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SPIE Professional July 2009

Startup in a Downturn

Two engineers find that bad economic times can be a good time to start a company.

By Conor Rafferty and Clifford King

NoblePeak Vision started up in an economic downturn.

NoblePeak Vision Corp. is a product of the last recession in 2002 and the seizing of an opportunity out of the telecom bust.

We both worked in the research area at Bell Labs in Murray Hill, NJ (USA), before and during that time. It was an exciting environment for risk taking on new technologies and provided superb facilities to execute investigations.

The technology at the core of our products today was originally developed around a Si/SiGe BiCMOS process for a single chip photoreceiver on Si at Bell Labs. With the high-speed electronics in place, a high-speed photodetector sensitive to wavelengths used for fiber optic communications needed to be developed to complete the group of integrated components necessary to fulfill the system.

We implemented a process design philosophy to preserve existing CMOS design rules to ensure that the inclusion of the high-speed detector was transparent to circuit designers. This philosophy produced a CMOS process that could continue to leverage existing designs and could be implemented within any foundry in the world.

Necessity being the mother of invention, we hatched a technique to grow nearly defect-free crystalline germanium on silicon with existing transistors in place. Prototype detectors showed excellent frequency response and sensitivity at 1540 nm, enabling 40 Gbit/s systems.

However, the telecommunications market was not cooperating. In fact, the telecom meltdown during the last recession was marked by a number of mergers, acquisitions, and spinoffs in the industry, and the parent organization of Bell Labs (then Lucent Technologies, now Alcatel-Lucent Bell Labs) decided to move its microelectronics business into a separate company named Agere Systems.

The subsequent sale of the optical divisions of the Agere enterprise happened quickly in that downturn.

Seeing an Opportunity

We might have dispersed with the breakup and crashed with the telecom bust. Instead, we recognized this turn of events as an excellent opportunity to start our own company and build an outstanding product.


NoblePeak Vision entrepreneurs Clifford King, left, and Conor Rafferty exhibit the TriWave camera at SPIE Defense, Security, and Sensing, April 2009.

NoblePeak was formed through negotiations by Clifford King to offer consulting services to help with the transfer of existing Agere semiconductor processes to alternate manufacturing locations in exchange for ownership of patents, technology, and equipment. Before the negotiations were finished, Conor Rafferty elected to become a co-founder, and we were off to a momentous start.

We loved our jobs and saw the promise in the germanium photodetector technology. We had been PhD students together at Stanford University and colleagues at Bell Labs for more than a decade and knew that we'd be spending even more time together.

Developing a Plan

We developed an initial business plan to deliver on the single chip photoreceiver, and it soon became apparent from government solicitations and market research that the technology was much better geared toward imaging applications than telecommunication applications. Because of the ability to create millions of detectors in an array on the same substrate as the required electronics for signal readout, the market research and technology requirements quickly focused on visible to short-wave imaging applications.

At the close of the telecom boom, investors were very demanding that business plans include credible references about market and product viability from customers. As technical founders, we had to learn quickly to engage our future customers, and we received the help of an excellent business consultant willing to work under very flexible terms (i.e. we paid him something when we could), which were the same terms we had for ourselves.

Among the wide-ranging applications for our wideband image sensor, medical, dental, security, and military markets stood out from the pack in terms of size. While medical and dental imaging were promising areas, those markets did not provide a sufficiently short time to revenue to entice "chip" investors.

Commercial security providers, on the other hand, had a difficult job of delivering high- quality video to customers under very demanding conditions at night when most of the nefarious activity is taking place. Security companies appreciated the value of our offering and were willing to express to potential investors their desire to purchase our products immediately if we delivered to their specifications.

Another enormous part of the plan was putting together the manufacturing partners needed to build our image sensor chip. With the downsizing of Lucent that came with the telecommunications meltdown, we realized we had many old colleagues in the vital operations we needed around the globe.

Using these contacts, we put together a complete supply chain with top tier companies well before we had funding.

This detail on cost and development time added strength to the business plan and was a principal reason why we hit the ground running when we did receive capital.

While preparation for our future business was extremely important, at the same time we needed to support ourselves through consulting services and whatever government contracts we could secure. This balancing act was very stressful at first, but became second nature for us as time went on.

