What questions should you ask when commercialising new photonics technology? Greg Blackman reports from a panel discussion on the subject at Photonics Europe in Brussels
How do you bring new technology to market? Where should you go for financing? Who should be involved in starting a new photonics company? These and other questions were discussed during an industry session on commercialisation at SPIE Photonics Europe in Brussels on 6 April.
The first question a budding start-up or university spin-out should ask themselves, according to James Regan, CEO of Effect Photonics, is: is there a business case? Second, is the technology ready for product development, and third, can I persuade people to invest in it?
Effect Photonics builds optical chips for dense wavelength division multiplexing (DWDM) applications. The company won the elevator pitch competition at Invest in Photonics in Bordeaux in 2014.
Regan’s advice for those wanting to commercialise technology is be customer driven, not technology driven. He said talk to customers and understand their needs.
Effect Photonics was founded by designing a solution to a customer’s problem that couldn’t be solved by existing technology. It was then a case of finding out if the product would be useful for other potential customers, because, as Regan pointed out, it’s unwise to rely on one customer or very specific market, a situation he likened to pandas eating only one type of bamboo, meaning if the food supply disappears then so does the panda. ‘You don’t want to be the panda,’ he said.
The panel commented on the cultural differences between the USA and Europe, which are substantial they felt. Ruth Houbertz, CEO of Multiphoton Optics, based in Germany, commented she would ‘definitely transfer to the States’ at some point. The European outlook, she said, was one of maintaining the status quo and avoiding change, whereas in the US there’s more of an attitude of ‘we come with nothing, and we build’.
Regan added that there is more appetite for risk in the USA, and that US venture capitalists (VCs) are beginning to set up offices in Europe because of the unwillingness of European VCs to invest.
He commented that it is incredibly difficult to secure financing, especially in Europe, because the large corporate research houses are mostly gone, as are the VCs investing in early stage hardware.
His advice was to look for funding at regional government level. The European Commission’s Horizon 2020 programme is a good place for very early funding, he said. After that he suggested asking banks if they have an investment platform, and trying individuals and family offices as well as angel syndicates. But above all, keep it local; people are more likely to invest in technology being developed in their geographical area, he said.
Regan’s other advice was to make sure there’s a commercially minded person involved in the new company – he suggested four people with a balanced set of skills is best for getting a start-up off the ground.
Also, be investment efficient, he said, in that, look for the shortest path to generating cash from the technology. Even if this isn’t the final goal, is there a first generation product that will yield profit to support the company in the short term? As soon as the company starts generating revenue, investors are happy.
The road to commercialising new technology is a difficult one and most new businesses fail for many different reasons. Houbertz said that timing can be a big issue, and that when she was first working on the 3D lithography technology behind Multiphoton Optics, there wasn’t a market for it yet. She said that new businesses have to establish whether there is a market need for the technology in the first place.
Related articles:
Digitisation 'big opportunity' for photonics, says European Commission's Burgess
EPIC looks to improve investment opportunities at AGM
The VC marriage - Following coaching the start-up companies pitching for finance at Invest in Photonics, Géraldine Andrieux Gustin, a senior partner at Yole Finance, gives her five tips for attracting investment from venture capitalists
Further information:
