Ayar Labs Gets $2.5M to Go After Optical Chips for Data Centers

Xconomy Boston — 

This startup sits at the intersection of electronics, optics, energy efficiency, and the Internet. It is where more than a decade of academic research meets a multibillion-dollar market. This is the story of Ayar Labs.

The San Francisco startup, which has roots in Cambridge, MA, and Boulder, CO, is trying to solve a fundamental problem in computer systems, starting with data centers—namely, how to make them perform better while also using less energy. Now, the company has raised seed funding from prominent investors (more on that below) as it gears up to build its first product. And its experience sheds light on how a team of diverse experts can take a broad scientific advance and focus it on a particular market.

The story begins in a classroom at MIT in 2014. Alex Wright-Gladstein was getting her MBA at the MIT Sloan School of Management. She had previously worked in energy efficiency and smart-grid systems at EnerNOC and other companies. She says her “passion for the global warming problem” drove her to look for emerging technologies that she could help commercialize to address some of the world’s big challenges.

Wright-Gladstein took a course called Energy Ventures (class number 15.366), where teams work together on energy-related projects, business plans, and startup ideas. She had previously sat down with about 20 professors to talk about energy research projects that might be ripe for commercialization, she says.

One technology stood out. It was co-developed by Rajeev Ram, a professor in MIT’s Research Laboratory of Electronics. Ram and his collaborators at the University of California, Berkeley, and the University of Colorado Boulder had spent about 10 years developing methods for combining high-performance optics and electronics on the same silicon chip. The result: a new kind of chip-to-chip communication using light, but without the need for a custom manufacturing process. (That research was published in Nature last December.)

Wright-Gladstein and others saw a big opportunity in data centers: the potential to boost speed and performance while also saving energy. It boils down to the fact that light can be used to transmit information faster and more efficiently than electrical wires. Yet optical systems have been difficult to integrate with silicon chips, for technical reasons. So, places where lots of computers need to talk to each other fast—see today’s ever-expanding data centers—have inherent bottlenecks. Data centers already use some optics, but they also use (and waste) tons of energy.

To explore possible solutions, Wright-Gladstein and her class team got to know the student researchers on the chip project: Chen Sun, a PhD student at MIT, and Mark Wade, a PhD student at University of Colorado Boulder. They worked out a preliminary business plan and product strategy. In early 2015, Wright-Gladstein convinced Sun and Wade to enter the MIT Clean Energy Prize competition with her. “I said, ‘I’ll do all the work.’ They were busy trying to graduate,” she jokes.

Their team ended up winning two grand prizes that spring, netting $275,000. The money “made it possible to ignore job offers” and focus on the company, says Wright-Gladstein, who is the CEO (pictured above, center). In the meantime, her co-founders Sun (electronics expert, on left) and Wade (optics guru, on right) finished their PhDs and took on the roles of CTO and chief scientist, respectively, at the company.

Prior to the competition, they had named their startup OptiBit. Later they realized the name was already taken by a company in Europe, so they had to change it. They settled on a new name: Ayar Labs, with Ayar pronounced like “IR” for infrared—the part of the electromagnetic spectrum their optical system uses.

The team moved out to San Francisco last summer (much to the chagrin of those worried about brain drain in Boston). They joined two incubator programs, Citris Foundry and Silicon Catalyst, and continued work on their technology and business plan.

Ayar Labs’ scientific co-founders—the company calls them “technical principals”—are MIT’s Ram, Vladimir Stojanovic at UC Berkeley (he was previously a professor at MIT), and Milos Popovic from CU Boulder. (Popovic has just moved to Boston University, so the company has strong ties to the area.)

In late May, Ayar Labs closed a seed financing round of $2.5 million, led by FF Science, which is part of Founders Fund, the venture firm co-led by Peter Thiel. Ayar Labs’ other investors include TechU Angels, led by MIT Sloan alumnus Natanel Barookhian.

Ayar Labs' technology miniaturizes optical and electrical components onto a silicon chip.

Ayar Labs’ technology miniaturizes optical and electrical components onto a silicon chip.

The startup’s first product is slated to be a 400 gigabit per second transceiver, aimed at data centers. The team plans to make it available in 2019, which is when the first data center switches with 400 Gbps ports should appear. (Right now the highest per-port bandwidth available is 100 Gbps.) Ayar Labs is planning a demo of the technology … Next Page »

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