Mythic, an AI chip startup that reportedly ran out of capital last November, rose from the ashes today with an unexpected injection of fresh funds.
Mythic announced this morning that it has closed a $13 million funding round led by existing investors Atreides Management, DCVC and Lux Capital along with new investors Catapult Ventures and Hermann Hauser Investment. While the tranche is a fraction of the startup’s previous raise ($70 million), Mythic claims the tranche will allow it to bring its “next-generation” product, an enhanced, power-efficient AI processor, to market.
“While economic conditions are challenging right now, this new funding will help Mythic focus on its technology offering, go-to-market strategy and customer acquisition,” Dave Fick, Mythic’s new CEO, told TechCrunch in an interview. by email.
Co-founded by Fick and Mike Henry at the University of Michigan under the name Isocline, Mythic developed chip technology that stores analog values on flash transistors. While digital processors “pause” to swap data in and out of dedicated memory, Mythic’s hardware can perform computations in parallel without stopping, leading to performance and efficiency improvements, particularly for AI applications, Or at least that’s what the company claims.
Mythic initially worked on projects for the US Air Force through its Small Business Innovation Research (SBIR) program, focusing on high-altitude drone computer vision and GPS signal acquisition. Once the contracts closed, the startup decided to go the venture capital route, raising more than $170 million in multiple rounds from investors, including Hewlett Packard Enterprise and BlackRock.
With its first commercial chip, the M1076, Mythic doubled down on computer vision use cases, building a system that can help detect small objects from far distances in less than 33 milliseconds. It is perhaps these capabilities that have attracted Mythic’s largest client to date, Lockheed Martin, whose corporate arm, Lockheed Martin Ventures, became a major investor in the startup.
So what went wrong? Well, Mythic was competing in a very crowded field. Dozens of startups were, and are, developing chips to run AI efficiently at the edge, including SiMa.ai, Axelera, Flex Logix, NeuReality, EnCharge, Hailo, and Kneron. But funding is running out. According to The Register, global VC capital for semiconductor startups in 2022 declined 46% to $7.8 billion, reflecting increased scrutiny of capital-intensive companies.
Mythic wasn’t the only one affected by the raid. Last year, AI chipmaker Graphcore, whose valuation was slashed by $1 billion after a deal with Microsoft fell through, said it was planning job cuts due to the “extremely challenging” macroeconomic environment. Meanwhile, Habana Labs, the Intel-owned artificial intelligence chip company, laid off roughly 10% of its workforce.
To regain stability, Fick, who rose as Mythic’s CEO from CTO after Henry, who was CEO, left to pursue other interests: priority efficiency. For example, Mythic now leverages more development partners and off-the-shelf components than ever before, lowering costs and (hopefully) reducing time to market.
Fick says the shakeup has the added benefit of making Mythic’s research and development “more agile” as it prepares to launch its next-generation chip, the M2000.
“Given the new macroeconomic environment, we expect many startups to want to take a similar approach, especially for system companies that need to offer many components beyond their core technology,” Fick added. “But one advantage of Mythic’s analog computing approach is that we can use more mature compute nodes. These have more supply chain availability than edge nodes and are also much more cost effective.”
Beyond cutting costs, Mythic revamped its go-to-market strategy, going back to its roots with a “renewed focus” on defense (and, to a lesser extent, public safety, industrial and consumer verticals), according to Fick. He would not elaborate. But presumably, that means going after more customers with government contracts, like Lockheed.
“Cloud computing is often unavailable on the battlefield, creating a strict edge computing environment. Advanced machine vision is being applied in many places, including large and small drones, autonomous ground systems, radar, augmented reality headsets, and more,” Fick said. “As the M2000 reduces the size, weight, power and cost to implement high-performance computer vision, these technologies can be applied in more applications.”
Critics may deride Mythic’s turn to defense as opportunistic, but there’s no denying there’s a source of capital there. As PitchBook noted in a recent report, after years of avoiding investment in military and security-related technology startups, venture capitalists have begun to raise their profile in the sector as the US tries to gain the upper hand against threats from adversaries, including China and Russia. In 2022, $7 billion was invested in VC-backed US aerospace and defense companies through October 13, putting the sector on track to surpass the record 2021 deal value of $7.6 billion. .
As Matt Ocko, managing partner at DCVC, put it in rather doomsday language: “Mythic’s processor delivers data center GPU performance in the size, power and cost of practical long-lived edge systems. who can protect America’s schools and public places from violence and terror, and the troops of our allied nations on the battlefield. Mythic’s technology will close the gap between what AI researchers publish and the systems they actually implement, and offers revolutionary capabilities for national defense and national security.”
Analyzing the hype, investors are excited about Mythic’s new defense-forward direction, at least for now. Time will tell if it was the right one.