Lumera raises $24 million to build next big thing in networks

In the high-stakes race to build a faster and more reliable telecommunications network, Lumera Corp. of Bothell believes it has found the holy grail: polymers.

Some big-name investors seem to agree.

Lumera -- formed in October through a partnership between the University of Washington and Microvision -- yesterday raised $24 million in a first round of capital financing led by Cisco Systems.

Unlike many of its competitors, Lumera is developing optical equipment that uses organic polymers or plastics to help send data over telecommunications networks at more than twice the speeds currently available. In addition to higher speeds, Lumera's polymer approach uses far less power than products currently made by Lucent, JDS Uniphase and other makers of optical components that rely on crystals, executives say.

Lumera Corp. hopes devices made of polymers, such as the test wafer held by product manager Hillary MacDonald, will aid data transmission.
Phil H. Webber / Seattle Post-Intelligencer
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"One of the challenges you have with crystalline materials is that they are brittle so they are much more challenging to work with than plastics are," said Rick Rutkowski, chief executive of Microvision and acting president of Lumera. "Polymers give us two things: One is ... a performance advantage with respect to being able to achieve high data rates at low voltages, and the second is they give us a cost advantage because they are easier to process and we can get a higher yield."

He said the Lumera device will be able to move data at 40 gigabits per second whereas devices currently being used operate at 2.5 gigabits or 10 gigabits.

Lumera plans to unveil its prototype device -- known as an electro-optic modulator switch -- early this summer with full commercialization slated for next year. Potential customers include such networking companies as Cisco, Nortel Networks and Corning.

Rutkowski said the company is looking for a manufacturing facility in the Seattle area to build the tiny chiplike devices. It is also seeking a full-time chief executive and chief technology officer, Rutkowski said. The company has about 20 employees with plans to more than double by midyear.

After yesterday's investment from Cisco, The Barksdale Group, Acorn Ventures and WRF Capital, Microvision owns 58 percent of the company. The UW, which developed much of the technology through work by professors Larry Dalton and Bruce Robinson, holds a minority stake.

Casey Tegrene, the intellectual property attorney at Lumera, said the start-up has applied for two patents and is planning to build a strong intellectual property portfolio in the coming years.

That is one of the reasons Cisco invested, Tegrene said.

"Cisco is a very sophisticated company when it comes to technology and its development in intellectual property," he said. "Cisco would not invest in a company that had not adequately protected its assets."

Executives at Cisco could not be reached for comment.

John Reagh, managing director at WRF Capital in Seattle, said his firm invested because of the potentially groundbreaking technology.

"It is kind of like if you had a patent on silicon back when they started making microchips," Reagh said. "At least we are hoping it turns out that way."

While stocks of many optical component manufacturers are tumbling and some analysts are cutting back on their revenue projections for the sector, Rutkowski said he is not very worried.

"People have revised downward some of their forecasts, which is a lot more meaningful for a company doing billions of dollars than it is for a company like ours that wants to get to hundreds of millions of dollars," he said. "There is still plenty of market there and plenty of growth and plenty of demand."

Lumera is part of Seattle's growing community of optical networking start-ups, which includes such companies as nLight Photonics and Terabeam Networks.

Microvision, a maker of image display technology, gained 4 percent yesterday to close at $15.25.

P-I reporter John Cook can be reached at 206-448-8075 or johncook@seattle-pi.com