Intel Capital VP bullish on semiconductor startups

VCs are hanging on to some of their funds in part due to a bad economy and the lack of acquisitions or public offerings for startups. "A lack of exists shouldn't impact you, because VCs should be long-term investors with a three-to-seven year horizon, but it's a behavioral thing that people tend to cramp up and not invest," he said.

In semiconductors, digital fabless startups "will continue to struggle" fund funding because they are seen as capital intensive. However, Larsen listed several chip sectors where he sees promise.

"You will see innovations in horizontal ways to drive cost out of semis such as in test, packaging and critical parts of process innovations such as patterning and polishing-- those are areas where we look to invest," he said.