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“Creating an environment that allows Michigan small businesses like these to innovate and grow must be top priority,” Stabenow said in a statement.

The Arbor Photonics project is described as a "novel laser system that makes compact, tabletop-sized accelerators more realistic, and can dramatically increase the rate of acceleration possible with traditional high energy particle accelerators without dramatic increases in machine dimensions."

Levin and Stabenow said the grants announced today are under Phase I of a process in which each company will work to determine the feasibility of its concept. After completion, each grantee will be eligible to compete in fiscal year 2012 for Phase II funding, which is the principal research and development phase of the programs.

The Senate will resume consideration in May of a measure to reauthorize and expand the two high-tech grant programs. Without Senate action, Levin and Stabenow said the initiatives will be suspended at the end of next month and future grants will cease.

The two lawmakers support continuing the grants, which are designed to increase the commercialization of federally funded research and development by small businesses.

According to the Senate Committee on Small Business and Entrepreneurship, small businesses produce more than 13 times the number of patents than large businesses and universities, and they employ nearly 40 percent of America’s scientists and engineers.

If Arbor Photonics can generate those kinds of revenues, it will join the ranks of IntraLase Corp. and Picometrix as successful spinoffs from the school's center.

IntraLase, which made lasers for LASIK surgery, was a big success for local investors, going public in an $84 million IPO in 2004, then being sold for $808 million to 2007 to Advanced Medical Optics Inc.

Picometrix is a subsidiary of Advanced Photonics Inc.,a publicly traded company in Ann Arbor that makes electro-optical receivers and other high-speed electronic instrumentation for homeland defense, military, telecommunications and medical applications.

Arbor Photonics, founded in 2007 and based on research by UM associate professor Almantas Galvanauskas, uses something called a chirally coupled core to improve the performance of high-powered lasers.

The key is to make a larger fiber cable that retains its beam quality. Usually a larger fiber means a less-focused beam, but by wrapping the core of the fiber with a smaller, helical core, the beam maintains a tight focus. That's been shown in the lab, and now Arbor has begun translating lab performance into commercial product, selling beam amplifiers for between $10,000 and $20,000 for such potential applications as making more-efficient solar cells and the next generation of integrated circuits for the semiconductor industry.

The company's research has been well-funded from inception. Venture-capital funds, grants and loan sources have ranged from Ann Arbor Spark to the state's 21st Century Jobs Fund to the National Science Foundation to the U.S. Army and Navy.

Based on a recent report by a review panel, Arbor is likely to receive a phase-two NSF grant of $500,000 in April or May.

At the first annual Accelerate Michigan contest, funded by the New Economy Initiative in what was billed as the world's largest business plan competition, Arbor Photonics beat hundreds of other companies in finishing runner-up to Armune BioScience Inc. of Kalamazoo, which won $500,000.

"We love these guys. It's not easy taking technology out of the university and translating it the way they have -- especially translating physics theory into the world of manufacturing -- and they've accomplished it," said Marc Weiser, managing director of RPM Ventures, an Ann Arbor-based venture capital firm that led the investment round of $2.2 million.

The company is planning to do a second VC round later this year of $6 million to fund growth and ramp up manufacturing. It currently employees 8.5 full-time equivalents, plans to hire a supply chain expert and three manufacturing engineers later this year, and to employ 25-30 by the end of 2012, according to CEO Phillip Amaya.

Amaya, a 25-year veteran of the laser industry, was living in California in 2007 when he was asked to vet Arbor on behalf of RPM.

"I had a predisposition to tell them the world didn't need another laser company, especially in fiber optics. There are a lot of proven laser companies," he said.

Not only did Amaya change his mind, he decided to join the company.

"It looked like an interesting company. If you can make it work, there's a lot of low-hanging fruit," he said. "You can make it a $30 million or $40 million company with existing applications, and then if you can enable something new, there's a big upside."

Amaya said that while beginning to generate revenue is a nice milestone, "this year isn't about revenue, it's about customer testimonials."
Arbor's amplifiers show such promise that its would-be customers pay for the alpha and beta versions they are testing.

"It has compelling enough performance that if they won't pay for it one of their competitors will," Amaya said.

One defense contractor has been evaluating Arbor's amplifier since last summer and using it in its R&D.

