Under New Ownership, Alfalight Remains Laser-Focused

When an unfamiliar vehicle approaches a military checkpoint, soldiers posted at the station often have little time to determine whether the person behind the wheel is a friend or foe.

One organization that had been working to help keep troops safe in such scenarios—as well as protect any approaching allies or civilians whom they may not recognize—is Madison, WI-based Alfalight. The company was acquired in July by Gooch & Housego, a U.K.-based business focused on photonics technology.

The products Alfalight had been developing—which will now be sold under the G&H brand—include battery-powered, non-lethal laser devices that allow users to shine a bright green beam on the windshield of a car or truck. The light obscures the vision of anyone inside the vehicle who tries looking out the windshield. The experience is similar to trying to drive with the sun directly in one’s eyes, says Ron Bechtold, senior director of business development at Gooch & Housego.

“In general, the case is you’re trying to determine intent,” Bechtold says. “You’re trying to signal, ‘Hey, you’re making me nervous—you’re coming into a zone you shouldn’t be coming into.’ That [could be at] a checkpoint and someone’s coming in fast, or on the water and someone’s got a fishing boat drifting your direction.”

Founded in 1998 as a spinout of the University of Wisconsin-Madison, Alfalight brought in tens of millions of dollars over the years from investors and contracts awarded to the company by large organizations in sectors such as defense and national intelligence.

Given all of the money Alfalight raised and contracts it won, it seems somewhat surprising that the company was acquired for just $1.3 million last summer. That was the sale price, according to a report on the website StockMarketWire.com and data from Seattle-based PitchBook and the National Venture Capital Association.

One possible reason that Alfalight did not fetch a high purchase price relative to the amount of funding that had come into the company over time is that it reportedly sold “semiconductor manufacturing assets and commercial product lines” to Compound Photonics in 2013. An article about that deal from Optics.org, which covers the photonics industry, did not say how much Compound Photonics paid.

Compound Photonics is based in Phoenix, but according to its website also has an office in Madison, at the same address as Alfalight’s former headquarters. It is not clear whether Alfalight shared—or G&H currently shares—space with Compound Photonics there.

Bechtold declined to comment, saying only that “this transaction, combined with the sale of a portion of [Alfalight] to Compound Photonics in 2013, has been a good step in the evolution of our Madison startup.”

In Alfalight’s news release announcing that it had been acquired, the company said “all equipment, intellectual property, and product lines, including the Alfalight brand” were sold to G&H.

Alfalight said some of its employees would remain in Madison and that two of its executives—CEO Mohan Warrior and chief financial officer Aaron Marshall—would not be joining G&H. Warrior is now an angel investor based in Palo Alto, CA, according to his LinkedIn profile.

The Wisconsin State Journal reported in 2007 that Alfalight had “received more than $57 million in venture funding.” According to an SEC filing, the company brought in about $2.5 million from investors in 2008, meaning the total amount raised likely exceeded $60 million.

Alfalight’s backers reportedly included Madison-based Venture Investors and the Wisconsin Alumni Research Foundation, which handles technology transfer for UW-Madison. Chicago-based Arch Venture Partners also provided financing to Alfalight, according to the fund’s website.

In addition, Alfalight received a number of grants from well-known agencies and firms before becoming part of G&H. The Defense Advanced Research Projects Agency awarded Alfalight $3.9 million in 2003 and $4.7 million in 2006. The company also landed a $3.7 million contract from Pacific Scientific Energetic Materials in 2014, and an undisclosed amount of funding from In-Q-Tel, the CIA’s venture investment arm, as Optics.org reported in 2011. Bechtold declined to comment on the total value of grants and contracts awarded to Alfalight.

Whether or not Alfalight’s founders or investors made a profit for their time and money, G&H is finding value in the startup, Bechtold says.

“The integration of Alfalight into G&H has gone as planned and we are working closely and productively as members of the G&H organization,” he says. “With the resources of the larger G&H organization, the former Alfalight team will be able to magnify the impact of our technologies and capabilities on a worldwide basis.”

Fourteen of Alfalight’s employees were transferred to work out of G&H’s office in the Boston area following the acquisition, according to Optics.org. Bechtold declined to respond to questions about the size of Alfalight’s workforce at the time it was purchased, and the number of G&H employees who currently work from the former Alfalight facility in Madison.

Jeff Buchanan is the editor of Xconomy Seattle. Email: jbuchanan@xconomy.com Follow @_jeffbuchanan

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