later stage semiconductor companies,” says a former Novafora executive. “They all want to do social networking and things like that.”

The ex-employee added that the Transmeta acquisition had been “cash positive.”

Novafora’s creditors are now in control, and are in the process of assigning a trustee who would manage a sale of Transmeta’s intellectual property (designed, in part, by Linus Torvalds).

Among those laid off were the company’s founding brothers—Zaki Rakib and Schlomo Rakim—who served as CEO and chairman, respectively. The pair previously co-founded Terayon Communications and, before that, Zaki co-founded Helios (which was bought by Cadence Design Systems). —Dan Primack