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A Company is Born: How an idea becomes a business

A Company is Born: How an idea becomes a business

A lab on a chip, nanocrystals in solution and miniaturized power modules probably don’t mean much to the average person. But testing for traumatic brain injury on the spot, developing more energy-efficient lighting and more economical hybrid electric vehicles might, and that’s exactly what each of the innovations above has become, thanks to the hard work of many scientists and support from the Arkansas Research and Technology Park. The following pages contain three profiles of up-and-coming companies in different stages of creating products based on research findings.

Growth in the Arkansas Research and Technology Park has exploded: The Innovation Center, built in 2004, has 35,000 square feet of space. Six years later, the Enterprise Center has opened with 60,000 square feet of space that can accommodate offices as well as wet and dry laboratories. Together these two centers facilitate the commercialization of research and will be useful for companies that are just beginning to grow.

The three companies featured here, as well as NanoMech and Duralor, featured in a video on the Web, represent the first tenants of the new building – merely the beginning of a period of growth for technology businesses in Arkansas. The possible economic impact of companies within the Arkansas Research and Technology Park could be up to $134 million over the next five years, according to a report by the University of Arkansas Technology Foundation.

“It has been very gratifying to see the evolution of these companies, as it represents a fulfillment of our strategic plan,” said Phil Stafford, president of the foundation. “The path to commercialization is neither quick nor easy, but through the development of an innovation system consisting of facilities, equipment, workforce and the culture necessary for product development, the foundation is reducing the barriers that exist between idea generation and product launch.”

SFC Fluidics

Scientists have long wanted to make small “laboratories” – handheld devices that allow researchers to perform tests on the spot, in the field. SFC Fluidics has taken technology to do that and applied it to the real-world problem of traumatic brain injury.

“A person will be able to take a tiny blood sample, much like one might for a diabetic blood sugar test. They’ll insert the sample into the device, and it will indicate if a traumatic brain injury has occurred and how severe it is,” said Forrest Payne, senior scientist for the company. The company got a $5 million grant from the U.S. Armed Forces for a four-year project to create this device using technology licensed from various institutions.

“It’s a great opportunity to help people who potentially have these injuries,” Payne said.

The company is in the first year of the four-year grant. They have developed the pumps and the miniaturized capabilities as well as the connections for the device, and currently they’re building the prototype.

Payne returned to Arkansas after getting his graduate degree from the University of Virginia. He got his undergraduate degree in physics at the University of Arkansas and his parents live in the area. He wanted to move back to the area, but jobs for physicists are scarce in Arkansas. SFC Fluidics provided him with the opportunity to return to Arkansas with a good job.

Arkansas Power Electronics International

From left. David Battaglia of NN-Labs, Sharmila Mounce of Arkansas Power Electronics International and Forrest Payne of SFC Fluidics all live in Arkansas thanks to jobs at businesses created through University of Arkansas research.
Photo by Russell Cothren

“It’s kind of a Cinderella story,” said Sharmilla Mounce, business operations manager for Arkansas Power Electronics International, Inc. In 2002 she and Alex Lostetter, chief executive officer of the company, worked for free for a year and maxed out their credit cards to start the company with former colleague Jerry Hornberger. Today the company has 30 employees and $3 million in revenue, but for a short time it looked as if the company would go nowhere at all. Grant money appeared just a week before Lostetter left for a paying job.

“We all wanted to be in Arkansas, but there aren’t a lot of high-tech jobs here,” Mounce said.

The company grew by capitalizing on technology to make things smaller – in this case power modules used in vehicles, geological exploration and the aerospace industry. To shrink the size of such devices, company scientists have focused on silicon carbide. Silicon carbide can operate at temperatures up to 600 degrees Celsius, unlike other currently used materials, which operate at about 125 degrees Celsius.

“If you can have electronics operate at higher temperatures, you need less of a cooling system,” Mounce said.

With their first grant in hand, the engineers took the unusual step of creating a motor drive from scratch to demonstrate that their concept would work.

“We grew everything from the ground up, from the sweat that people put into the company,” said Lostetter, and the work paid off. They kept that first motor drive as a reminder of how they started. It has a place in the same room with the R&D 100 magazine’s award for their work on a state-of-the-art power module.

A joint development between APEI, the university, Rohm Company LTD., and Sandia National Laboratory, the APEI power module is the world’s first commercial high-temperature silicon carbide-based power electronics module. With applications in hybrid and electric vehicles, renewable energy and electric aircraft, the APEI power module reduces size and volume of power electronic systems by an order of magnitude over present modules. It also reduces energy loss by greater than 50 percent, which translates into significant potential energy savings.

