With Data Centers Expanding, Semiconductor Startup Astera Labs Is On Track For $100 Million In Revenue This Year

Astera Labs’ cofounders Jitendra Mohan, Sanjay Gajendra and Casey Morrison met at Texas Instruments where they had the idea for a new chip business to remove bottlenecks throughout data centers. The problem was that connectivity wasn’t keeping up with advances in artificial intelligence and machine learning.

“That was the aha moment for us,” says Gajendra, 48, the company’s chief business officer. “This AI and machine learning train is heading really fast.”

So in 2017, the trio—all first-time entrepreneurs—quit their jobs to start Santa Clara, California-based Astera to create connectivity solutions that could help keep data flowing. A so-called fabless chipmaker, it designs its chips on the cloud, speeding up the process, then has them fabricated by semiconductor giant TSMC.


“People thought connectivity was going to be simple. It’s not a glamorous story, but they all need plumbing.”


Today, with data centers growing fast, Astera gained a spot on this year’s Forbes Next Billion-Dollar Startups list, our picks for the 25 venture-backed companies we think most likely to reach a valuation of $1 billion. With investors that include fund giant Fidelity, Intel’s venture arm Intel Capital and serial tech entrepreneur Avigdor Willenz, Astera, worth a recent $950 million, is the first semiconductor company to make the cut.

“If you look at where the market is today in terms of semiconductors, it’s about time,” says Mohan, 49, the company’s CEO. “I am trying to figure out how do we get to a billion dollars in revenue. That is the opportunity in front of us.”

While other chip startups have focused on more glamorous parts of the business like using artificial intelligence to develop smarter chips, Astera’s founders chose to focus on the basic plumbing of how to connect them faster. “At that point, people thought connectivity was going to be simple,” Gajendra says. “It’s not a glamorous story, but they all need plumbing.”

Raising funds happened so fast, Gajendra says, that the trio were caught off guard at first. “Within five minutes, he [Willenz] was writing all these numbers, ‘here’s the pre-money and the post-money,’” Gajendra says. “We were Googling in real time to see what do all these terms mean because it was all too quick for us.”

To get Amazon’s AWS as an early customer, the founders went to their contacts at the cloud giant and told them why they’d need such a solution to data-center bottlenecks. “I don’t know how convinced they were, but in the past we had done a good job on execution,” Mohan says. “When they got convinced was when we delivered on our commitment. Customers now come to us, and say, ‘We have this problem, how do we solve it?’”

Today, the company has three distinct product lines focused on different bottlenecks, and dozens of customers, including Google and Microsoft in addition to AWS. Last year, Astera’s revenue hit an estimated $35 million. This year, it’s expected to reach $100 million.

Despite a supply-chain crunch that has delayed many chips, Gajendra says that the firm has been able to differentiate itself by shipping within three-to-four months lead time, which he notes, “in today’s industry is like gold dust.”t has delayed many chips, Gajendra says that the firm has been able to differentiate itself by shipping within three-to-four months lead time, which he notes, “in today’s industry is like gold dust.”

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Source: https://www.forbes.com/sites/amyfeldman/2022/08/16/with-data-centers-expanding-semiconductor-startup-astera-labs-is-on-track-for-100-million-in-revenue-this-year/