U-M’s Frankel Fund Has First Exit, Leads Fusion Coolant’s Series A

University of Michigan’s student-led Frankel Commercialization Fund, in collaboration with the Zell Lurie Institute for Entrepreneurial Studies, announced this week that Arbor Photonics, one of the fund’s portfolio companies, has been acquired by nLIGHT, an industry leader in semiconductor lasers. The terms of the acquisition were not disclosed.

“We’re really pleased for such an early-stage fund to already have an exit,” says Tom Porter, the fund’s managing director. The Frankel Fund made its first-ever investment in Arbor Photonics, which was spun out of technology developed at the university, in 2007. The fund contributed $85,000 to an initial round of financing led by Ann Arbor-based RPM VenturesThe Wolverine Venture Fund, the university’s venture-stage investment fund, has also invested in the company, participating in the company’s Series A round of financing in 2009.

Arbor Photonics’ technology can produce a laser with five to seven times as much power as ordinary lasers for use in defense applications and materials processing. Porter calls Arbor Photonics’ technology “very strategically important” to nLIGHT, which has led nLIGHT to keep Arbor Photonics’ research lab in Ann Arbor. “It’s encouraging,” Porter adds. “When Michigan companies are acquired, companies often swoop in and just take, and Ann Arbor doesn’t get the benefit of what was started locally.”

Also this week, the Frankel Fund announced its seventh investment: Fusion Coolant Systems, another U-M spinoff startup. It led Fusion Coolant’s $600,000 Series A round; other participating investors were the Ann Arbor-based Amherst Fund, Troy, MI-based Automation Alley, the Michigan Pre-Seed Capital Fund, and the Detroit Enterprise Fund and First Step Fund, both based in Detroit.

Fusion Coolant has developed a patented dry coolant and lubrication system for use in metalworking and other manufacturing. The company recently opened a tech center on the west side of Detroit. CEO Tom Gross says Fusion Coolant will use the Series A funds to improve its product development and marketing strategy.

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