"Aristos Logic makes crucial push with $12m funding"
December 1, 2004
By Martin Desmarais

Gupta

FOOTHILL RANCH, Calif. - Like many chipmakers, Aristos Logic faced a long research and development battle and required substantial cash to get its product to market. But with a last round of funding this fall and customers using its chips, the company says profits are in sight.

Anil Gupta, Vipul Mehta and Sanjay Mathur co-founded Aristos Logic in February 2000. The California-based company makes semiconductors and software for data storage networks. It has about 70 people in the United States and about a dozen in India.

The company is backed by $65 million in venture capital. In September it raised $12 million.

Aristos' first product was launched in October 2002. Network equipment manufacturers are now using Aristos products and the company has been pulling in revenues in the past year, according to Gupta.

Gupta, Aristos' chairman, chief executive officer and president, said that this year the company has generated several million in revenues and is expecting to hit double-digit revenues next year.

"The initial customers we have are going into production with our first generation products," he said.

The company has six committed customers, according to Gupta.

Aristos targets original equipment manufacturers that make storage equipment. These are companies such as Fujitsu, NEC, Toshiba, EMC, IBM, Hewlett-Packard Co., Sun Microsystems Inc. and Hitachi.

Orders vary from $3 million to $5 million, on the small end, to $10 million to $15 million, on the large end, Gupta said.

He believes that now that Aristos has gotten over the hump of gaining those first few initial customers, things will really start to roll.

"The initial set is the toughest to sell, because you are a startup and viewed as such," Gupta said. "But as you get early ones out, the startup label drops off."

In the chip industry, it is a "challenge and a benefit" that customers are slow to come on board, he added.

"It takes a lot to get customers, but once you have them they stay," he said. "You are pretty much locked in with that customer for multiple years and multiple generations of their products."

Aristos has in fact already launched the second generation of its products and the third generation is in the works.

Marketwise the challenge is to build chips that keep pace with the fast-changing dynamics of the network industry, Gupta said. "We are integrating the other kind of interfaces that are emerging in the market."

And bottom line, Aristos is focusing on the key facets of chipmaking - improving performance and supporting more speeds.

Investors in Aristos most recent funding round believe the company has accomplished just that and will continue to be able to do so. These investors are JP Morgan Partners, TPG Partners, Woodside Fund and QVT Capital.

"We are pleased with Aristos Logic's progress and believe that the company is well positioned to capitalize on the industry's transition," said Vikram Gupta of JP Morgan Partners.

"Aristos Logic has not only delivered a silicon solution that provides industry leading cost/performance, but has also built a powerful software kernel that enables customers to get to the market in shortest possible time," said Steve Foster of TPG Ventures.

"Our continued commitment to Aristos Logic is further evidence of the strong traction the company has generated with leading storage (original equipment manufacturers)," added Rick Shriner of Woodside Fund.

Aristos co-founders, Gupta, Mehta and Mathur, met while working at Western Digital Corp.

Al three have a lengthy background in network storage.

Gupta said that, when they initially thought of starting Aristos, they approached the chief executive officer of Western Digital with the plan.

"We worked with him to take a core team and form Aristos," Gupta said. "For the first six months we worked with Western Digital, then we did a friendly spin off."

"In return, Western Digital has an equity stake in Aristos," he added.

Mehta is the company's vice president of business development and marketing. Mathur is vice president of engineering.

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