Attracting Capital

During the first year of company formation, we set deadlines for necessary funding events to occur in order to keep the company going. One target we set for ourselves at the earliest stage was to talk to at least one potential customer, government agency, or investor every day.

Each step along the way, there were enough good things that happened to keep us engaged and justify the commitment to our families.

The first major boost after formation came with the hiring of our vice president of engineering, Bryan Ackland. Ackland was a pioneer in the field of CMOS image sensors in the early 1990s and became excited about the prospect of helping to create an entirely new image sensor with extended sensitivity to longer wavelengths. His commitment to us validated that we truly were onto something.

However, we still needed funding to keep marching along. In addition to a few reasonably large consulting projects, we received Phase I and Phase II awards from the Small Business Innovation and Research (SBIR) program and the National Science Foundation. These awards were significant in both timing and value to keep our fragile enterprise afloat.

We later obtained an interest-free loan from the NJ Economic Development Authority that was also instrumental in pushing our product and marketing ideas along.

Starting the company in lean times taught us valuable lessons about stretching a dollar such as acquiring equipment through negotiation and the secondary markets.

Our product ideas, however, involved silicon semiconductor process development, which does not come cheap. Thus, we needed to find a large sum of capital to really get our ideas built and tested.

Although large government contracts existed for sensors like our proposed device, program managers were not willing to risk such a large amount of money on such a small company. Likewise, venture investors were licking their wounds at the conclusion of the telecom bubble, and they demanded strong proof of technical feasibility, thorough market research, and customer buy-in.

Persevering

The customer interest we had developed was critical here. Eventually we persevered in the search for venture capital, and found two highly regarded firms excited about our business. We closed on the financing and moved the company to the Boston area as a condition of the deal.

We also found a very large pool of excellent technical and business experts with experience working in startup companies. With the capital in hand, we were fortunate to attract top talent from exceptional universities and companies in the Boston area.

HP and FedEx are two successful companies that have been started in a recession. Starting a company in a downturn breeds the discipline necessary to persist when setbacks come your way.

It is not for everyone, but for us every day brings a new set of challenges and learning that is pure joy.


Solving Problems

Successful entrepreneurs, companies, and products find innovative solutions to important problems.

NoblePeak Vision's TriWave camera, a germanium-enhanced CMOS image sensor with sensitivity in the visible to SWIR region, solves the problem of outdoor night vision by capturing the Earth's natural SWIR "night glow." Night vision is important to the defense and security industry where detecting and recognizing objects 24 hours a day is critical.

While thermal cameras can reveal the presence of people in the dark because of the heat humans emit, the TriWave camera captures reflected light and can produce images with enough detail for facial recognition.

The TriWave surveillance camera received a Prism Award for Photonics Innovation earlier this year.


Defense and Security News

The SPIE Newsroom is updated daily with concise reports on technical developments in the defense and security industry written by those doing the research.

Sign up for free monthly e-alerts on defense and security topics at spie.org/news-defense and receive the latest news.


Science Park Development Continues
In Mexico Despite Economic Crisis

NoblePeak Vision isn't the only organization to use a recession to good advantage.

Silicon Border, a 10,000-acre science and technology park being built in Mexicali, Mexico, is moving ahead with development near the U.S. border despite the ongoing financial turmoil. ING Real Estate announced a financing partnership with Silicon Border Development in October, and German solar cell manufacturer Q-Cells has plans to build there.

The infrastructure needed to support manufacturing of solar, semiconductor, nanotechnology and other green materials and equipment on 500 acres of the site was completed earlier this year.



The deadline for entering the 2009 Prism Awards for Photonics Innovation is 22 September. There are nine categories.

Conor Rafferty and Clifford King

Entrepreneurs and SPIE members Conor Rafferty and Clifford King received their PhDs in electrical engineering from Stanford University. Rafferty, who has 9 patents and 100 publications to his credit, is CTO of NoblePeak Vision Corp. King, with 19 patents issued or pending and more than 60 publications, is COO. NoblePeak Vision Corp. is headquartered in Wakefield, MA, and received $12 million in series B financing in March 2008.


Have a question or comment about this article? Write to us at spieprofessional@spie.org.

DOI: 10.1117/2.4200907.02

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