From the outside, the brief story of NUVIA reads like a Silicon Valley fairy tale. Three semiconductor industry veterans who had worked together at Apple on the A-series chips that power millions of iPhones and iPads started the company in 2019 to create an ambitious new kind of chip for data centers. Less than two years later, on Jan. 12, Qualcomm announced its intent to acquire Nuvia for $1.4 billion plus company cash and completed the acquisition on March 16.
Easy peasy, right?
Wrong. NUVIA had raised a $53 million Series A round in Summer 2019. The founders started discussions with investors and strategic partners to raise their Series B, with expectations of closing a round within a few months. But after COVID-19 hit, all financing discussions paused, leading to worries about future funding. “This put some serious gray hair on our heads,” says Gerard Williams, NUVIA’s CEO, who co-founded the company with Manu Gulati and John Bruno. “We’d convinced hundreds of great people to leave cushy jobs to join us.”
Having never so much as pitched a VC before starting NUVIA, these first-time founders were fortunate to have an experienced team of advisors and board members to help them navigate the challenging times. Our own Navin Chaddha took a particularly active role, both in driving a process that led to a $240 million Series B last September, and in the decision to sell to Qualcomm a few months later.
Navin’s involvement with NUVIA dates back to early 2018, when Manu and John, then at Google had an idea for a data center start-up and then reached out to talk to Gerard, still at Apple, about joining them in this endeavor. To test their basic thesis — that data center operators needed a new kind of super-fast, low-power server chip to keep up with the soaring demands of an increasingly cloud-based economy — Manu called Navin for an informal chat.
The two had known each other since the late 1980s, when they were classmates at the Indian Institute of Technology in New Delhi. Manu knew that Navin was one of the few VCs in the Valley with experience and enthusiasm for the high-stakes game of building chips. He’d even developed a detailed thesis about a coming “silicon renaissance.”
“Not many investors have an appetite for something as capital intensive as building silicon, and far fewer understand the big picture, or all the global trends,” says Manu. “Navin advised us to go big. Plus, Navin was the top student in our class, so we wanted him on our team.”
The admiration was mutual. Navin had followed Manu’s career as he, and later John, moved to Google to create processors for consumer devices. The two of them and Gerard have a combined 100 patents and 20 major chip architectures on their resumes.
A pandemic, and a seismic industry change
NUVIA got off to a great start. By the end of 2019, it had assembled a star staff of 100, and was well on its way to developing a server processor codenamed “Phoenix” that in tests would run up to twice as fast as competing chips from Intel and others. By February of 2020, Nuvia had lined up investors for a big Series B round to be raised around mid-year.
Then, the pandemic hit. “Everything came to an absolute standstill,” says Gerard. “It seemed like no one wanted to jump in anymore until things got back to normal.”
That’s when Navin and other board members took a more active role. They led a plan to reach out to potential investors and run a tight fundraising process. They pitched many new entities within a few weeks, including big financial institutions (previously, they had focused on VCs and strategic partners). During this time, the board met around three times a week to discuss promising leads, but Navin often spoke with one of the founders multiple times a day. “Navin was very, very proactive in making sure all the leads were followed and making sure the spreadsheet was up to date,” says Manu.
Finally, on Sept. 24, the company announced a $240 million Series B. The round was led by Mithril Capital, and Mayfield was joined by investors including Marvell Technology Group founders Sehat Sutardja and Weili Dai, as well as funds and accounts managed by BlackRock and Fidelity Management, WRVI, Dell Technologies, Capricorn and others.
Then, the industry was rocked by a series of headline-making announcements that reinforced new realities, including increased consolidation in the data center silicon industry, including a decision by the world’s largest consumer device company to make more of its silicon itself. In September, Nvidia announced a planned $40 billion acquisition of ARM Holdings, saying it would let big cloud companies integrate Nvidia’s AI and graphics technologies into custom-designed chips. In November, Apple unveiled its first Macs powered by its own M1 chips (rather than chips from Intel).
As they tried to think through the new market realities, the team got the kind of sober, honest counsel that Navin is known for. He explained why the changes might reduce NUVIA’s TAM if more companies moved to in-house silicon programs, but also why the new conditions might compel industry giants to want to buy NUVIA in short order.
Sure enough,there were multiple acquisition inquiries – and the founders were prepared to consider them. Just to be sure, Navin and other directors spent time with each of the co-founders to find out if they were ready to give up on their dreams of building their own independent, public company. “The board was 100% behind us either way,” recalls Manu. “But emotion can get in the way at times like these. Navin helped us stay data-driven and objective. He plays the cards in front of him, and doesn’t mince words. I love that about him.”
When talks with Qualcomm got more serious, Navin showed another side of him that the founders hadn’t expected. “Navin really, really, really – I don’t know how to emphasize this enough – cared about our employees. Looking back on 2020, it’s clear he was trying to do what was best for them all along the way,” says Gerard.
“None of this could have been possible without the support and guidance of our early stage investors, and in particular Navin,” says John. “He took a threesome of first-time founders and stood by our side all the way through.”
When asked about the one quality that first-time founders should look for an investor, the answers come in quickly:
Gerard: Stamina; Manu: Founder friendliness; John: Resilience