"We excited about the technology and wish them well," said the head of the company's advanced technology group. He said he could be quoted provided neither he nor his company was named because he didn't have approval from the U.S. Department of Defense.

His company doesn't make components of its own, but combines component parts from suppliers in laser systems it sells to the military. He said Arbor's amplifiers show promise because they are resistant to vibrations and temperature swings, which is crucial to performing in the cold of Earth orbit or in the jostling atmosphere of a helicopter.

A $70,000 Phase I Small Business Innovation Research grant that Arbor got in December calls for it to begin work on a laser-based method for remotely detecting hazardous materials.

Fraunhofer USA Inc.'s Center for Laser Technology in Plymouth helped evaluate Arbor's technology before it was spun off from UM. A research nonprofit that helps bridge the gap between university research and industry, Fraunhofer invested $150,000 of the $2.2 million round led by RPM.

In addition to helping the school evaluate the technology, Fraunhofer helps with improvements in design and provides introductions to would-be customers, particularly in Europe.

"Their technology is very unique in enabling a bigger fiber without making the beam quality worse," said Stefan Heinemann, the executive director of the Center for Laser Technology. "It extends the limitations to the current state of the technology."

But the state’s economic development approach has helped to fill in the gap. Arbor Photonics has secured $2 million in funding from the Michigan through state-sponsored economic development competitions and other programs. Amaya added that he admires Michigan’s strategy for economic development, which focuses on developing businesses in the state and encouraging them to stay there instead of just incentivizing companies across the country to relocate.

And the approach seems to be working, Amaya says. He added that since the company’s founding in 2007 other startups as well as organizations such as Ann Arbor SPARK have provided Arbor Photonics with advice and even helped the company find its current location.

“Between the University (of Michigan), state economic development programs, and local VCs, it’s a very supportive environment for starting a business,” he says.

So far the company has raised $4.7 million, including the $2 million in state funding, and it plans to start shipping its products by the end of the first quarter of this year. According to Amaya, the company expects to make $30 to $35 million in sales by 2015 off of the technology that was originally developed by Almantas Galvanauskas, a professor of electrical engineering at U-M and VP of the company.

From the outside, Arbor Photonics’ headquarters—a few-room office and lab space tucked away in a nondescript industrial park in Ann Arbodoesn’t seem like much, but before entering the lab visitors are reminded of the technology’s power with signs that read “Danger” and advise anyone stepping into the lab to put on protective goggles to shield their eyes from the lasers’ intense light.

Inside the lab, the fibers, which are about the size of angel hair pasta, are strategically coiled on tables and surrounded by post-it warnings. The light inside the small fibers can deliver enough power to manufacture LED screens, wafers for computer electronics, or laser defense equipment.

“This technology enables you to make the brightest lasers commercially available,” Amaya says, “and by brightness we mean power and the ability to tightly focus it.”

According to Amaya, the goal of the company is to provide manufacturers with “more watts per dollar” than any other fiber optic laser on the market.

“Our competitive advantage is purely technological performance,” he says. “More power means faster processing speed or the ability to process new materials that weren’t possible to process by traditional means.”

Fortunately for Arbor Photonics, the need for faster and more precise manufacturing technology will only continue to expand, Amaya says.

“As things get smaller your processes need to adjust,” he says. “If you pick up your iPhone for example every component in your iPhone is touched by a laser at some point in the manufacturing process.”

The international competition was open to start-up companies interested in doing business in Michigan, and attracted business plans from 13 states and 4 countries.

Company Competition

Arbor Photonics
2nd Place Overall

"Arbor Photonics is developing high power, fiber laser solutions for advanced materials processing and defense applications. The company's products will be lasers and lasers subsystems that enable increased productivity and new capabilities in the growing $2 billion industrial laser market. Specific applications include current and next generation manufacturing of solar cells, microelectronics, flat panel displays and LEDs. Target customers are original equipment manufacturers and defense contractors. Unsurpassed product performance is achieved with unique 3C Fiber technology, licensed exclusively from the University of Michigan that can economically deliver 2 to 5 times more power and processing speed than competing alternatives.

