This week, Dutch VC PhotonVentures announced it’s raised €60m in the first close of a new fund to exclusively invest in startups building photonics technology — an emerging sector that some say will transform how we build computers.
We chatted to Pieter Klinkert, general partner at PhotonVentures on Startup Europe — The Sifted Podcast, about why the fund is betting on photonics, what startups it’s keen to invest in and what this has to do with the chips race.
Why photonics?
Photonics is the use of light or light particles to transmit, detect and work with data.
“We are used to transporting data on electrons, but the next thing — and what we are already doing — is to do it on photons, light particles,” said Klinkert. “The big advantage of light is that it has a tremendous bandwidth and one light source, one beam, could transmit a lot of data.”
Klinkert added that another advantage of photons is that they don’t use as much energy as electrons when they move — or generate as much heat. Photonic chips could potentially be used in data centres to process large amounts of data while eating up less energy.
“Photonics itself has already existed for many years, but the trick in integrated photonics is to put all these lasers and all the small mirrors, everything involved in photonics, on a single chip,” said Klinkert. “And by putting it on a chip, you’re able to reduce its size and therefore have a lower price.”
Could photonic chips replace electronic chips?
Right now, electronic chips are used in a wide range of applications, from trains to computers, and are essential to almost every sector of the global economy. Klinkert said photonic chips are unlikely to replace them for now.
“I definitely don’t think it will replace electronic chips, at least not for many years to come, but it’s an enabler to lower the energy consumption which is currently used in electronic chips,” he said. “It’s not meant as a replacement, it’s part of the entire semiconductor industry.”
What kind of European photonics startups are there to invest in?
People and companies are already using photonics in data telecommunications, in the form of glass fibre, which we use for the internet. But other possible applications are wide-ranging.
“It’s a bit of a chicken and egg,” said Klinkert. “For us, it’s important to look at the applications, the use cases of integrated photonics in existing products. Those products could be in data telecoms as already mentioned, but also in healthcare. It could be in cars using LIDAR [light detection and ranging], so instead of radar communication to detect things, you could also do it by light. You could use it even in quantum computing.”
According to Dealroom, there are currently 63 European startups working on photonics tech. PhotonVentures aims to invest in 10-15 with initial tickets ranging from €1.5m-€2.5m. After applications, it’ll move to the supply chain.
“All those different applications, they will increase demand for the chips themselves,” said Klinkert.
What about the chip race?
Of course, global powers have been scrambling to develop their own chip strategies. The US and China announced $52bn and $143bn packages in 2022, respectively, while the EU’s €43bn European Chips Act aims to increase the continent’s production capacity to 20% of the global market by 2030.
The UK pledged £1bn, but it met criticism from industry leaders that it’s not enough.
“If you look at what happened in the traditional semiconductor economy, electronic chips, on some parts — and mainly the production — we [the EU] did lose space in the past,” said Klinkert. “We are still dependent on the entire world in this, but it’s not too late.”
In this episode, we also discussed:
- US AI startup Poolside raising $126m seed round and relocating to France
- Klarna cutting losses and the “huge opportunity” it sees in generative AI
- N26 CPO Gilles BianRosa stepping down to supervisory board member
- Babylon finding a buyer for its UK business (and GP at Hand service)
- Hackers watching your startup
