Chip design firm raises €1.1m funding
19th October 2008
Duolog, the Dublin-based developer of chip design solutions, has raised €1.1 million in funding over the past year which it is using to finance expansion into new markets and complete a refocus of the company to purely concentrate on selling its Electronic Design Automation tool.
The firm raised €650,000 from Enterprise Ireland last year. This year, it completed an internal funding round for €475,000,which came from existing investors.
Duolog chief executive Ray Bulger said that the company had shifted its focus over the past year, after originally starting out selling intellectual property for wireless chip design. It had developed an Electronic Design Automation (EDA) tool to help chip developers integrate its technology and others into their silicon, which was released on the market in 2004.
However, by last year, revenues from its EDA tool had begun to exceed those from its original IP business. Bulger decided to abandon the latter and focus exclusively on EDA sales going forward.
“We realised that we couldn’t scale the business as much as if we retained our original business model. The EDA model is much better for us. It provides annual recurring license revenue, so every euro earned in sales this year counts as a euro in the bank for next year. Previously, we had to win new customers every single year,” he explained.
As a result, Bulger expected revenue to grow by only 1 or 2 per cent this year, to just over €5 million. “This year alone, we doubled our revenue from EDA license sales. However, we also forfeited around €1.6 million in wireless IP sales after exiting that business,” he said.
The full effects of the shift in the company’s business model would, Bulger said, be felt next year, when he expects revenues to grow to around €10 million.
In tandem with this, Duolog has also been hastening its international expansion. The company already has a development office in Budapest and opened its first US office in February in Palo Alto, California.
Bulger’s focus now is on Asia, where the company has already appointed a distributor in South Korea and has commenced direct selling into Japan.
The recently-filed abridged accounts for the company indicated that it made a €68,000 loss in the year ending December 31, 2007, and had accumulated losses of €165,000. The firm had shareholders’ funds of €5.1 million.
The Sunday Business Post