They have worked with a major aeronautics company to put wireless sensors on turbine blades to monitor them for vibrations. The tips of these blades can heat up to about 500 degrees, so silicon carbide can effectively work for these sensors where other materials will not.

Based on these and other successes, the offices for APEI have expanded from a 150-square-foot room to 10,000 square feet of research and development space and 10,000 square feet of manufacturing space in the new Enterprise Center, which opened in October.

“We’ll be able to take things from an actual concept all the way to a product,” Mounce said.

The company has not sought venture capital to grow; instead, the company is employee owned.

“That’s a challenging way of doing things,” Lostetter said. “It also lets us go where we think we ought to go” in terms of research and development.

Of their 30 employees, 23 have bachelor’s degrees and three are pursuing their bachelor’s degree. Seventeen people have or are pursuing degrees beyond a bachelor’s degree. And most of these employees either have a degree or are pursuing a degree at the University of Arkansas. The company’s policy of supporting employees in furthering their education, plus flexible work hours, free health club memberships and a commitment to work-life balance helped the company win the Silver Award for small companies in the Governor’s Work-Life Balance competition.

“It all comes down to having good people,” Lostetter said.

NN -Laboratories

 In 2002, Xiaogang Peng, a professor of chemistry and biochemistry, synthesized nanocrystals in suspension using environ-mentally friendly methods that had not been seen before. Shortly thereafter, he founded a company at the Arkansas Research and Technology Park to examine possible applications for these nanocrystals.

Peng recently returned to China, but the company he founded, NN-Laboratories, continues to do research and development in Fayetteville. The company also has a subsidiary called NN-Crystal that specializes in applying the technology to lighting.

The nanocrystals can power solid-state lighting used commercially. Lighting consumes more than 20 percent of the energy used worldwide, and most current light sources are inefficient: An incandescent light bulb is about 1-3 percent efficient, while fluorescent light bulbs are about 20 percent efficient. In contrast, solid-state lighting, also known as LED lighting, can be up to 50 percent energy-efficient. Furthermore, this LED lighting lasts much longer than standard bulbs: Incandescent bulbs last about six months, fluorescent bulbs anywhere from a few months to three years, and LED lighting can last up to 10 years.

“Imagine a hotel lobby in Las Vegas. There, the cost of a light is trivial compared to the cost of replacing those lights,” said Suresh Sunderrajan, president of NN-Crystal.

Despite their increased efficiency, LEDs have proved a challenge, because they are monochromatic — they do not emit white light, which is a combination of all types of light. Instead, they can only emit colors like red, blue and yellow. LEDs are made to produce white light by combining a blue LED with a yellow phosphor, a substance that glows when exposed to electrons. The combination of blue and yellow makes white. The quality of white light produced this way is poor, however, with relatively poor color rendering ability.

“This can cause a blue jacket to look gray, for instance,” Sunderrajan said. High-quality light mimics sunlight, the human’s natural standard, and the light from LEDs is not considered to be of high quality unless other colors beyond blue and yellow are added, which cuts back on the light’s overall efficiency – the light may look better, but the amount of light emitted is lower for the same amount of energy.

“We fix that problem with our technology,” Sunderrajan said.

NNCrystal has created a technology called Qshift Coral, which uses quantum dots to precisely control color. They can be used to augment the color of light emitted by LEDs to produce high-quality white light without sacrificing efficiency. Since these quantum dots are tunable – the optical properties can be controlled to change the color of light they emit – the lights can be “tuned” to create almost any other color or color combination on the spectrum.
The second technology being introduced by NNCrystal, Qshift Lucid, features nanoparticles that are color-free in ambient lighting and can be combined with different LED lights, yet will look clear like traditional lights when turned off. This technology can be used to build all of the colors in the sun’s spectrum.

“It’s just like having the sun indoors,” Sunderrajan said.

The company demonstrated the technologies at Lightfair 2010, the lighting industry’s trade show. Their technology caught the interest of Renaissance Lighting, a company that was recently bought by Acuity Brands, which has about $1.6 billion in annual sales.

Qshift Coral is available commercially now, and Qshift Lucid should be available next year.

The company employs 15 people, four of whom have doctoral degrees in optical physics, polymer engineering and synthetic chemistry.

“The focus of the Arkansas lab is taking an idea from its synthesis to proof of concept,” Sunderrajan said.

Beyond lighting, NN-Labs is looking at advanced applications in the life sciences, such as medical diagnostics, as well as possible use to enhance the performance of solar cells.

Point your smart phone here to see a video about another company in the Arkansas Research and Technology Park.

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