This acquisition marks one of the largest deeptech mergers and acquisitions (M&As) from India, reinforcing the country’s growing prominence in the AI and semiconductor sectors.
Speaking about the deal, Kinara.ai CEO Ravi Annavajjhala highlighted the strategic advantages of joining forces with NXP. “We are very excited to be part of NXP. NXP is the third-largest semiconductor company in Europe, and what this means is that we will get the reach and resources of NXP, beginning with its massive customer base, as well as all the resources they have. So, it’ll help us expand our products into a much larger customer base,” Annavajjhala stated.
Kinara.ai will become part of NXP’s secure connected edge business line once regulatory approvals and integration processes are completed, which is expected in the first half of 2025. The company will focus on addressing the growing AI demands of the secure connected edge market, particularly within industrial IoT—a domain where NXP is already a leader.
The acquisition represents a significant win for early investors like Exfinity Venture Partners, which supported Kinara.ai through its Series A and B funding rounds.
Chinnu Senthilkumar, Managing Partner at Exfinity, emphasised the returns generated from this deal stating, “With this exit, we are returning 40% of our fund, and we will be touching a DPI of one, meaning we will have returned our entire fund. This validates our thesis in deeptech,” he explained.
Exfinity also played a crucial role in helping Kinara.ai establish a cost-effective R&D centre in Hyderabad, showcasing India’s capability for frugal innovation in the deeptech space. Senthilkumar sees this as an encouraging sign for India’s deeptech ecosystem, which has long faced scepticism regarding its readiness for investment and exits.
Looking ahead, Annavajjhala pointed out the vast opportunities in industrial IoT and AI-driven edge computing. “This is a $40 billion market, growing at a 30% CAGR from today to 2028. NXP has a strong presence in industrial IoT and edge computing, and we will complement their microprocessor lineup,” he said.
Edited Excerpt from the Discussion.
Q: What does this deal mean for the future of Kinara.ai? And now, with NXP Semiconductors, what impact do you hope to make, and will Kinara work as an independent entity? What happens to your team?
Annavajjhala: We are very excited to be part of NXP. NXP is the third largest semiconductor company in Europe, and what this means is that we will get the reach and resources of NXP, beginning with the massive customer base and all the resources they have. So, it’ll help us expand our products into a much larger customer base. So, we are very, very excited about it. As far as the team and the future of Kinara, we will be part of NXP after regulatory approvals are cleared and after integration is complete, which we expect to happen in the first half of 2025. Once that occurs, we’ll be part of the secure connected edge business line. We’ll be catering to the rapidly growing AI needs of the secure connected edge business line, especially the industrial IoT markets, for which NXP is a big leader.
Q: Exfinity has supported Kinara through Series A and Series B rounds, including the high-profile investment led by Tiger Global. What does this milestone mean for Exfinity? What kind of returns have you made?
Senthilkumar: We are returning 40% of our fund with this return. We will be touching a DPI of one. We’ll be returning our entire fund with this exit. We also made partial exits earlier, but this will make us touch the DPI of one.
Exfinity has always been at the forefront, looking at deeptech trends well ahead of the curve. Kinara is one such company we spotted about five to seven years back. This validates our thesis in deeptech. We also played a crucial role in helping the company set up the cost-effective R&D centre in Hyderabad. This also demonstrates frugal innovation in the US-India corridor. We have many other investments of this kind in the deeptech sector. We are very happy and excited, and it’s a good exit for the deeptech landscape in India.
Q: Over the years, multiple LPs have questioned whether the Indian ecosystem is ready for deeptech. This deal proves that it is ready for investments as well as exits. So, what are the new partnerships you’re building? Take us through some of the offerings that are in the pipeline.
Annavajjhala: First of all, yes, the ecosystem is ready. We are seeing a lot more deeptech deals happening in the market. Very delighted to see that.
In terms of the actual pipeline, I can give you a high-level overview. This $40 billion market is growing at a 30% CAGR from today to 2028. And clearly, it’s a very, very hot space. NXP caters to the industrial IoT and edge markets in a big way. They have a microprocessor lineup, and we will be complementing that lineup. For example, we’ll be pairing up with their IMX line of processors, creating modules, creating system-on-modules, dye integration, and maybe in the future, we will be part of their microprocessors and an IP block.
We are looking to cater to the industrial IoT and automotive edge. Here are some examples: We were at CES for a month and jointly demonstrated a very cutting-edge model called Lava, a large language and visual assistant model. This combines elements of large language models as well as interpretation of images. For example, if a video is coming in, you can interpret it and describe it using a large language model in real time. And that’s the capability we are unleashing.
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