The Ferdinand-Braun-Institut (FBH) in Berlin has created 11 startups in 20 years—it’s an impressive record for any organization and especially for a research institution. This accomplishment is based on a culture of commercialization, which complements its well-known technical expertise such as in developing kilowatt-class laser diodes and its role in demonstrating the first Bose-Einstein condensate in a space flight. I spoke with FBH director Günther Tränkle about the institute’s ecosystem and his approach to founding new companies.
Andreas Thoss: As the director of a research institution, you could actually have an exciting life with just your research. And yet you have established numerous spinoffs. Why do you do so?
Günther Tränkle: Indeed, I find my life as a researcher exciting, even though our research is focused on the relatively mature field of III-V semiconductors. Still, there is a lot of work to do with many exciting opportunities. After all, results should really be used.
The applications might be both in commercial and scientific fields—for example, if we look at the lasers that we are realizing for quantum technology. Among other applications, they helped to demonstrate a Bose-Einstein condensate onboard a sounding rocket. These tiny and robust light sources work smoothly under challenging conditions. So far, that’s a purely scientific application, but we are already thinking: Who could be a future industrial partner for real-world applications?
AT: In such a case, what is your approach? Do you create a startup team?
GT: In our more-commercial projects, we first look to see if there is already a company that addresses the market. Can we cooperate, for example, with long-term partners like Trumpf, Jenoptik, or Toptica in the particular application field? If there is no obvious partner, we have decided several times to support a spinoff or startup.
AT: When you look back, how many startups have you helped launch?
GT: We have now been through that process 11 times in the last 20 years. All in all, our approach has been quite successful. Just three of these companies no longer exist. Our spinoff with Jenoptik in Berlin is probably the biggest success. It has always been the responsibility of Jenoptik, but with our people and our technology. And their production facilities are only a five minutes’ walk from FBH, so it is easy to maintain a close interaction. When we are developing new technologies or devices and see an opportunity for market success, we discuss a possible transfer with them or other suitable industrial partners.
AT: So, do you always think to start companies from scratch or would you rather team up with an established company?
GT: Over the years, it has become clear to us that it is one thing to develop a technology to the point of market maturity and a whole different matter to get access to a market. This is a very time-consuming process that also requires qualified personnel. It is much easier to get your product sold if you can rely on an established partner.
One example for building a startup is eagleyard photonics. It was founded 15 years ago by Götz Erbert, the former head of FBH’s Optoelectronics department; Jürgen Sebastian, who is now Jenoptik’s site manager in Berlin; and me. Why? Simply because we had good broad-area lasers that no one really wanted to use at that time. However, we saw a market opportunity and therefore founded our first company.
Götz and I remained within FBH and when Jürgen took over the spinoff with Jenoptik, we looked for new management. Finally, we convinced the former Siemens affiliate Jörg Muchametow to assume responsibility for eagleyard, supported by the institute with all its scientific basis and knowledge.
eagleyard has been very successful with their sales and marketing activities in opening up the market for FBH, selling our diode lasers to industrial and scientific customers worldwide. In 2013, eagleyard was bought by Toptica, and we are continuing to market our research results via this channel.
AT: How is your relationship with the new owner of your startup evolving?
GT: Very good! At the moment, we are mainly cooperating with them on chip-level designs, but we have some very interesting and powerful laser modules at FBH that can be used in various applications. With them, we once again ask ourselves: Who can take over the next step towards marketing? It might be an option to convince Toptica to do it.
AT: Okay, so you have two concepts to take over the technology for further engineering and marketing. One concept is to find a partner for a new business and the other one is to start a new company yourself?
GT: Yes, if we are convinced that there is no partner and if we feel quite confident about the anticipated market success, then we will try it with our own startup.
AT: What criteria do you use to decide upon a technology for spinoff? When do you think the technology is ready for market?
GT: It is a truly stepwise procedure and every case is different. For example, we have a small unit of engineers and technicians in our prototype engineering lab. They build systems and make devices ready for potential customers to test. After getting positive feedback from the market, we decide on who will do which part of the further development or production steps.
In the beginning, the institute strongly supports this process. Ultimately, the partner company or the spinoff has to take care of the market, has to test the devices or systems in the targeted applications, and has to market the product—while the technology continues to be driven by FBH.
AT: What about finances in this process? Do you consider venture capital?
GT: We were looking for external funding to stimulate eagleyard’s business. Hardware-driven companies need a relatively large amount of money to begin production and it is rather difficult to acquire venture capital in Germany. But we were lucky and one financial investor and a local bank supported the investment.
Since our developments often address niche applications, it is hard to develop a business model that makes a lot of money because you cannot offer a well-defined exit strategy. Investors do not want to stay too long in a company and if you are developing hardware, it takes time.
AT: But on the other hand, isn’t this part of your success story that you do not look for the unicorn, but seek a serious, long-lasting business, even if it is for niche markets only?
GT: Yes, that's what we do. And a lot of the business relies on access to facilities at FBH, with mutual benefit. This is all part of our local ecosystem. It took more than 20 years to build a sustainable system with the FBH and its partners. At the moment, we have installations worth about 60 million euros at the institute. We are currently building a second cleanroom facility, which raises the investment to 100 million euros.
AT: If you develop new companies, they use your laboratories—so they contribute to utilizing the capacity of your hardware. Are they both partners and customers for you?
GT: As I said at the beginning, the value of our research work is very often determined by whether it is ultimately used. We have to find people who use it, but at the end we should not be a manufacturer.
However, if you have a separate manufacturer in between and if the business is not really making the amount of money required to transfer the whole technology to a third party, then we have to open our infrastructure for these purposes, too.
This arrangement is also about the German ecosystem in this field: We have a lot of bigger and smaller companies in the photonics field and many of them are market leaders in niche markets. In STED [stimulated emission depletion] microscopy, for example, developers are currently looking for yellow light from compact modules. The market is small and the technical problem challenging. In addition, you need trained people for development and production of such devices. This is where we enter the game.
The ecosystem consists of basic and applied research along with small and large companies. It is well distributed. Our part at the Ferdinand-Braun-Institut is to conduct research on light sources, develop them, and, sometimes, we go as far as small-scale production. You also need to have customers, suppliers of spare parts, and all the rest. These are all part of Germany’s ecosystem and they are what makes the country so successful in this field.
