(Bloomberg) -- UK chip startup Paragraf Ltd. has bought a California-based competitor and joined other British technology businesses like ARM Ltd. in basing their growth plans in the US.

In acquiring San Diego-based Cardea Bio Inc., which will be renamed Paragraf USA, Paragraf has acquired extra manufacturing capacity as well as technological expertise. The deal’s terms weren’t disclosed.

Paragraf is based among a cluster of chip businesses in the marshes near Cambridge, England, dubbed Silicon Fen. However, instead of that traditional microchip material, Paragraf makes one-atom-thick sheets of carbon, a material called graphene, which it says possesses incredible semiconductor properties.

“In order to grow the business, we need to have a US footprint,” Paragraf founder and CEO Simon Thomas said in an interview with Bloomberg News. UK investors have “appetite to be part of that journey, but not to the level that we actually need, if we want to move at the speed that we want to.”  

“It’s been great in the past, but now we’re at the end of the road in terms of the availability of that type of capital over here,” Thomas said. 

The attractions of the US include deeper-pocketed venture capital investors with higher risk appetites, as well as a bigger potential customer base in target markets like medical technology. Acquiring Cardea Bio, whose website describes using graphene to make “biosignal processing units,” gives Paragraf a base close to companies like biotech giant Illumina Inc.

There’s also the more advanced state of US industrial policy. The UK is expected to publish a semiconductor strategy soon, including the provision of government support. But companies have expressed frustration at having to wait during a crucial moment for the sector: Pandemic shortages exposed the necessity of microchips in everyday life, and rising tensions between the US, Russia and China have forced governments to secure chip supply chains as an urgent priority.

“There is a big problem at the moment with not having clarity,” Thomas said about the UK. “It’s a lot easier for me to look at the US right now and go: actually I can grow there. Not just because of the capital reasons that we discussed, but because I know what the strategy is. I know what the country wants to do.”

In July, Thomas told a British Parliamentary panel that the US government had offered him help and tax rebates if he moved, while the UK’s Department of International Trade had suggested he outsource a division to Malaysia. 

Paragraf in March 2022 closed a $60 million Series B round led by US-based New Science Ventures LLC, which valued the business at about $200 million. Thomas plans to raise again to accelerate the company’s growth. UK government-backed British Patient Capital is also one of Paragraf’s investors.

Any potential IPO is still at least three or four years off, Thomas said. But if that day comes, he may reluctantly follow chip design giant ARM, also based in Cambridge, by opting to sell shares in New York rather than London. 

“There is certainly a greater upside to NYSE than there is to LSE,” he said.

That draw isn’t limited to microchips — London-listed gambling giant Flutter Entertainment Plc and Irish building material producer CRH Plc are also seeking US capital markets.

©2023 Bloomberg L.P.