LFG (for semiconductors)
Cloudberry VC: Europe's First Dedicated Semiconductor VC Fund
Hello dear friends and subscribers, hope the week is winding down for my European subscribers, enjoying some family time and a high quality of life. And for my American friends, I hope you take advantage of us weak European’s next week to crush it and show us how to win deals and grow an economy.
I jest of course, but also, like 0.1% economic growth over here in the UK so, I guess who’s laughing? Anyway, big news:
Yesterday, we launched Cloudberry VC: Europe’s First Dedicated Semiconductor VC Fund.
Sifted did a thing: https://sifted.eu/articles/cloudberry-30m-fund-semiconductors. Paywall, but it says roughly this: "new fund, semiconductors are interesting, specialists in semi”
So, it’s semiconductors for me now. I’ll get back to fusion next decade…
My career (insofar as we can credibility call it that) has basically been a series of bets on technologies. Which is a very weird way to run a life, I know. And in that vein, I am at it again.
2015-2020: Crypto. Outlier Ventures. (tres early, niche)
2020-2025: Deep Tech. Lunar Ventures. (early, broad). State of the Future. Explore all the techs.
2025-? Semiconductors. Cloudberry. (early-ish, niche)
Not bad? Early crypto. Early deep tech. Early semi? Always early. It’s all that Head of Research-ing I be doing.
I wouldn’t be able to do semiconductors if it wasn’t for Rene and Veera for doing all the hard work. The truth is I am just some dude running around talking about crypto, deep tech and now semi. I am not a serious person. If it wasn’t for them, this wouldn’t be possible. Mad props to them.
So with Cloudberry, I’m making 3 bets:
Semiconductors are the best thing to invest in
There are 20 potential unicorns in Europe to find in next 3-4 years
We get the opportunity to invest in those companies
1. Semiconductors are the best thing to invest in
I guess people know semiconductors are important, at least a bit. It probably got into the public consciousness in Covid with carmakers couldn’t get their hands on chips. And now clearly it’s NVIDIA. From a $300 billion company to the most valuable company on earth at over $4 trillion. AI is obviously the macro trend that is making chips culturally relevant again. But they have always been financially relevant. Global semiconductor sales are already $700 billion and likely to cross the trillion by 2030. Trillions folks.
So big market yes, but are they a good investment area? Something to build a fund around? You need to make the case, that something has changed in the market for VC to be a useful asset class in semi. Otherwise just buy AVGO, GOOG, MSFT and NVDIA. I made the case here:
So has something changed? Yes.
For fifty years, we had Moore’s Law. Every two years, the same dollar bought twice the performance, and incumbents rode that curve hard. Startups struggled to compete because the gains came from manufacturing scale, not really architectural innovation. Intel, Samsung, and TSMC won by building bigger fabs, not better chips.
That era has ended. New nodes cost upwards of $500 million to design and billions to manufacture. Power consumption has become a hard constraint. The performance gains from shrinking transistors have slowed dramatically. I think what follows is the most significant opening for new entrants since the 1970s.
We will continue to get gains: gate-all-around transistors will replace FinFETs, backside power delivery will move the power rail to the back of the chip freeing up space, and high-NA EUV lithography gets us ever smaller transistors. The difference now is that all this nanoscale trickery costs a ton of cash.
So the shift and the thing to build a fund around is: the move from chip-level scaling to system-level scaling. This means, we will get much more innovation around the chip itself. Chiplets, which essentially break chips into smaller interconnected pieces, and advanced packaging that connects them with high-bandwidth interconnects, let designers mix and match process nodes, reuse IP, and sidestep the worst of the leading-edge economics.
These changes, chiplets and advanced packaging, mean combining photonics with silicon can become cost effective. You no longer need to build a monolithic chip that somehow integrates lasers, modulators, photodetectors, and logic on a single process. Instead you manufacture each component at its optimal node and connect them through interposers or silicon bridges with bandwidth approaching monolithic designs. The same logic applies across the board: stack memory directly on logic to shorten data paths to microns rather than centimetres, combine CMOS with GaN power amplifiers and MEMS sensors in a single package, add cache vertically rather than burning area horizontally. None of this requires bleeding-edge transistors. It requires integration, deep understanding of system bottlenecks, and willingness to optimise across the full stack rather than waiting for the next node to solve your problems.
Over the next decade, datacentres, vehicles, factories, grids, and wearables will all be rebuilt. They will not be rebuilt with the same silicon CMOS technology that defined the last half century. We are entering an age of heterogeneous computing, where systems process and move information with an increasingly diverse set of technologies.
