Faqs
Frequently Asked Questions & Answers
Q:What investment areas are of particular interest to Telos Venture Partners?
A:Telos invests primarily in next-generation electronic design automation companies, particularly those that fill the in the gaps between IC design and manufacturing, and between system-level design and semiconductor implementation. Startups in the design-for yield (DFY) and design-for-manufacturing (DFM) spaces are areas of particular focus. We also invest in innovative fabless semiconductor companies. In addition, companies whose technologies or business models are related to or analogous to the EDA or semiconductor industries are of great interest. Please note that although we previously made several investments in enterprise software and communications systems companies, these are no longer areas for our investment focus.
Q:What distinguishes Telos from other venture capital firms?
A:Our focus and our ability to add value. We believe that we have assembled the deepest and most experienced investment team when it comes to evaluating and helping to build successful next-generation EDA and semiconductor companies. Our General Partners have decades of experience as senior executives in the EDA industry, semiconductor industry executives, and entrepreneurs in these areas. In addition, because of our extensive networks throughout these industries, we can help connect startups with potential customers and partners, and can attract value-add team members, board members, and co-investors.
Q:What is the relationship between Telos and Cadence Design Systems?
A:Cadence Design Systems and its affiliates are the sole Limited Partners in Telos funds. Telos has an advisory committee comprised of members of Cadence’s Board of Directors (currently Donald L. Lucas, Roger Siboni, and Lip-Bu Tan) who review investment opportunities recommended by the Telos team.
Q:Do you focus on companies that are strategic for Cadence?
A:Although we are happy to facilitate relationships with Cadence when appropriate, we are independent of Cadence. Like other independent venture firms, our long-term financial rewards come from carried interest (profits) from our investments. Independent of its investment in Telos, Cadence makes direct investments in private companies whose products and underlying technologies serve Cadence’s strategic interests.
Q:At what stage of company development do you typically prefer to invest?
A:We are early stage investors who prefer to invest in financing rounds where the post-money valuation of the company is about $20M or less. In extraordinary cases we may decide to make later-stage investments.
Q:What is the typical size of your investments in portfolio companies?
A:We typically invest between $1M and $3M (often around $2M) in the first financing round in which we participate. Over the lifetime of a company, we usually invest between $4M and $6M.
Q:What if the amount of money my company needs to raise is much greater than the typical Telos investment?
A:We generally co-invest with other venture capital firms. Sometimes these firms are ones that we bring to the company and sometimes the company is already working with other firms who are willing to form an investment syndicate.
Q:How do you add value to the companies in which you invest?
A:We prefer to invest in companies where our operating experience can help the company grow and prosper. Typically, we help refine business models, evolve business strategies, define market engagement approaches, and ensure disciplined product development and introduction methods. As with all venture capital firms, we are also very involved with executive recruiting for our portfolio companies.
Q:Do you generally prefer to lead an investment round or just follow?
A:We usually prefer to lead an investment round. This often entails having a seat on the company’s Board of Directors. Having a Board seat facilitates providing active support and guidance to management. In some cases, we will participate in investment syndicates where the lead investor is someone we respect.
Q:What are your geographic preferences for investments?
A:The vast majority of our investments are located in Northern California, and this is our strong preference. Being nearby facilitates our ability to actively support our portfolio companies. We will also consider opportunities elsewhere in the Western United States.
Q:How long does it usually take for Telos to reach an investment decision?
A:Usually about three months from the first meeting we have with a company.
Q:How would you describe the Telos “style”?
A:The operating experience of the Telos team results in a very “hands-on” interactive style of working with the management teams of companies we are either considering for investment or in which we have invested. We truly enjoy working collaboratively with entrepreneurial teams in refining the business strategies and tactics that guide the development of their business.
Q:How much capital does Telos Venture Partners currently manage?
A:The firm was established in 1996 and currently has approximately $180M of capital under management. We are members of the National Venture Capital Association and the Western Association of Venture Capitalists.
Q:What is the current view at Telos regarding making new investments?
A:Telos formed its third fund, Telos Venture Partners III, L.P. in June 2004. We expect to make new investments from that fund for several years.
Q:What type of business plan do you prefer to see?
A:The best place to start is by submitting a brief executive summary. If the executive summary piques our interest, the next step is a meeting where you can present your entire business plan. For insight into what we expect in a business plan presentation, please click here.
Q:Why is it important to seek a referral when submitting a business plan?
A:We believe it is always helpful to have someone with whom the Telos team is already familiar refer a potential business opportunity. Referrals can come from a variety of sources including: current or former portfolio company executives, service providers, co-investors, and other types of business associates. These parties often already have significant credibility with the Telos team, and by referring an opportunity to us, they lend some of their credibility to the entrepreneurs.
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