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Discera, whose semiconductor-based oscillators are designed to supplant the quartz devices that are ubiquitous in electronics, has closed on a $17.5-million third round of funding led by Scale Venture Partners, the company announced Monday.

'We're coming out with a substantially better widget.'  -Tom Willey, Discera

Ardesta, 3i, and Horizon Ventures also participated in the round. The funding, which brings the San Jose, California, company's venture capital haul to $40 million, will be used to manufacture and market MEMS (microelectromechanical systems) timing devices for the multibillion-dollar market dominated by quartz-based oscillators based on decades-old technology.  

"We've particularly focused on MEMS," said Jim Jones, managing director with Scale Venture Partners, based in Foster City, California. "Our thesis is that MEMS can replace existing technologies with a better product, and this is our fourth investment."  

Oscillators are produced by the billions and used in a vast array of electronics, including computers, DVD players, gaming consoles, set-top boxes, cameras, radios, MP3 players, and cell phones.  

"Every year there are two or three of them shipped for every person on the face of the earth," Mr. Jones said. Tom Willey, Discera's chief executive, described oscillators in general as the "heartbeat" of electronics.  

'Rock in a Package'

Mr. Jones, who is joining Discera's board of directors, said that earlier-generation quartz oscillators—"little pieces of rock in a package"—are difficult to shrink and hard to manufacture.  

Quartz oscillators are produced by Japanese giants like Epson, Sanyo, and NDK, as well as New York City-based Dover's Vectron International unit. It has signed an agreement to sell Discera's devices, which recently began shipping. High-volume production is expected in the second quarter of 2007.  

Mr. Willey said the Vectron agreement is a "strong validation" of Discera's technology. "We're coming out with a substantially better widget," he said.  

Discera outsources manufacturing of its chips in the Far East and has only 23 employees. It has sufficient potential to grow into a company that stages an initial public offering, Mr. Jones said, but it also could be an attractive acquisition candidate.

Still, Discera faces competition from other startups making semiconductor-based oscillators. Like Discera, SiTime is a fabless semiconductor company developing MEMS-based timing devices. SiTime is backed by Greylock Partners, New Enterprise Associates, and the Bosch Group, a global conglomerate.

Among Scale Venture's portfolio companies are Good Technology, ScanSafe, Seattle Genetics, and Frontbridge.

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