Nobels and $125M Exits: Report Tells Tales of Two Colorado Startups
A startup commercializing Nobel Prize-winning research and the software startup that kicked off Colorado’s year of $100 million-plus exits were highlighted in a new report released today by the Science Coalition, a nonprofit dedicated to getting the federal government to increase support for basic scientific research.
LineRate Systems and ColdQuanta both received support from the federal government in addition to the University of Colorado-Boulder, and are examples of why spending taxpayer dollars on research is a good investment, the coalition said in its report, Sparking Economic Growth 2.0. The report on “success stories” follows a similar survey released in 2010 by the coalition, a nonprofit advocacy group formed by more than 50 universities.
You could call it the tale of two Colorado startups. Both happen to share roots at CU and received some taxpayer support, but they tell two very different tales.
LineRate Systems’ story is a classic tale of a Colorado startup capitalizing on technology that could improve a well-established industry. CU computer science grad student John Giacomoni and former CU professor Manish Vachharajani founded the company in 2008.
Giacomoni’s research was in high-performance networking, specifically software-defined networking that let companies manage traffic flow on their servers. He received a $100,000 grant from the Department of Defense to pursue his research.
The LineRate Systems story also is the story of a small Colorado startup with a lot of potential being snapped up by a much bigger competitor.
LineRate would grow to 20 employees before being bought by F5 Networks (NASDAQ: FFIV) for $125 million last February. The company had raised $5.75 million and was backed by Boulder Ventures and local angel investors. It also received a proof-of-concept grant from CU.
At the other end of the spectrum is ColdQuanta, a startup founded in 2007 that is commercializing tech that only existed in theory less than 20 years ago.
ColdQuanta’s roots are in fundamental research conducted at JILA, a lab that’s jointly run by CU and the National Institute of Standards and Technology.
JILA, originally known as the Joint Institute for Laboratory Atmospherics, doesn’t get a lot of attention from the media—except when one of its researchers wins a Nobel Prize. JILA has produced three laureates since 2001.
One of the institute’s specialties is research in ultracold matter, and a team of JILA scientists created the first Bose-Einstein condensate, which is a unique state of matter that occurs at temperatures near absolute zero, or -273 degrees Celsius. That earned its leaders, CU professors and JILA researchers Eric Cornell and Carl Wieman, the legendary early morning phone call from the Royal Swedish Academy of Sciences telling them they won the prize in 2001.
ColdQuanta is working to take those technologies from the lab and develop them for commercial use. Its founders and scientific advisors either won a share of a Nobel themselves or were part of the teams that conducted the research.
The products under development at ColdQuanta include instruments that create ultracold matter and Bose-Einstein condensates, and the company could be a case study for how quickly huge breakthroughs can become commercial products.
Indian physicist S. N. Bose and Albert Einstein did the theoretical work predicting the condensate in 1924, but it wasn’t until 1995 that a team led Cornell and Wieman were able to create it in a lab for the first time.
Cornell and Wieman had to use a lab full of lasers and advanced electronics to trap atoms and slow them down in order for them to reach a temperature where the rules of classical physics no longer described their behavior, and they constituted a new form of matter.
In September, ColdQuanta began selling a tabletop system that universities and labs can use to create the condensate. It took 71 years to create the condensate. Now, 19 years after that breakthrough, ColdQuanta can teach experimentalists how to create it in their laboratories during a four-day course.
ColdQuanta also has provided the Jet Propulsion Lab—the lab in California that NASA relies on to lead many scientific research missions—the equipment it needs to conduct ultracold atom research on the International Space Station.
ColdQuanta founder and chief technology officer Dana Anderson collaborated with Cornell and Wieman and spent decades on his own at JILA developing the technology behind ColdQuanta. Scientific adviser Theodor Hänsch shared the prize with Hall for work on the lasers needed in ultracold research.
According to ColdQuanta, commercial applications include atomic clocks, precision instruments, quantum computers, and complex and novel materials created through “quantum simulation.”
A $5 million grant from an Army program and a $12 million grant from the Defense Advanced Research Project Agency enabled researchers to develop the tech that ColdQuanta would go on to commercialize. The researchers also received a $100,000 proof-of-concept grant from the CU Technology Transfer Office, which has a licensing agreement with ColdQuanta.
The Science Coalition praised the companies, along with 98 others, as examples of successful startups that made good use of taxpayer support. The organization has an agenda, and it doesn’t try to hide it. The report is intended to highlight the economic benefits of how federally funded research leads to economic development.
The Science Coalition wants the federal government to increase its support for basic research, and in particular wants the budget cuts made by the sequestration undone. It says the cuts took $95 billion away from researchers.