Tessolve raises $40 million in funding from Novo Tellus


Hero Electronix-owned end-to-end semiconductor engineering and testing service provider Tessolve has raised $40 million in funding from Singapore-based private equity firm Novo Tellus at a valuation of $100 million, as it looks to build chops in semiconductor design to feed a growing demand for custom silicon globally.

Tessolve plans to utilise the capital to beef up its semiconductor design and engineering capabilities inorganically through acquisitions in the US Bay area, while also expanding its geographical presence. It said it will also invest in developing IP for its test engineering business, which today drives over 80% of the company’s revenues.

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“Being in India our mindset is towards growing in services. But the way the semiconductor industry is evolving, from a few large players now even unrelated companies like GoPro, Facebook and Google want to build their own chips,” said Ujjwal Munjal, founder director at Hero Electronix. “We wanted someone to come help walk us through this journey.”

Hero Electronix acquired a majority stake in Tessolve in 2016 and has been able to diversify the business from just semiconductor test engineering. It said it has been able to grow the company’s revenues by over three times in this period to $75 million in 2020, but still largely driven by its testing services.

Nikhil Rajpal, CEO of Hero Electronix, said that Tessolve has the capability to grow by a further 3X in the next 4-5 year by making the right investments in organic and inorganic growth. He added that Novo Tellus’ investment, which specialises in backing semiconductor companies, will further aid partnerships to help the company grow.

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“Having made multiple investments in the semiconductor space through the years, it is clear to us that Tessolve’s unique value proposition to its global customers puts it in a great position to benefit from the secular growth trends in semiconductors,” said Wai San Loke, co-founder and managing partner at Novo Tellus Capital Partners.

Novotellus said that it already works with eight of the ten largest semiconductor firms globally, and while it is also looking to tap technology companies looking to design their own chips, it will continue to work with semiconductor firms to allow them to bring products to market faster and more cost efficiently.

Around 85-90% of its revenues are driven by working with semiconductor companies and it doesn’t expect this to change significantly in the future.

The company has a few early projects in the end-to-end semiconductor engineering services space, and has already scored a customer for whom it has designed a chip from scratch and will even work with the manufacturer to deliver the end product. Novotellus, however, declined from naming the customers it works with.

“As everything gets digitised, people want very application specific semiconductors that have better performance, lower power consumption and a chip that does not have additional functionalities. For manufacturers, this means a lot more complexity, but for us, it means there’s a lot more engineering dollars being spent,” added Munjal.



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