Photonics is one of the fastest-growing branches of technology today. It is concerned with light generation, detection, and manipulation. It provides a viable alternative to electronics for the future, as it promises greater speeds of transmission. If in an electronic circuit, signal transmission is carried out by electrons, in a photonic one, it is carried out by photons – particles that travel at the speed of light – thus generating a rate of transmission several magnitudes faster.
Photonics encompasses a wide spectrum of applications across numerous industries and fields, solving numerous real-world technological issues. It is found in optical communications, including optical fibre, lasers, infrared links; optical imaging, such as spy and weather satellites, night vision, holography, flat screen displays; optical data storage and optical computing, for example CDs and DVDs; optical detectors, for use in medical optics and supermarket scanners; and lasers, for exapmle laser surgery, laser shows, laser rangefinders and welding lasers, among many other fields.
It is also overlapping with another exciting area of development in quantum computing. Researchers at the University of Science and Technology of China at Hefei are trying to use how particles interact at a subatomic level to make calculations rather than the method employed by conventional computers using electronic gates, switches and binary code. The Hefei machine, research on which was published in Nature Photonics this month, predicts the highly complex movement and behaviour of photons that current supercomputers struggle to predict because of their unpredictability and difficulties in modelling.
When GCV visited scientists at University of Waterloo in Canada last month, they said there were a number of approaches to cracking quantum computing, from problem-specific ways, such as those of Hefei with photons or Vancouver’s D-Wave startup, or more theoretical methods of trying to build universal quantum computers, such as the work being conducted at Waterloo.
Historically, photonics was on offshoot of the first practical semiconductor light emitters from the early 1960s and the first commercially viable optical fibres developed later in the 1970s. Thanks to the discovery of low-loss glass fibre, the telecoms industry had shifted towards using optical fibre as a transmission medium, and lasers as optical sources, by the 1980s – a shift which would ultimately revolutionise modern-day communications.
In the more digitised and interconnected world of the 21st century, demands for high-speed data transmission have placed various photonics applications in the limelight, making them a lucrative target for investors. Corporate venturers, which more often than not serve as strategic vehicles for incumbent corporations, are no exception.
Using data provided by the European Photonics Industry Consortium (Epic), GCV Analytics cross-compared and filtered out funding rounds raised by photonics enterprises backed by corporate investors.
The investment level in such emerging enterprises remained stable and almost unchanged between 2012 and 2015 – with 10 to 12 rounds at an estimated total value of $190m. In 2016, however, it surged to 18 deals totalling an estimated $396.9m. This appears to indicate that photonics businesses will continue to be the target of corporate venturers due to the wide range of application across sectors.
Indeed, corporate investors have made financial commitments to various enterprises employing photonics technology for different ends. The most commonly funded companies are in the IT, industrial and energy sectors.
Unsurprisingly, most of the top corporate venturers in this fields are also in these sectors. Industrial conglomerate Robert Bosch, semiconductor manufacturer Intel and consumer electronics producer Samsung led a number of deals, while Samsung – along with nanotechnology developer Rusnano and network systems company Cisco Systems – partook in the largest financing rounds over the past six years.
Top deals
The top deals in photonics applications involving corporate venturers spanned a range of businesses – from solar energy and industrial manufacturing equipment through virtual reality device components and consumer electronics to optical healthcare.
Germany-based solar film developer Heliatek secured €80m ($89m) in financing, including $46.8m in equity, led by Innogy, a subsidiary of energy utility RWE. The series D round also featured another Germany-headquartered utility, Engie, and another RWE unit, Innogy Venture Capital, chemicals producer BASF and financial services provider BNP Paribas.
Heliatek produces an ultra-light organic solar film called HeliaFilm that is less than 1mm thick, and which can generate energy on such surfaces as the roof of a car or the exterior of a building.
US-based flat panel display technology developer Kateeva completed an $88m series E round with contributions from several corporate investors – Samsung Venture Investment Corporation (SVIC) and TCL Capital, subsidiaries of Samsung and conglomerate TCL. Electronic display technology producer BOE Technology Group and semiconductor producer Veeco Instruments also participated in the round.
Founded in 2008, Kateeva has developed a technology that uses inkjet printing to produce ultrathin organic light emitting diode displays, instead of the glass substrates traditionally used for electronics displays.
Earlier Kateeva raised $38m in a series D round featuring SVIC, Veeco Instruments, and venture capital firms Sigma Partners, Spark Capital, Madrone Capital Partners, DBL Investors and New Science Ventures.
Chinese power and electrical group Shanghai Electric agreed to acquire “at least” a quarter of Germany-based technology group Manz in a deal that could lead to a full takeover offer, as reported by Reuters. Manz specialises in producing machines that make solar panels, smartphone displays and batteries, and counts US-based electronics producer Apple as one of its major customers.
ReVision Optics, a US-based optical healthcare company dedicated to treating long sight, closed $55m in equity financing from new investors, including Johnson & Johnson Development Corporation, the venture capital subsidiary of the healthcare company, and RusnanoMedInvest, the venture capital subsidiary of investment manager Rusnano, which is wholly-owned by the Russian government. Founded in 1996, ReVision Optics has created an implant similar to a contact lens.
Israel-based augmented reality (AR) technology producer Lumus closed a $45m series C round with a $30m extension led by laptop manufacturer Quanta Computer. Smartphone and virtual reality (VR) headset maker HTC and undisclosed existing investors also contributed to the extension, which added to an initial $15m tranche closed in June 2016 that was led by investment group Shanda and backed by photoelectric display equipment maker Crystal-Optech. Incorporated in 2000, Lumus is working on transparent AR displays for eyewear products aimed at a diverse range of sectors including healthcare, consumer products and manufacturing logistics.
Compass-EOS, a US and Israel-based making ultra-bandwidth routers using photonic technology, closed a $42m round, which included existing investors Comcast Ventures, the venture capital affiliate of the cable television company, computer server and internet equipment company Cisco, venture capital firms Pitango Venture Capital, Benchmark Capital, Northbridge Venture Partners and Marker, plus an unnamed, US-based private equity fund and Rusnano joining the round as new investors.
Avogy, a US-based developer of energy efficient power conversion systems, secured $40m in a series B round led by Intel Capital, the corporate venturing arm of the semiconductor producer. The round also featured venture capital firm Khosla Ventures, already an investor. Intel Capitals’s managing director Ramamurthy Sivakumar and director Stephen Saltzman led the investment for the unit.
Avogy specialises in power conversion systems that are more energy efficient and have a lower cost, size and weight than conventional systems.
US-based fabless semiconductor company Movidius raised $40m in a series E round, backed by investors including Robert Bosch Venture Capital, the corporate venturing unit of the industrial group. The round was led by Summit Bridge Capital, and included photovoltaic and lens technology producer Sunny Optical Technology Group, Arch Venture Capital Partners, Atlantic Bridge Capital, AIB Seed Capital Fund, Capital-E and DFJ Esprit.
Movidius’s technology enables visual sensing, meaning it mimics human vision computationally and can understand a physical environment, enabling applications, wearables and smart devices to be contextually aware of a user’s surroundings.
US-based ethernet technology provider Aquantia raised $37m in series H funding from investors including Cisco Systems, semiconductor foundry GlobalFoundries and financial services firm Credit Suisse. Cisco invested through its corporate venturing arm Cisco Investments, while Credit Suisse participated through Direct Equity Partners, one of its investment vehicles. Walden Riverwood also contributed funds.
Founded in 2005, Aquantia produces high-speed ethernet connectivity technology for data centres and enterprise infrastructure. The technology, dubbed AQrate, enables faster speeds to be reached on existing cables.
