GERMAN SMALL TECH DEVELOPERS ARE LOOKING TO U.S. FOR VENTURE CAPITAL

By Tom Henderson
Small Times Senior Staff Writer

HANNOVER, Germany — Klees Eijkel is looking westward, for American investors or partners to help his MESA+ Research Institute continue its for-profit spinoff activity in the world of small tech. The Dutch institute, part of the University of Twente, has developed a reputation as one of the leaders in Europe in commercializing academic research.

“We have put in place the elements that make us a good opportunity for American investors,” said Eijkel from the MESA+ booth at the Hannover Trade Fair. “We think some of these start-ups are interesting, and the American market is crucial.

“It is important not to look just to Holland or Western Europe. We want to jump into that market. When one of your investors is American-based, it’s 10 times better for you.”

He recently has had exploratory talks with one VC firm but has yet to sign any deals.

Thus far, funding for commercialization of MESA+ companies has followed a European rather than American model: Money comes primarily from government sources. Venture capital is such a new concept that the Dutch and German don’t even have words in their own languages for it, borrowing the English-language term, instead. MESA+ got $22.5 million (U.S.) in funding last year, just 9 percent of it from the private sector.

MESA stands for microelectronics, sensors and actuators, and was founded at the university in 1990 as a cross-disciplinary institute pulling together researchers in the fields of electrical and mechanical engineering, physics and chemistry. The “+” tag was added in 1999 when it merged with the university’s Materials Research Center, which itself had been a consortium of various groups in the physics and chemical technology departments.

MESA+’s cross-disciplinary philosophy should serve as model for other universities, both in Europe and in the U.S., says Eijkel. And the number of researchers it can bring to bear on various projects is impressive; the staff of 400 includes about 300 scientific researchers, including 200 Ph.D.s and post-docs.

The Netherlands is home to two other large research institutions in small tech, the Delft Institute of Microelectronics and Submicron Technology in Delft and Bio-Organic Materials and Devices in Groningen. “Their research is more basic. We’re the wild guys, with the wild technologies,” says Eijkel.

All three of them are part of the Microsystem and Nano Technology Cluster (MINAC), a consortium 28 for-profit companies and research institutes specializing in small tech, helping make the Netherlands one of the world’s focal points for emerging technologies.

But while the research has been cutting edge, turning the research into market-based, for-profit companies has lagged. That is beginning to change slowly, says Eijkel, citing three reasons:

* Universities, once reluctant to see professors involved in private enterprise, have done an about face. Eijkel said when he began renting out clean-lab space at the University of Twente to private businesses in 1984, such activity was unheard of — almost shocking. Today, it is commonplace.

Twente has even formed a for-profit subsidiary, called the Microsystem Technology Foundry, to facilitate and promote privatization.

* Second, “The government now likes very much if you set yourself up so spinoffs will occur. The government has been saying these things for some time, but there has been real attention the last couple of years. Political support is very, very important.”

* Finally, a new venture-capital company has been formed. Called INNOFONDS, it is modest by American standards, $12 million, but because it is in part government subsidized it will be free to participate in at least some high-risk, hard-science projects, says Eijkel. MTF’s first VC deal with INNOFUNDS will be signed today, he adds.

This month, MESA+ spun off Lion Photonix Technologies, which makes silicon-based photonic waveguides for optical networking. Another recent spinoff was Micronit, which makes microfluidic devices in glass “with very rapid prototyping capabilities.”

This brings the number of viable spinoffs from MESA+ to 20, half of them related to Twente research and the other half originating off-campus. Current employment, says Eijkel, totals “a few hundred jobs.”

The most successful is Kymata Netherlands, with 60 employees. It is a merger of two separate companies bought and combined last year by the Scottish firm of Kymata. Eijkel hopes to spin off two or three more companies this year, and perhaps as many as seven in 2002. “Things are really ramping up.”

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