Your Business: Spin-offs build on uni brain banks

Sasha Rifaat, Iannick Monfils and Andy Stevens are part of Auckland University spin-off company Southern Photonics. Photo / Dean Purcell

All over the world exciting spin-off companies are emerging from universities, where commercial and academic minds work together to fill a niche in the market.

New Zealand has its share of these highly educated enterprises. Auckland University physics professor John Harvey set up the Auckland business Southern Photonics in 2001 with three of his students to provide high-tech opportunities for PhD graduates.

Southern Photonics offers a range of optical pulse test and measurement equipment for use in the telecommunications industry and in academic and industry research laboratories worldwide. Its optical pulse diagnostic equipment provides instruments for "characterising" short optical pulses used in high-speed optical communications systems.

Two new senior appointments at the company in 2010 have given Southern the injection of ideas and commercialisation to take it to the next level.

Andy Stevens, formerly at optical touch-screen technology company NextWindow, is chief operating officer.

"What I do is build teams," he said.

Iannick Monfils, Southern's principal engineer, comes from Nortel Networks in Canada and has led a stream of new products at Southern Photonics.

This new management team has taken the business from six to 18 employees and the turnover last fiscal year end in March was $2 million.

"What we are seeing now is an opportunity for very significant growth. We have got quite a diversified number of products," said Stevens.

"We're looking at growth in the business which will mean a turnover of in excess of $3 million for this current year, then $5.5 to $6 million the following year and up to $10 million for 2014/ 2015," he said.

In the past year, the small company has formed commercial partnerships with two international players to make world-class products. Southern Photonics' links with telecommunication components company Micram and serial data test solution company the LeCroy Corporation are leading to a new international status for the New Zealand company.

"The products that we have in that market are quite unique - that's why we are attracting interest from international partners," said Stevens.

Most of the company's contacts come through attending the large telecommunications equipment trade shows in the United States and Europe.

"Trade shows are where the entire industry comes together. We can show people stuff we are working on. There is no doubt that as a small NZ company, contracting with larger internationals, there's a credibility leap that we have to make," said Stevens.

The business challenge for Southern Protonics is that the equipment it sells is high value, ranging from $10,000 to $250,000, so the company is always striving for working capital. It is time to find some external investors.

"We are being approached by a number of [multinationals]," said Stevens. "These companies want to have a vision into our technological road map and our product road map."

At the moment, the company's majority shareholding is held by co-founder Professor Harvey, who will be even more involved with the company when he retires from the university at the end of this year.

Auckland UniServices is also a large shareholder, the rest split between the founders and some employees.

Interested investors are impressed by the professional talent Southern Photonics is able to access from its academic links.

Its staff include graduates in marketing, graphic design, mechanical design, electrical design, and physics.

While the intention is to keep the main office in New Zealand, Southern Photonics is planning sales offices in the US, China and Japan in the future.