Portfolio News
Microfabrica closes $22.5M
TheDeal.com
Cheryl Meyer
4 September 2008
Micro-device maker Microfabrica Inc. said Thursday, Sept. 4, it has closed a $22.5 million second round of funding co-led by Versant Venture Management LLC and InterWest Partners LLC.
Draper Fisher Jurvetson, DynaFund Ventures, Chevron Technology Ventures LLC and Partech International also participated in the round. Van Nuys, Calif.-based Microfabrica has raised more than $45 million to date.
The nine-year-old company, which develops micro- and millimeter-scale mechanical devices, said it plans to use the new funds to expand its products in the medical device arena and to expand product capacity in its growing electronics and defense businesses. The company's patented micro-fabrication technology creates three-dimensional micron-precision metal structures that can be used in various devices.
Microfabrica CEO Vacit Arat said the company has been focused on developing its products for the semiconductor testing market in order to gain traction, but believes most of its future revenues will come from using its technology in minimally invasive medical devices.
"It's our holy grail and that is where we believe the company's highest value is going to come from, and that is certainly the vision investors have," Arat said of the medical devices sector. He said the company is "getting a lot of market pull" from the cardiovascular, endoscopy, drug delivery, ophthalmology and spine surgery sectors.
Kevin Wasserstein, a managing director at healthcare-focused Versant Ventures and new member of the company's board, said Microfabrica has already begun working with large-cap medical device companies interested in helping the startup build its technology. He said the company will "continue to harvest and maintain" the semiconductor business, along with enhancing its products for the medical technology sector.
"At some point this company could look like it has multiple vertical business units," he said. Venture capitalists say they like the business because it has developed a platform technology that can be used across numerous sectors - including IT, semiconductors, medical devices and possibly others.
"We can have a significant impact across so many major industries and the potential of the company is staggering," said Warren Packard, a managing director at Menlo Park, Calif.-based Draper Fisher Jurvetson, which has invested in all rounds at the startup. He said his goal for Microfabrica is help take it public. Packard also joined the board of the company.
In 2004 the company closed a $15 million round of funding led by WK Technology Fund, Atherton Venture Partners LLC, Draper Fisher Jurvetson and others. It added another $8 million in funding in 2006 led by Draper Fisher Jurvetson, DynaFund Ventures, Partech and several other firms. The company is labeling its previous financings as part of its Series A round, as it now begins a new Series B chapter focusing on the medical device arena.
Microfabrica was founded in 1999 to commercialize work that began with Defense Advanced Research Projects Agency at the University of Southern California in Los Angeles, and has since generated revenue largely from its semiconductor testing business.
Arat said the company is generating annual revenue of under $10 million, and that it expects the latest funding round to take it to profitability sometime around 2010.
"We're going to position the company for an IPO," he said. "That means healthy revenue, increasing margins and good market acceptance."
