VCs Shine $6M On Zia Laser Offering

Spun out from the University of New Mexico’s research group, Albuquerque-based Zia Laser Inc. recently garnered $6 million worth of seed money from Prism Venture Partners and RWI Group. RWI was technically the lead investor, as the firm and its affiliates put about $3.1 million into the deal which featured a $14 million post-money valuation. Prism made up the difference with a $2.9 million investment, said Wendy Swedick, chief financial officer with Zia Laser.

Although this first round will satisfy the company’s capital needs for at least the next year as it refines its quantum dot semiconductor laser technology and manufacturing capabilities, Zia Laser will most likely take another dip in the private equity pool early next year, Swedick said.

“We’d like to have these investors involved in our second, third and fourth rounds if we can,” she added, when asked if Prism and RWI were likely candidates for a follow-on financing.

Zia’s unique approach to tunable lasers is what initially caught Prism Venture Partners’ attention and ultimately enticed it to get in on the round at such an early stage, said Bill Seifert, a general partner with the venture firm.

“It’s something of a materials play that’s a little bit out there in terms of exploring the laws of physics as opposed to pure environment and product decisions,” he added. “This group has done a lot of ground work, and now it’s coming into its own. There’s been very little experience with it in terms of manufacturing real things, and we have the opportunity to explore and be the first ones to plant a flag someplace.”

Prism Venture Partners also saw some viable synergies with its other portfolio companies. For example, the firm also backs Asxun Technologies Inc., a Billerica, Mass.-based company that provides packaging for semiconductor components, so there could potentially be a fit between that company and its newest portfolio mate down the line, Seifert said.

Zia claims its technology is different from other offerings in that it confines a semiconductor’s laser to two regions instead of three, which eliminates some of the other components in a fiber optic system, hence, dramatically reducing costs for providers of such services.

“This is new stuff, which is a bug as well as a feature,” he explained. “The biggest unknown has much to do with the manufacturing aspects. We’re going to have to work on yields and getting the recipe right in the factory. It’s fine to be able to build one or two or 10, but the question is, can [they] make a thousand or a million?”

While the company has just 11 employees on board to help bring that manufacturing process to bear, Swedick said it will likely stay fairly lean and mean, hiring only an additional 12 workers or so before the end of 2002.

Its next round of financing will likely go toward increasing its headcount, as well as outsourcing its manufacturing process once the company has perfected it internally, she added.

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