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Scotland Does the Startup ShuffleScotland Does the Startup Shuffle

Scotland funds a new optoelectronics incubator; components startup Kamelian runs into trouble

July 7, 2004

3 Min Read
Scotland Does the Startup Shuffle

Scotland is trying to reestablish itself as an optoelectronics hotspot following the failure of several local components startups.

At the end of June, development agency Scottish Enterprise officially opened an optoelectronics packaging house and incubator called Optocap Ltd. With £4 million (US$7.4 million) in funding from government bodies, Optocap is supposed to become self-sustaining after three years.

Optocap, created to commercialize intellectual property developed at universities, already has a couple of startups in its incubator. Conjunct Ltd. is developing an optoelectronics device that will address the inherent deficiencies of electrical buses. MicroEmissive Displays Ltd. is developing microdisplays for portable consumer electronic goods. Both are based at Heriot Watt University in Edinburgh.

Optocap may be starting along a path similar to the one taken by Compound Semiconductor Technologies Ltd. (CST), a fabrication facility and incubator originally set up by The University of Glasgow, The University of Strathclyde, and Scottish Enterprise near Glasgow. It later became a private company, with investments from Intel Corp. (Nasdaq: INTC), among others (see Compound Semiconductor Gets $5M).

"Optocap is on the packaging side of what we were on the device side [before going private]," says Neil Martin, CST's chief executive. "We're quite complementary."

CST has survived the telecom recession, as has one of the startups that emerged from its incubator, Intense Photonics Ltd. Earlier this year, Intense announced a planned expansion of its fabrication facility, which uses a technology called "quantum well intermixing" to make devices that integrate optical and electronic functions (see Intense Announces Expansion).

Another startup born in CST's incubator, Kamelian Ltd., a vendor of Semiconductor Optical Amplifiers (SOAs) , hasn't fared so well. At the start of the year, it abandoned Scotland for its former home in Oxfordshire, and last month (June 18) the startup went into receivership -- the U.K. equivalent of filing for Chapter 11. Although the company is still operational, it's being run by administrators on behalf of creditors.

"We're extremely disappointed," says Kamelian's CEO Paul May. "We achieved our initial goal, we had the best SOA, but at the end of the day the market wasn't big enough to support the fab." May says he is still hoping the company will be bought as a going concern.

Kamelian was founded in 2000 and raised a total of $30 million from 3i Group plc, Goldman Sachs & Co., Lightspeed Venture Partners (disclosure: an investor in Light Reading), and Japan's Hoya Corp. (see Kamelian Gets Green Light and Kamelian Scores a Coup).

Other Scottish startups that haven't survived include Essient Photonics and Terahertz Photonics, both of which shut up shop last year (see Oath (#@%#!!) of Allegiance). Many of these startups were spawned after the initial sucess of Kymata, a manufacturer of Arrayed Waveguide Gratings (AWGs) which was once considered incredibly hot (see Scotland Spawns Component Startups).

During the recession, Kymata cooled off pretty quickly. It was bought by Alcatel SA (NYSE: ALA; Paris: CGEP:PA) for $119 million, and then closed after Alcatel's Optronics Group was sold to Avanex Corp. (Nasdaq: AVNX) (see Kymata Sold for $119 Million and Alcatel Optronics to be Slashed). Kymata's technology was saved at the eleventh hour by Gemfire Corp.(see Kymata Lives On).

— Pauline Rigby, Senior Editor, Light Reading

For further education, visit the archives of related Light Reading Webinars:

  • Optical Gateways: The Portal to Profitability

  • Optical Signaling Systems Update

  • Optical Amplifiers: Putting the Power Into Metro Networks

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