Southampton spin-off attracts record Pounds 37m

The multi-billion dollar global telecommunications market has a new key player this week after the spin-off from Southampton University of a fibre-optics components company.

Southampton Photonics, which has its roots in the Optoelectronics Research Centre (ORC), a world leader, will exploit technology licensed from the university. It has attracted initial funding of Pounds 37 million, the largest private investment for a university-based spin-off. The university has taken a financial stake and will further benefit by maintaining close links between the ORC and the company.

David Payne, the company founder and chairman, and director of the ORC, said it was a new type of start-up model for European universities, which ensured that the institution would benefit substantially.

"We believe we can be a $1 billion company in very quick time. We will plan for flotation, but the exact timing will depend on the market conditions," Professor Payne said.

He was quick to distance the start-up from the rash of dot-coms that have contributed to recent turmoil in world markets.

"Market analysts have been describing dot-com content companies as technology companies, which they are not. We are an extremely unusual start-up in that we have already exhibited prototypes at trade shows. We are not one of the smoke and mirrors companies."

The company's products should cater for the world's leading network solutions companies, such as Cisco, Nortel Networks and Lucent, as they attempt to meet the challenge of providing enough bandwidth at competitive prices to carry internet traffic, which is doubling every 100 days.

"We will be mining bandwidth in existing installed fibre," Professor Payne said.

Southampton Photonics will create 200 jobs for engineers, manufacturing specialists and sales and marketing staff in the next 18 months. Most will be based at a purpose-built development in the university's Science Park at Chilworth. The company will also establish facilities in California, where it expects to employ more than 200 staff by the end of 2002.

The ORC has been at the forefront of optical communication research for 35 years and Professor Payne was the world's first PhD student in the subject. He led the team that in 1986 invented the optical amplifier, the enabling technology behind Dense Wavelength Division Multiplexing, and was jointly awarded the Benjamin Franklin Medal for developing the erbium-doped fibre amplifier in 1998.

Southampton Photonics will base its product range on technology developed and patented by university researchers. An alliance with the ORC will ensure that, in addition to in-house product and technology development, the company will continue to license key know-how and further ORCpatent portfolios. Two senior ORC staff, Anatoly Grudinin and Mikhail Zervas, will be technical directors.

Professor Payne said: "Between us we have over 100 years of experience at the top of the optical telecoms field. For this reason, we have attracted an outstanding set of investors from the US and the UK and a record level of first-round funding."