Zephyr Photonics transitioning to commercial markets

A Zephyr Cove company that's worked a quarter of a century on secret defense projects is coming into the light under the guidance of new owners.

Zephyr Photonics, a company that previously operated as Opticomp, was acquired by Torch Hill Investment Partners of Washington, D.C.

Torch Hill, which announced the transaction last week, didn't disclose terms. Both companies have been privately held.

Zephyr Photonics employs 32 at its facilities near Lake Tahoe, most of them doctorate-level researchers with specialized knowledge in the design, fabrication and testing of optoelectronic data communication products and materials.

The company's 17,000-square-foot facility includes a clean room as well as on-site fabrication and testing facilities.

With the acquisition, Zephyr Photonics is changing its focus from research and development to a product-oriented, commercial operation, said Tom Steding, its chief executive officer.

In its 25-year history, the company handled more than 60 R&D grants and prototype contracts for the federal government and defense contractors, working as a small, stealth research firm.

It was involved, for instance, in the development of intelligence satellite communications systems and the Department of Defense Joint Strike Fighter program.

"While Zephyr may be a secret to much of the country, it has a tremendous history of innovative research and development, and is primed for growth with a pipeline of commercial products ready to hit the market in the coming months," said Steding.

The company's new commercial focus, he said, will seek markets for a patented technology known as vertical-cavity surface-emitting laser.

Here, Steding said, is why the company thinks the technology is a big deal:

The battleground of the future is likely to be one in which communications technology plays a critical role as it links satellites, drones, ground-based technology and soldiers.

And it's an environment filled with heat, shock and vibration that's tough on technology components.

At the same time, designers of military components need ever-greater amounts of bandwidth at the same time that they want to reduce size, weight and power requirements.

Zephyr Photonics and its new owners think the technology meets those requirements, and they'll be looking to sell products to the Department of Defense as well as aerospace and intelligence markets.

Brian Nugent, chairman of the board of Torch Hill and a partner in the firm, said last week, "We acquired Zephyr Photonics because of its incredible photonics technology portfolio, its success with the defense, intelligence and security sectors, and its committed and highly skilled staff. We have a technology and product roadmap that is years ahead of current competitors."

Steding comes to Zephyr Photonics after serving previously as chief executive officer of 10 technology companies. Most recently, he led Red Condor, which was acquired by St. Bernard Software (now EdgeWave) in 2010.

He also is the chairman and founder of Quadrix Partners, a leadership consulting organization that puts to use his doctorate in electrical engineering from the University of California, Berkeley and his master's degree in management from Stanford University Graduate School of Business, where he was a Sloan Fellow.

For all his business and academic background, he said the acquisition of Opticomp by Torch Hill Investment Partners was one of the most challenging of his career, largely because of the secrecy involved with the company's previous contracts.

Torch Hill Investment Partners, founded in 2005, invests entirely in the security sector. Brent Scowcroft, National Security Advisor to Presidents Gerald Ford and George H.W. Bush, is the firm's strategy partner.