2. There are 20 potential unicorns in Europe to find in next 3-4 years
Right, so semiconductors are a good investment area. But why invest just in Europe? Obviously finding unicorns is hard. And a geographic filter narrows the filter. And we’ve already narrowed the filter significantly by focusing on semiconductors (and photonics and “advanced materials”).
So yes, the fact is, it will be harder to find semi unicorns in Europe. But here’s why I am confident we can: we now exist + pride.
First, we will have more successful semi companies if they don’t have waste their valuable time applying for grants and pitching to funds that struggle to invest in semiconductors. Founders won’t have to dial down their ambition and pivot to a software story to raise money. I hope they can tell the most ambitious hardware story they can, and we can at least put them on the path. You want to build a temporal computing chip. Okay, let’s go. You want to build a photonic memory company. Where do I wire? You want to build an advanced packaging company focused on compound semi and photonics? Good stuff. Get at it. And my ambition is that we crowd in more money. Co-investors and Follow-On. This is Consensus Capital for European Semi:
Second, who else is pissed off with the European decline memes? The National Security Strategy said the quiet part out loud. "The Swindon lot don't seem to respect you". I don’t think the American’s respect us very much? Sort of makes me want to win, no? Where previously many of the best European founders moved to the US because staying in Europe was playing on “hard mode”. Maybe we should play on hard mode and win anyway? The more founders take on the challenge like Lovable, the more attractive it will be to stay. The more great companies that will grow. And the flywheel flys.
We have ASML. We have ARM (sort of). Take a look at Infineon, NXP and STMicroelectronics in automotive. And it’s not like we can’t build global winners here. Novo Nordisk, LVMH, SAP, Roche, Nestle, AstraZeneca, Shell, Hermes, and L’Oreal. Volkswagen. We can build huge companies. And we will again.
And honestly, we have the talent. But we need to demonstrate to the best talent that they can raise money for big things, hire the best people, and grow quickly: here. National and continental pride are bloody good motivators.
And there is no better place to start than semiconductors. Computing is and will increasingly become the bedrock of economic growth. Every major industry runs on semiconductors. Every breakthrough in medicine, energy, transport and communications depends on advances in processing power.
Europe invented much of this technology within a generation. The World Wide Web. Bluetooth. GSM. ARM. The stored-program computer. WiFi. The compact disc. MP3 compression. Linux.
And while we are at it, the printing press. The steam engine. The automobile. The battery. The telephone. Radio. X-Ray.
The bloody novel. Classical music. Impressionism. Shakespeare.
The scientific method. The Enlightenment. Liberalism. And what about Democracy? Heard of it?
Yes, so we do stuff. We can do stuff again. It’s a matter of will and ambition.
The alternative is a continent (and a little Island on the side) where the brightest leave because opportunity exists elsewhere. Where adversaries exploit weakness. Where demographics make every problem harder. Europe can be a place where ambitious people build or a place they leave behind.
We want to see the next trillion-dollar company in Europe. It will be a computing hardware company.
3. We get the opportunity to invest in those companies
Okay, big market and maybe I’ve persuaded you on Europe. But what about the me in all this? Why Cloudberry.
Here I am most convinced. You are starting a semiconductor company? You want to do something big from Europe in semi or photonics? You don’t want to haul yourself around collecting SEIS/EIS cheques. You don’t fancy grant proposals? You really don’t want to have to explain the difference between back end of line (BEOL) and front end of the line (FEOL) to investors.
You don’t have to do any of that. 500k no-questions asked* (*some questions asked).
Oh also, you need to build something at some point? Or get customer validation? GlobalFoundries, one of the world’s largest semiconductor foundries, gives our companies a path from prototype to volume manufacturing. And Radiant OptoElectronics, a Taiwanese global leader in photonics, gives us a foot into the photonics and Taiwanese ecosystem. I am genuinely excited to be able to properly “add-value” as VCs like to say.
Join Us!
Semiconductors are the best thing to invest in. True.
There are 20 potential unicorns in Europe to find in next 3-4 years. True.
We get the opportunity to invest in those companies. True
Semiconductors. Europe. Cloudberry.
I’m not stopping here. I am indeed ‘going hard’. There is much more we will do. We will build the World’s leading semiconductor platform. Fund I is the foundation.
So here’s an ask to fellow Europeans: what is the biggest, hardest thing in semi that you can think of doing?
lawrence@cloudberry.vc. LFG.
Interesting development with a semiconductor focussed fund - and one that is opportune with the money being poured into the ecosystem.
Fascinating "quantum" doesn't appear once. Why not?