European private equity firm Jolt Capital is making its first Canadian investment by bringing a French semiconductor company’s headquarters to Montréal.
Jolt Capital acquired some assets from French semiconductor firm Dolphin Design at the end of October and is relocating its head office to Montréal under a newly created entity, Dolphin Semiconductor. The firm is investing $40 million CAD to grow Dolphin’s footprint as a provider of intellectual property (IP) blocks for semiconductor chips.
Dolphin hopes to become a leading provider of chip subcomponent IP to some of the world’s biggest tech companies.
Dolphin Semiconductor, now 100 percent owned by Jolt Capital, does not manufacture chips itself but rather develops IP for key subcomponents of the chips that power analog-to-digital devices. The acquisition covers Dolphin’s IP for power management and signal processing, typically used in smart devices for voice recognition. These IP activities accounted for about 60 percent of Dolphin Design’s revenue and patents portfolio.
The $40-million investment, to be doled out in tranches, will support Dolphin Semiconductor’s efforts to scale, develop new semiconductor IP, and land “hyperscale, Tier 1” clients. Dolphin hopes to become a leading provider of chip subcomponent IP to some of the world’s biggest tech companies.
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The new Montréal company will be headed by Laurent Monge, the former president of France-based Metrologic Group, which makes software solutions for manufacturers.
Dolphin already had a subsidiary presence in Montréal, with about 40 employees. But now, it will be well-positioned to add talent within Québec’s semiconductor hub, according to Claude Jean, an executive vice president at Teledyne Digital Imaging, who will join Dolphin’s board as an independent member.
“It’s striking how much Quebec universities were able to maintain a very, very rich semiconductor program, although semiconductor manufacturing was offshored massively,” Jean said in an interview with BetaKit.
Bromont, Que., is home to Technum Québec, one of the province’s three government-designated innovation zones. Semiconductor players such as IBM, Teledyne, and Nord Quantique are stationed there. Bromont and Montréal are both part of the Northeast Semiconductor Manufacturing Corridor, which stretches down the northeastern coast to New York City. The bilateral corridor was established to boost semiconductor reshoring efforts.
Jean added that Dolphin’s semiconductor design champions energy efficiency, which gives it an edge.
“One of the biggest challenges that the world is facing right now is the power consumption of AI,” he said.
Part of Dolphin’s growth strategy will involve creating stronger commercial ties with US companies, due to its large chip manufacturing market.
Jolt Capital, a French firm managing nearly 600 million euros ($900 million CAD), opened its first Canadian headquarters in Montréal this summer. In an interview with BetaKit, managing partner Jean Schmitt said he was drawn to Canada due to the tech investment opportunity.
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“A tsunami of startups are getting funded early on, that are developing good tech, and then they reach a state where they’re just too big for VC … and they’re way too small for buyout,” said Clément Bourgogne, Jolt Capital investment director and lead for Canada. “But there’s no one to really support them in that stage of growth.”
Bourgogne, formerly COO of Scale AI, said that Dolphin Semiconductor is a perfect example of Jolt’s investment targets: mid-sized deep tech companies that generate their own IP.
Jolt was founded in 2011 and invests in mid-sized European deep tech firms bringing in annual revenue of between 10 million and 50 million euros ($14.8 million and $74 million CAD). Applied AI, semiconductors, cybersecurity, photonics, and robotics are some of its target sectors. The private equity firm developed its own database search tool to identify target companies within its investment window, called Jolt.Ninja.
Beyond breaking into Québec’s semiconductor industry, Jolt Capital has big plans for Canadian investments. The firm sees Canada as a strategic market that will allow its European portfolio companies to expand into North America. Bourgogne told BetaKit that the firm is raising its first dedicated Canadian fund next year, with an objective of between $100 million and $150 million.
“That’s also part of the strategy,” Bourgogne said. “Try not to go too fast in Canada, do things methodically. We want to deploy our model here, and we want to do it sustainably.”
Feature image courtesy Jolt Capital.