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Photonics VC Update: Optical interconnect companies lead March’s VC deals

Other funding rounds backed companies developing quantum components, LiDAR, and laser-fusion technologies.

Introducing the Photonics VC Update, a new monthly series to brief scientists, engineers, entrepreneurs, and business leaders about the venture funding of emerging companies in various photonics technologies.

April 3, 2024

With March, the month for both Nvidia’s GTC conference and OFC, it is unsurprising that optical interconnects headline the photonics venture fundings this month, especially those that apply to artificial intelligence (AI) computing and memory infrastructure.

Santa Clara-based Celestial AI is targeting this market with its fully photonic compute-to-compute and compute-to-memory links (specifically for AI) and raised the most funding we noted this month, a $175M Series C led by USIT and a long list of prior investors, including AMD Ventures, Koch Disruptive Technologies, and Temasek.

Similarly, Quintessent, a Santa Barbara-based company, announced that it closed a $11.5M oversubscribed Seed round to advance its highly scalable silicon photonics platform, accelerating this transition of computing infrastructure from general-purpose architectures to ones specifically designed for accelerated computing in applications like AI. Osage University Partners led the funding round, joined by new investors, including M Ventures, and existing investors Sierra Ventures, Foothill Ventures, and my firm, Entrada Ventures.

Finally, Oriole Networks, a University College London spinout, raised £10M in Seed funding from XTX Ventures and others to substantially lower the interconnect power consumption of AI clusters with its optical fiber technology.

Although these AI-focused applications are receiving the most attention, bandwidth bottlenecks throughout the network continue to create opportunities for other optical interconnect startups. EFFECT Photonics in Eindhoven raised $38M Series D funding to advance coherent optics for multiple applications, including 5G and cloud edge. Innovation Industries Strategic Partners Fund and co-investor Invest-NL Deep Tech Fund led the round with participation from other existing investors.

Other active areas

Despite the flurry around optical interconnect technology, venture funding in other photonics markets remained strong in March. Colorado optical component vendor Vescent announced a $5M Seed round led by Corporate Fuel Advisors with participation from Caruso Ventures. With established product lines, the company is older and more mature than expected in a typical Seed round. Its funding reflects interest in "Picks & Shovels" vendors for quantum-related technologies (i.e., the lower-level enabling technologies that will enable other companies to produce the "gold" of a commercial quantum computer). Vescent highlights frequency combs and lasers suitable for those applications.

French LiDAR startup SteerLight announced its first fundraising of €3.2M by Stellantis Ventures, Quantonation, and LIFTT to help commercialize its silicon photonics-based frequency-modulated continuous-wave (FMCW) LiDAR chip. The company is a prime example of continued venture interest in photonics integration technology, especially silicon photonics, that moves beyond its initial beachhead of optical communications into other potentially lucrative markets.

Finally, Blue Laser Fusion, co-founded by UC Santa Barbara professor and 2014 Nobel laureate Shuji Nakamura, raised $37.5M Series Seed from Softbank Corp, Maezawa Fund, and Itochu Corporation. The company has developed a proprietary novel laser fusion technology, a step toward its goal of achieving a commercial-ready fusion reactor for energy generation by 2030.

About the Author

Eric Hall is a managing partner of Entrada Ventures, a seed-stage fund investing in innovative technologies. He has worked alongside multiple Nobel Prize winners in building successful startups across various photonics technologies, including Aurrion (silicon photonics), Soraa (GaN LEDs), Kaai (GaN lasers), and Agility Communications (InP photonics), leading to multiple acquisitions. Subsequently, Hall led several transactions as an investment banker at Golding Partners before moving into early-stage investing. He earned his Bachelor of Science in engineering physics at UC Berkeley, a Master of Business Administration (MBA) from Columbia Business School, and a PhD in materials at UC Santa Barbara.


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