# Presentation: 403851

## A case study in converting academic research to a venture-funded technology startup in Oregon

## Outline

- The problem
- The research
- The market
- The solution
- The deal
- The company
- The investor profile
- The takeaways

## The Problem

*Solid-state laser technology hit a brick wall*
*Non-linear optical materials could go no further in wavelength or power advancement for solid state lasers*
*Unreliable performance*
*Expensive*
- Solid-state CW~$65k/100mW
- Solid-state pulsed~$65k/W
*Solid-state laser roadmap ended at 266nm*
*Result – significant market pull for a solution*

## The Research

- Fundamental materials advancement in non-linear optical crystal carried out by the OSU Chemistry Department under Dr. Douglas Keszler.
- New material enables solid-state lasers at deep ultra-violet wavelengths and power levels never achieved before

## The Market

- All OEM industrial applications for solid-state deep-UV lasers
- $500M market in 2005
- >19% CAGR to 2008
- Initial target applications
- Patterned Wafer Inspection
- 30nm defects at 65nm node
- 1000 units per year
- Nano Machining
- 200nm features
- 400 units per year
- Nanometrology
- <10nm Scatterometry on thin films
- 600 units per year

- Pictures courtesy of ESI and KLA-Tencor

## The Solution

*A long-life, high power, solid state Deep-UV fiber laser *
- Low Cost
- Superior Performance
- 30,000 Hour Lifetime
- No heat at work site
- Roadmap to 193nm and 100W
*Disruptive, defensible IP*
- Exclusive rights to OSU material IP
- Deep Photonics laser IP

## The Deal

- Objective
- Dominate the deep ultra-violet laser market with a novel laser system based on disruptive NLO material, fiber laser technology and frequency conversion IP
- The deal makers
- OSU Department of Science – Sherm Bloomer
- OSU Tech Transfer Office – Craig Sheward
- OSU Foundation – Maya Abels
- Enterprise Law Group, Menlo Park CA
- The money deal
- $750k seed financing
- IP protection
- NLO material production development
- Laser IP development
- Prototype demonstration
- 20% discount for seed investors at Series A
- $1.8M Series A Financing
- Customer order trigger
- $35M post money valuation
- Cash flow positive Q106

## The Company

- Located in Corvallis, Oregon
- Incorporated in Delaware Q104
- Engineered management team
- Experienced tech startup entrepreneurs (2)
- Best-of-breed technical staff (4 PhDs)
- Seven employees
- $2.5M startup capital raised
-  IP Position
- Materials technology
- Laser technology
- Six patents in process
- Outside BOD members :
- Dr. David Lam, founder and former CEO of LAM Research
- DK Kim, Chairman Daehong Corp, Korea
- Bruce Juhola, former CEO of Microbar
- Counsel
- Business – Enterprise Law Group, Menlo Park CA
- IP – Townsend and Townsend, Palo Alto CA

## The Investor Profile

- The financial investor
- Marginal market opportunity ($1B preferred)
- Uncomfortable without control
- Allergic to seed financing w/o valuation
- Expensive money in early stage financing
- Best fit for later stage (low technical, financial risk)
- The strategic investor
- Customer with technology pain
- Higher risk threshold
- Revenue drives valuation
- Leverage market position
- Exclusivity in niche
- The value-added investor
- Leverage intangibles
- Distribution rights
- Exclusivity in new markets
- Complimentary technology
- Our best source of seed money
- Deep Photonics funding strategy
- Value-added investor for seed financing
- Strategic investor to drive valuation
- Financial investor for market and production expansion

## Takeaways

- Problem-driven research is the genesis of tech-driven jobs
- Disruptive technology is initially faith-based; match the best and brightest (i.e. PhD’s) with the executioners (entrepreneurs) to get the dream team
- Do not compromise on business or IP legal talent; go with track record on this one
- Management needs skin in the game, not just the investors
- Always take the value-added investor early, if you can get it
- Sell intangibles before equity
- Get strategic investors to drive valuation
- Use expensive money last
- Target the low hanging fruit and FOCUS