A new tech business was born in Canada on Tuesday through the creation of analog semiconductor company, Spectra7 Microsystems Inc--a firm that may one day boost bandwidth for mobile devices. Two smaller tech firms, RedMere Technology Limited and Fresco Microchip Inc. will merge with Chrysalis Capital VIII Corporation to produce this new entity, soon to be traded on TSX Venture.
It's a small deal with several significant backers. For starters, the $10 million in equity (including investments) that Spectra 7 is expected to raise will come from venture capital firms such as Celtic House Venture Partners, Ventures West and EdgeStone Capital Partners. Celtic was originally founded by Terry Matthews, the Welsh-born, telecommunications billionaire also famous for founding Mitel Networks (which used to have a semiconductor company in its stable), although he has been gone from the firm for about 10 years now.
It seems there is technology in RedMere and Fresco's combined patent portfolio and development centres worth growing. RedMere's business is primarily in active HDMI connectivity solutions with products already available at electronics stores worldwide. Fresco brings inexpensive but good quality silicon tuner solutions to the table--that's technology needed by TVs.
Chrysalis Capital VIII has been formed under the TSX Venture Capital Pool Company Program, which works like a reverse IPO. Three to six individuals (with mandated business and public company experience) contribute funds and incorporate a Capital Pool Company (CPC) -- in this case it's ChrysalisVIII -- and proceed to collect seed capital in exchange for shares before applying for TSX Venture listing. Fresco and RedMere will become wholly-owned subsidiaries of Chrysalis VIII, and Spectra7 and its shareholders will then perform a reverse-takeover on that company. That should lead to three-way benefit for the exchange, which gets a new security, as well as the founders and investors, who get a new business to grow and bet on.
Once all the dust settles on that arrangement, Spectra7 will work to satisfy the seemingly insatiable global demand for bandwidth with fibre, copper and wireless links it believes will unclog current blockages in the mobile internet space.
To add credibility to that plan it's worth noting that Samsung Electronics, the largest maker of memory chips on the planet, also said Tuesday that it would make an investment in semiconductors (which have been takeover targets over the last several years). It will acquire the mobile division of a U.K. semiconductor company, Cambridge Silicon Radio. The $300-million deal will also involve sinking funds into the development of chips used in smartphones and tablets to improve internet access.
Editor's Note: This post has been corrected to reflect that Terry Matthews is no longer affiliated with Celtic House Venture Partners.