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With a Series D investment of $38 million (€35 million), EFFECT Photonics is taking a big step into the photonics industry. The Eindhoven-based company announced this today in a press release. The company provides products based on integrated photonics on chips. It will use the funding to scale up production further to meet the bandwidth demand and faster data transmission. 

Innovation Industries Strategic Partners Fund led the investment in partnership with Dutch pension funds PMT and PME and co-investor Invest-NL. 

Accelerating market introduction

Roberto Marcoccia, CEO of the company, emphasizes that the investment will accelerate the introduction of integrated photonic solutions. This is a crucial step to meet the increasing worldwide need for bandwidth, focusing on affordable and high-volume optical solutions available for 5G networks and cloud services. “Our investors’ excitement marks the culmination of a dynamic year of progress in every facet of our business and reinforces the market momentum we have built.”

The challenge of scaling up for a deep-tech company

Scaling up is a well-known hurdle for start-ups, especially in deep tech. The transition from development to mass production in the early stage poses significant financial and operational challenges. Nard Sintenie, co-founder of Innovation Industries: “Young deep-tech companies should be valued based on their technology, not on their sales and profits. So that requires knowledge about the technology and the industry. To build these companies, you have to take a long breath, but ultimately, they are of enormous added value to the Netherlands and Europe, and the entire ecosystem benefits from that. It’s very motivating that we, Innovation Industries, can help roll out those technologies.”

Effect Photonics has met this challenge by fundamentally adjusting its manufacturing strategy. In an interview with Innovation Origins last year, the company’s CTO, Tim Koene, clarified that scaling production capacity from one to hundreds of wafers per month required a significant turnaround. “We had to change our business model. Running an internal factory is no longer an option. To meet these demands, we have to cooperate with the largest factories in the world.” EFFECT Photonics said goodbye to in-house production. But, at the same time, the reorganization is also the starting signal for another growth spurt. A successful decision, it turns out, a year later.

The capital injection of $38 million confirms this vision. It shows that Dutch investors are willing to invest significantly in the chip industry and, in particular, in photonics start-ups. With the recent financial boost and technological advances, the company is ready to play a leading role in this market. The investment is more than a monetary contribution; it is a sign of confidence in the potential of photonics and in the capabilities of EFFECT Photonics.