Novafora Shuts Down, Selling Transmeta IP

Earlier this year, video processor startup Novafora Inc. boldly acquired publicly-listed Transmeta Corp. for $255 million. A few months later, company CEO Naki Rakib and VC backer Robert Genisier (Vertex Capital) rang the opening bell on the New York Stock Exchange. Yesterday, the San Jose, Calif.-based company shut its doors.

peHUB has learned that the company laid off all 40 employees yesterday at noon, after being unable to attract additional venture capital funding. Existing backers Vertex and Gemini Israel Funds apparently opted against another large investment, and no new firm stepped up.

“VC appetite has really dried up for later-stage semiconductor companies,” says a former Novafora executive, reached at his home this morning. “They all want to do social networking and things like that.”

The ex-employee added that the Transmeta acquisition had been “cash positive,” although did not get into specifics.

Novafora’s creditors are now in control, and are in the process of assigning a trustee who would manage a sale of Transmeta’s intellectual property (designed, in part, by Linus Torvalds).

Among those laid off were the company’s founding brothers — Zaki Rakib and Schlomo Rakim — who served as CEO and chairman, respectively. The pair previously co-founded Terayon Communications and, before that, Zaki co-founded Helios (bought by Cadence Design Systems). I’ve put in calls to both, and will update this post if I hear back.