May 28–A group of venture capitalists put new zip into Ziptronix, a fledgling semiconductor innovator in the Triangle.

The Morrisville company closed Tuesday on a $17.4 million infusion from Grotech Capital Group, a Maryland-based firm, and Intersouth Partners of Durham. Other investors included Research Triangle Ventures, MCNC Enterprise Fund and Research Triangle Institute, which spun off Ziptronix in 2000.

Ziptronics uses a patented molecular bonding process to make semiconductor circuits in three dimensions rather than on a single surface. The result is a smaller chip that consumes less power, an advantage in wireless devices. Ziptronix also sells bonded semiconductor layers.

With the venture capital infusion, the company will expand its manufacturing by finishing its clean room and hiring more workers to supplement its current 26 employees, said Doug Milner, CEO of the privately held company. It also will hire a team to complete its design and production of the three-dimensional chips.

“The full attention of our management team can now be focused on the operations part of our business,” Milner said, after devoting much of the past year to business presentations to potential investors.

The capital is a second round for Ziptronix after an initial $6.5 million in early 2001 from Alliance Technology Ventures and Xilinx Corp., both of whom also participated in the latest financing.

The investment may also mean other tech startups could emerge from recent years’ capital doldrums, said Milner and Monica Doss, president of the Council for Entrepreneurial Development. “It is definitely very significant funding in that industry,” Doss said. “No one is throwing money at anything they don’t feel good about.”

In fact, the sum is the largest privately raised so far this year by a Triangle company, Milner said. For early-stage products and services in the local tech sector, it may be an even longer record, Doss indicated. Last year, Pinpoint Networks, a Durham company that provides software and services for wireless networking, raised $12 million in venture capital, she said.

That was nearly equal to the total venture capital, $12.4 million, raised by RTP-area semiconductor firms in all of 2002, according to data from Ernst & Young and VentureOne. The sector’s financing fell by 77 percent in 2002 from $55.1 million in 2001.

Meanwhile, in all industry groups in the Triangle, new venture capital fell only 8.7 percent, from $392.4 million in 2001 to $358.2 million in 2002.

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(c) 2003, The Herald-Sun, Durham, N.C. Distributed by Knight Ridder/Tribune Business News.

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