f you examine the history of the semiconductor equipment industry, you will discern several consistent and important points about semiconductor equipment start-up companies.   THE MACRO INVESTMENT ENVIRONMENT
When asked about the reduced investment levels in semiconductor equipment start-ups, some venture capitalists cite the current difficult start-up funding environment in the aftermath of the horrific double-bubble implosion (the Internet, followed by telecom) in 2000 and 2001. They also


Start-ups have delivered many innovative products.
Some products – for example, the excimer laser source for DUV photolithography from Cymer and the capacitance manometer for pressure measurement from MKS Instruments – have since become industry standards. Others, like the sequential dielectric deposition system from Novellus and the single-wafer plasma etcher from Lam Research, have helped the industry push the technology to achieve higher levels of circuit performance and lower cost.
Some have become market leaders. As a result, the industry has developed from what was essentially a cottage industry in the 1970s to a $30 billion equipment industry by 2000.
Investors received excellent returns. Over the last two decades, there have been many IPOs and M&As that have provided handsome returns to investors.
          Yet today, venture investors are reluctant to put money into semiconductor equipment start-ups. Why?

note 9/11 and geopolitical uncertainty. These VCs are looking not for the reason to invest, but for the reason not to.
        There are also VCs who are worried about the current semiconductor industry downturn, fearing we are in a bottomless pit. They are so worried and fearful about the risk and potential loss of their investments that they would prefer to opt out of even the most attractive opportunities. These VCs would be more comfortable doing start-up investment after most
economists have pronounced and government statistics confirmed our nation’s economic recovery. But by then, they may be “buying high” and missing the greatest opportunity for return.
        Finally, there are VCs who justify their reluctance to invest by noting their maturing of the semiconductor industry, as if all innovations worthy of discovery have already been discovered. The industry is indeed getting more mature than, say, when I started Lam Research in 1980; most equipment manufacturing sectors are now dominated by a few large companies and fab managers are becoming more conservative as they seek to manage and optimize their supply chains.
        However, as long as our industry pushes the