Skip to main content
Lasers

Lasers

Laser jocks reach the big time

01 Apr 2001

Optoelectronics is flourishing in Scotland with new firms spinning off from local universities every month. Valerie Jamieson finds out why it is boom time for the region.

terahertz benchtop
People power Scotland's thriving academic community has helped produce a highly skilled workforce. (Courtesy: Simon Saffrey)

During the Californian gold rush 150 years ago, the people who made the real fortunes were the merchants selling picks, shovels and jeans, rather than the gold miners. The story is similar in today’s telecommunications industry. While the dot.com bubble appears to be bursting, the optoelectronics companies that supply the picks and shovels for the Internet are booming. Indeed, the global market for lasers, displays and fibre-optics technology is estimated to be worth over £140bn and is growing by 25% each year.

Recent surveys indicate that Scotland’s share of the spoils is increasing rapidly. The Scottish optoelectronics industry is currently worth £600m and is expected to grow to £1.6bn by 2005. Some 4000 people are currently employed in the sector, including 450 researchers in 16 university departments that specialize in optoelectronics. Indeed, Scotland has a long tradition of innovation in the field of optoelectronics with world-class teams working on ultrafast lasers, all-optical switching and optical computing.

Several centres have recently been set up to bridge the gap between academic research and industry. The Photonics Innovation Centre at St Andrews University, for example, provides facilities that enable prototype devices to be designed, manufactured and fully tested. Meanwhile, Compound Semiconductor Technologies Ltd – a technology-transfer company in Glasgow – offers services that include a £7.5m “foundry” for fabricating III-V semiconductors. Such facilities allow fledgling start-up companies to cut the costs, time and risk associated with commercializing new technologies.

Spotlight on displays

When it comes to research, Napier University is not considered one of the heavyweights in Scotland. But that has not stopped the institution from spinning off companies. Freelight Systems was founded in 1998 to commercialize the research conducted by Janos Hajto and co-workers on polymer materials. The company coined its name from fluorescent dye-doped polymers that absorb ambient light and re-emit a range of colours without the need for electrical power.

Freelight started to take off in 1999 when Brendan McGuckin, a former physicist and a commercialization manager at Napier, was appointed as chief executive. He secured £45 000 of funding from the Scottish Executive to further improve the company’s technology. He also commissioned market research to identify the priority markets for the technology.

“During a brain-storming session, we identified over 30 applications for the materials,” says McGuckin. “But it is vitally important for a small start-up to be focused.” As a result, the company discovered that the main market opportunity for the materials was as back-lights for electronic displays.

The company has now developed fully programmable prototype devices that emit red, green and blue light. Two selling points in the displays market are that the colours are not washed out, and that the devices consume less than 0.1% of the power of alternative technologies, such as light-emitting diodes. Freelight looks set to secure seed funding from both private and public investors by the end of the year.

Around the same time Freelight was set up, Jeff Wright was conducting research at Napier on organic light-emitting diodes (OLEDs). In 1998 he was awarded a one-year enterprise fellowship by the Royal Society of Edinburgh and Scottish Enterprise to assess the opportunities of his research. On his doorstep, at Edinburgh University, was one of Europe’s foremost groups in the field of microdisplay devices and systems. Wright recognized the opportunity for OLED-inspired microdisplays in portable consumer electronics and formulated a business plan, largely by himself. Microemissive Displays was born. Wright then met Peter Denyer, the founder of Vision – a company that makes image sensors – at a meeting between enterprise fellows and investors. Denyer was impressed with what he saw and invested his own money in the company.

Microemissive attracted a further six-figure sum from Lothian Investment, which lured Ian Underwood and two of his former colleagues from Edinburgh University. The funding also allowed the company to develop very small full-colour high-resolution demonstration displays at the Scottish Microelectronics Centre in Edinburgh. “Having daily access to a full CMOS fabrication and post-wafer processing facilities worth £8m is a great advantage for a small company,” advocates Wright. The displays are used in conjunction with a lens to make the image appear larger, while keeping the manufacturing costs and power consumption down.

Microemissive is currently developing the manufacturing process and expects to have a full prototype later this year. The company recently secured £1.5m from 3i and currently employs 13 people.

Home advantage

With such a sound infrastructure in place, it is not surprising that new companies are spinning off from physics and engineering departments every month. And investors are buzzing round these start-ups like bees round a honey pot. “It’s a very dynamic environment to be in at the moment,” enthuses Brendan McGuckin chief executive of Freelight Systems, a spin-off company from Napier University.

John Marsh, chief research officer of Glasgow University spin-off Intense Photonics, believes that the optoelectronics companies in central Scotland benefit greatly by trading with each other: “It is important to outsource as much you can locally so that your own company can concentrate on building up its unique features.” Intense Photonics, for example, sends its semiconductor chips to Edinburgh-based Terahertz Photonics to be covered in a dielectric coating. However, Marsh points out that it is important for companies to see themselves as global: “If you think parochial, then you won’t succeed.”

The cluster effect attracts both money and people from all over the world. “People don’t mind relocating to an area like central Scotland where there are plenty of other optoelectronics companies,” says Frank Tooley, a physicist at Heriot Watt University and co-founder of Terahertz Photonics. “If one job does not work out, there are plenty of other opportunities.” However, with so many optoelectronics companies squeezed into the 70 km stretch between Glasgow and Edinburgh, Tooley adds that competition for experienced and skilled staff is fierce.