Founded in 2007 by Prof. Almantas Galvanauskas, Dr. Michelle Stock, and Phillip Amaya, the company currently employs 10 people in 3,800 sq ft of laboratory and office space in Ann Arbor. The company has been awarded three Small Business Innovative Research awards from the Navy and National Science Foundation and a third is pending with the Army." [Source: Accelerate Michigan: Award Winners]
Prof. Almantas Galvanauskas, ECE faculty member and Chief Scientist of the company, stated "this award shows that we have taken this long path from an idea to an organization. We are now at the stage where we are pursuing additional ideas, and looking to grow the organization. Arbor Photonics is currently developing alpha prototypes that customers are evaluating for integration into their systems.

Evigia
Defense & Homeland Security Sector Award Winner

Evigia is a leading provider of wireless sensing, identification and tracking products and solutions targeting military, security, and commercial applications. The Evigia products advantage is in longer battery life, smaller form factor, and functionality per unit cost that all achieved through Evigia's technology for integration of electronics and sensing functions on an integrated silicon chip. Evigia is one of the three companies with full suite of wireless sensor hardware products selected by US Department of Defense (DoD) for its global Total Visibility & In-Transit Asset Visibility (TAV & ITV) program under RFID-III umbrella contract with a ceiling of $428M over 5 years. The Evigia common wireless sensing platform is employed in Evigia product variations including electronic seals for securing containers and hazardous material transportation, wireless sensor tags for asset location and condition tracking, machine health monitoring, and smart infrastructure.

Evigia is based in Ann Arbor and was founded in 2004 by Navid Yazdi (PhD EE), who serves as CEO of the company, and ECE faculty Khalil Najafi, Schlumberger Professor of Engineering and ECE Chair, and Ken Wise, William Gould Dow Distinguished University Professor, serve as advisors to the company.

Student Competition

Reveal Design Automation

Presenters: Zaher Andraus (MSE CSE 2004), Vimal B. Bhalodia (Business Admin. student), Matthew Neagle (Business Admin. student)

Reveal Design Automation was founded by Prof. Karem Sakallah and his former students Zaher Andraus (PhD CSE; Research Fellow at U-M) and Mark Liffiton (PhD CSE; Asst. Professor at Illinois Wesleyan U.). The company provides the electronic design market with the best possible software tools to verify correctness of complex, digital chip designs. Semiconductor companies currently spend $100M to develop a high-end chip, with half that cost spent on verification — the process of ensuring a chip design meets specifications and is fault-free. Leading chip design firms are actively adopting a new generation of methodologies called formal verification that drastically reduce the effort in verification and probability of missing a bug. However, existing formal verification tools do not scale with complexity of modern designs. Reveal is the first to solve this critical problem. [Source: Accelerate Michigan Student Award Winners]

The company placed 6th out of 42 in the 2010 Rice University Business Plan Competition. [Read more]

MiEND - Drug Screeners

Presenters: Trushal V. Chokshi (EE PhD Student), Dariusz Banasik (Business Admin. student)

Mr. Chokshi describes the need for MiEND-Drug Screeners: "Neurodegenerative diseases currently affect over 10 million people globally. These diseases have a 20% growth rate and have led pharmaceutical companies to pursue cures. However, the expenses incurred for conducting preclinical drug screening on tissue cultures of mice can be prohibitively high. In order to reduce these costs, there has been a significant interest in conducting preclinical drug screening on a micro organism named ‘C. elegans’. However, due to their small size, conducting preclinical drug screening on them is skill intensive and requires manual labor, resulting in low-throughput. Thus, there is an unmet need for a technology that could screen neurodegenerative medicinal compounds on C. elegans in a rapid and automated manner."

Mr. Chokshi stated that they have developed such a technology in the lab: "Increased automation in our product platform eliminates the need for skilled/manual labor and can potentially increase the throughput to several hundred folds. ‘MiEND - Drug Screeners’ aim to capitalize on this technology platform by providing neurodegenerative drug screening services to various pharmaceutical companies and academic institutions."

The concept behind MiEND - Drug Screeners was developed by Prof. Nikos Chronis, Assistant Professor of Mechanical Engineering, and implemented by three of his students, Trushal Chokshi (EE PhD Student), Daphne Bazopoulou (PhD, Biological Sciences) and Spencer Marsh (BSE ME).