July 2020 – In an article for the latest Insight Magazine, James Regan, EFFECT Photonics’ CEO, shares his experiences on the future of photonics, and discusses our company’s beginnings, challenges and his personal lessons working in Deep Tech.
“EFFECT Photonics is a true Deep Tech company, but what it is you are trying to do?
We are a photonic integration company. We have a unique capability in the world, by putting all the functions of an optical system onto a single chip. Traditionally, all the beams of lights in optical systems were managed through multiple small lenses, but small lenses, but we have put all the complexity onto one chip and that makes it into a much simpler and useful module. The difference is that we are making an integrated circuit of light – a photonic integrated circuit. We take the kind of systems that are used in the core of the network, which are low in volume and high in price, and put them out to the edges of the network in high volume, low cost and low power.
Has it been challenging to get this company off the ground? You are highly disruptive but how receptive have the investors been?
When we closed our series A in 2015, there were almost no early stage hardware technology deals being done in the world. Fortunately for us, much of the investment we have had has come thanks to the support of the Dutch regional Government’s ecosystems that exists in Eindhoven. That has provided us with our early stage seed money. Also, we were fortunate in finding at the time of our series A, a visionary German-Austrian investor with a lot of background in photonics and semiconductors, who was able to provide leadership throughout these investment rounds. I have learned a lot about the power of regionality and it has been great.
Is that because there is more to show and tell? Does that make the product more real for them?
Absolutely. In terms of risk-management, it is a much more attractive proposition. The downside is that the valuations arise with that. I think we have been very grateful for the visionary individuals that have come with us on this investment journey. We are also very excited that, as we grow, we are scaling now into larger and larger institutions in our investment community towards the larger scale investors.
Your first-generation product is coming to market soon. What are the challenges for you moving forward?
We are running multiple waves of product development simultaneously, which is quite a challenge. Traditionally, people in this market would advise you against that – but our investors see the scale of the opportunity in front of us and we are in a hurry to get everything out shortly after our first release and we have a rich roadmap of new products being developed. That is the power of a new technology platform – once you have that platform working, you can generate a wide variety of products and really leverage that core investment into a range of products, driving revenue and margins up on the top of it.
Where is the company looking to go in the next 5 years?
We see bringing these waves of products through to market, generating massive growth in revenue and ramping up our operations, sales and marketing and continuing to drive the engine of product development to bring these products through to meet the needs of our customers. That has us on a path of pretty rapid growth over the next few years, and then, ultimately, taking that towards a public listing – this could be where we end up.
What would be your advice to Deep Tech start-ups?
With Deep Tech, you need to understand how you can get something out as fast as possible. It is a very different case being a Deep Tech company that has revenue, and a Deep Tech company that has none. I would advise looking for a minimum viable product. I would also look for getting as much funding as you can in the early days from the help of Governments, and regional investment bodies, until you are ready to get something that’s then close to revenue. You need to preserve your equity and that isn’t easy if you have quite a long road to get a Deep Technology from its early university stages into something which is ready for deployment. How to hang onto as much of your equity as you can through that journey is the big challenge.
Additionally, you have to be smart about where you make your investments. For example, we have not invested in fab, which is very capital heavy and rather focused on adding value in the design and being vertical in the areas where we can differentiate.
Finally, you need to be brave! Something you want to find early on is the right commercial partner – someone that knows their way around the industry. You have got to be sure that you have got something that you believe in, and something that is really going to make a difference and change the world. That is what I have found with EFFECT Photonics. It is really unique and has an amazing capability that can, and will, change the world!”
Author: Paul Gillespie, www.sheffieldhaworth.com/sh-gillamor-stephens
Article source: https://www.sheffieldhaworth.com/wp-content/uploads/2020/06/Insight-Magazine-Issue-36.pdf