The thriving academic community has produced a large pool of graduates and postgraduates who have no trouble finding employment in Scotland and abroad. Ivan Andonovic of Strathclyde University and a founding member of Kamelian – a company that develops and manufactures high-performance “active” chips – also points to the benefits of having world-class research on the doorstep. Kamelian has recently teamed up with the Institute of Photonics at Strathclyde in a £750 000 government-backed project to develop new materials for the next generation of optoelectronics devices. “At this stage in the development of the company, we cannot be distracted from building the business by carrying out basic research,” Andonovic warns. The joint project means that Kamelian maintains a stake in research that might reap rewards in five years’ time. “It’s a brilliant way of working,” he enthuses.

But the advantages of being in Scotland are not all work related. The quality of life is a major attraction. Tooley has seen Scottish graduates who have spent several years abroad return home so that their children can be educated in Scotland. “It’s a nice place to live,” he adds. “I can be fishing in a loch all by myself within a 30 minute drive from Edinburgh. You cannot say the same for the south of England.”

Flowers of Scotland

There are more than 60 companies in the Scottish optoelectronics cluster. The biggest is Kymata – which designs and manufactures optical components for the telecommunications industry. The company, which was spun off from Southampton University in 1998, set up its global headquarters near Edinburgh a year later. Kymata has more than 250 employees and has raised over $162m of venture capital in the last two years – one of the largest finance deals for a company in the sector. Like Kymata, many of the other companies have grown from a twinkle in someone’s eye to the darling of the venture capitalists in under three years. How did they do it?

Frank Tooley of Terahertz Photonics always felt that there was more to life than teaching physics at Heriot Watt University and investigating optical interconnects, which was seen as blue-sky research at the time. A two-year stint at Bell Labs in the US, later followed by four years at McGill University in Canada, failed to satisfy his yearning to do something more relevant to everyday life. Back at Heriot Watt, Tooley and fellow physicist Gerald Buller approached the university with the idea of setting up a company to develop novel optoelectronics waveguides for the multibillion-dollar telecommunications market.

The university was incredibly supportive, recalls Tooley. His contract was initially modified so that he could spend one day a week working for the new company. He was also given access to lab space and equipment, and was sent on a variety of courses to learn about finance, intellectual property rights (IPR) and company law. When Terahertz secured £3m of funding from venture capitalists Scottish Equity Partners and ADD Partners last August, Tooley became the full-time chief technology officer. Heriot Watt assigned outright ownership of the IPR to the company in exchange for an undisclosed share in the equity.

Terahertz expects to move into new premises in the summer. Meanwhile, it pays commercial rates for the use of facilities and equipment at Heriot Watt. Currently the company employs 23 people, 20 of whom have PhDs in physics, electronic engineering, chemistry or optics. “Even the sales and marketing managers have PhDs,” says Tooley. By the end of the year, the workforce is expected to have grown to 60.

The company is also developing photonic integrated circuits – optical devices that contain waveguides, switches, filters and amplifiers on a single chip. “Most start-ups are formed round a single invention or technological process,” explains Tooley. “We are different because we combine our expertise in silica-on-silicon, polymer-on-silicon and semiconductor amplifiers.”

Creating networks

The last year has been a busy one for Ivan Andonovic, chief technology officer of Kamelian. In March 2000 he was asked to carry out some consultancy work in optical networks by Paul May, a founder and technical director of Cambridge Display Technology. “We discovered that we shared a vision for an optical-network business,” recalls Andonovic. By July Europe’s leading venture capitalists 3i had provided £1m of seed funding for the company to develop a business plan. And by November the company had secured £18m from 3i and Lightspeed, a US venture-capital company.

Andonovic attributes this meteoric rise to the strength of a team that includes a host of stars from the world of start-ups: May is now the chief executive officer; Tim Bestwick, a former director of technology strategy with Bookham Technology, is chief operating officer; and David Sibbald, founder of Atlantech Technologies, is non-executive director. “It is really important for academics to team up with people who have the business acumen and commercial nous,” advises Andonovic. “Our team made a real difference with the venture capitalists.”

Kamelian specializes in the design and fabrication of semiconductor optical amplifiers, which are expected to be one of the core components in future optical networks. “Our product has been driven by the market,” explains Andonovic. “Two years ago, our devices wouldn’t have been relevant. But they will be within the next six months.”

Currently the company is producing its first prototype chips at Compound Semiconductor Technologies and expects to have a qualified process later in the year.

For most start-up companies the hardest step is yet to come. Expanding a new business and making it a success in such a fiercely competitive industry will be tough. And there are bound to be losers as well as winners. Still tempted to set up your own company? “You must be willing to give up all your time,” warns Tooley. “Setting up a company is the hardest way to exploit your intellectual property. Ask yourself if you might be better suited to licensing your IPR or working as a consultant.”

“You need to have passion, confidence and to do your homework,” says Andonovic. “Team up with a business angel who has been through the whole process before you talk to venture capitalists. Otherwise you could lose everything.”

“It’s worth taking the risk though,” adds Tooley. “The payoff is huge if your company is a success. In a few years’ time you could be earning a lot of money.”

Related events

Copyright © 2024 by IOP Publishing Ltd and individual contributors