Reaching maturity

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Cobolt has developed from a start-up to an established company with mature products, as Warren Clark discovers

Cobolt began as a spin-out from both the Royal Institute of Technology (the technical university of Stockholm, known as KTH) and ACREO, a national institute, in 2000. It was founded by Håkan Karlsson and Fredrik Laurell, the head of the department of physics at KTH.

‘We sought to explore the technology for periodically-poled non-linear optical crystals, and their capabilities to generate efficient and tailored wavelength conversion in compact solid-state lasers,’ recalls Karlsson, now CEO. In the late 90s, this technology was the focus of both institutions. Indeed, Karlsson himself was employed by ACREO, but completed his PhD on periodically-poled crystals at KTH in 1999.

Although this technology was at an early stage of development, the company was founded in an era when, thanks to the telecoms boom, venture capitalists were falling over themselves to invest in photonics companies.

‘There were a lot of photonics start-ups in the Stockholm region at that time,’ says Karlsson, ‘which, to a large extent, was as a spin-off effect of Eriksson’s previously strong activities in optical communications. However, we were one of the few companies that did not orient our business plan towards telecom, despite being strongly encouraged by some of the potential investors to do so.

‘We did attract investors in 2001, including the Swedish Industry Development Fund, SEB Venture Capital, and a private investor – Rune Glavare. Between them, they funded our start-up phase to take the idea from development through to a product with market acceptance.’

With technology development focused on the visible range, Cobolt’s initial plan was to tackle display applications, but very quickly this moved on to replacing gas lasers in the bioinstrumentation area. Indeed, the trend from gas lasers to solid state is still ongoing.

‘Since 2002 we’ve been focusing on lasers for advanced analytical instrumentation applications, primarily in biotech,’ says Karlsson. ‘We have also applied our laser technology in other areas of advanced analytical instrumentation, such as Raman spectroscopy, interferometry, and semiconductor metrology. We’ve remained focused on these markets, which has given us a good understanding of the applications and their developments. In turn, this has helped us understand the current and future requirements of laser sources used.

‘As part of our dedicated market focus we have tried to develop close connections to the end users of the instrumentation technologies we are serving. Combined with established commercial relationships with leading instrumentation manufacturers, this has enabled us to be aware of emerging applications and, in some cases, allowed us to stay ahead of the competition.

Håkan Karlsson - CEO of Cobolt

‘We have always sought to pursue advanced designs within our technology, in order to extract the highest possible performance of the lasers, but that brings with it many manufacturing challenges. So, we have spent a lot of time and effort on manufacturing technology, which we market under the brand name HTCure. This is one of the major assets of the company now, along with our original technology. It has allowed us to develop compact, robust devices, which are very insensitive to environmental conditions. It has also helped speed up our development process, and therefore release new products more quickly.’

Cobolt has been self-funded since 2006, meaning that they have not had to call on investors since then, and have been able to use their own profits to develop new products. ‘In contrast to many of those telecom start-ups in 2000, our levels of original investment were relatively low. Those with high-level investments ploughed funds into large manufacturing fabs and so on, and that meant that there was huge pressure to deliver profits quickly. For us, though, it meant that we were able to develop our products at a more sensible speed, which has been good for everyone – that includes the quality of the technology development, the market introduction and the financial development of the company.

‘We have now passed the start-up phase and have developed into a company with mature products and good market penetration in the field of analytical instrumentation. We have a solid financial performance record, AAA credit rating and an ISO 9001-certified quality management system. Our investors have a long-term perspective. They believe in the growth potential of the company, and will remain with us for the foreseeable future.’

Cobolt’s location in Stockholm, coupled with the heritage of a strong telecom photonics industry in the area, has provided the company with access to highly-skilled photonics manufacturing personnel. Its workforce of 26 includes no fewer than seven PhDs in laser physics.

This year, Cobolt will be releasing a new family of lasers in the mid-IR range, suitable for use in gas sensing in the petrochemical, automotive or environmental markets. ‘This move was always part of our original business plan, and now we see the timing is right for it,’ adds Karlsson.

After years of using distributors worldwide, Cobolt is opening its first direct sales channel overseas as a result of a growing OEM business. The US office, located in the San Francisco bay area, will serve all Cobolt’s US customers from late March, and will be managed by Phillip Amaya. ‘This new office will enable us to have a closer relationship with our OEM customers in the US,’ says Karlsson.

Around 75 per cent of Cobolt’s products are standard, but the levels of customisation are increasing all the time. ‘The majority of our products are sold into OEMs, and where they need customisation, they ask for anything from tailored test protocols, through to customised designs with customised performance,’ says Karlsson. ‘We also have direct sales to end  users, such as universities and research institutes.’

From a product perspective, Karlsson says there are many reasons why customers should choose Cobolt over any competitors. ‘We focus on the high-performance, high-quality end of the market,’ he says. We also focus heavily on reliability and offer market-leading warranty terms. As previously mentioned, our close relationship with our customers means that we can often stay ahead of the market when it comes to new product development.’

Looking ahead, Karlsson sees several growth factors within the bioanalytical instrumentation market. ‘Development of new instrumentation technologies for higher resolution imaging, higher sensitivity and faster analysis drive demand for new, more powerful and efficient lasers. This new breed of analytical tools will be capable of not only addressing high level research labs, but also applications in clinical diagnosis, new drug development and personalised medicine.

‘We’ll also be addressing the growing demand for compact mid-IR sources in gas-sensing applications – we showed our first mid-IR lasers at Photonics West earlier this year.’

From an economic perspective, Karlsson is optimistic. ‘There were signs of uncertainty in the OEM market during 2012,’ he says. ‘The general funding situation, which is driving much of the end user market for research applications, remains relatively stable both in the EU and the US. We expect a pick-up in the market during 2013, just as we saw in 2010.’