Transforming Entrepreneurial Innovation Into Business Success

The New Energy Xcelerator in UpState NY (NEXUS-NY) is a NYSERDA-funded Proof-of-Concept Center that offers researchers and technologists the opportunity to test the commercial potential of their lab developments in an immersive setting.

by Jodi Ackerman Frank

Joe Caron
The Pure Quantum team has developed a better
way to mass produce quantum dots for lighting
and other applications. A team member
demonstrates the technology in front of a
panel of judges during an investor pitch
session at NEXUS-NY.

As a graduate student at Cornell University in Ithaca, Joe Caron studied the science of materials, particularly nanomaterials whose unique physical properties can be tailored by design. It’s important research, and faculty can spend a lifetime in the lab studying such things. But Caron expects his career to go beyond conducting research.

“What I’m more interested in is how IP (intellectual property) gets out of the lab and into devices to help change the world,” said the 24-year-old who recently earned his master’s degree. He is now a fellow at the Fraunhofer TechBridge program in Boston to continue his focus on commercializing sustainable energy technologies.

His research advisor, Richard Robinson, knew Caron’s aspirations early on. So, when the assistant professor of materials science and engineering heard about the New Energy Xcelerator in UpState New York (NEXUS-NY) program from a colleague, he encouraged Caron to fill out an application.

In continuing the research that has been conducted in Robinson’s lab over the last three years, Caron and his colleagues, doctoral students Curtis Williamson and Douglas Nevers, have developed a method to produce quantum dots in much greater quantities to enable the manufacturing of light-emitting diodes (LEDs) at lower costs. They also are producing quantum dots that don’t contain cadmium and other toxic metals.

“My professor thought NEXUS-NY was a perfect opportunity for me to see if this technology had any commercial merit to make it worth pursuing a business, and that’s what NEXUS-NY is all about,” Caron said.

NEXUS-NY is one of three Proof-of-Concept Centers (POCCs) funded by the New York State Energy Research and Development Authority (NYSERDA). They were established to help technologists and scientists turn high-tech clean energy ideas into successful businesses. The other two POCCs, at New York University Polytechnic School of Engineering and Columbia University share their POCC resources under the umbrella name PowerBridgeNY.

The POCCs fill an important gap between technical discovery in a research lab and successful commercialization of a product through startup company formation.

“The goal of NEXUS-NY is to provide support to enable the development and validation of promising clean energy technologies that will become the basis for startups in New York State,” said NEXUS-NY Executive Director Doug Buerkle.

Trial by Fire: Customer Validation

Caron’s team worked to develop novel quantum dots as well a better way to mass-produce them. Quantum dots are fluorescent nanoparticles of a semiconducting material. Each particle is a few billionths of a meter wide, and can be composed of as few as 10 atoms. These nanoparticles have vastly different mechanical, electrical and chemical properties than their bulk material counterparts.

Because quantum dots absorb and emit light, they have shown promise in solid-state lighting applications, such as LEDs. Other potential application areas are photovoltaics, medical imaging and quantum computing.

Caron’s four-member team entered the NEXUS-NY program to initially pursue another potential market — battery storage, the original focus of the research conducted in Robinson’s lab. Nanomaterials have high surface-to-volume ratios; the smaller the particle, the greater proportion of atoms at the surface level. This makes nanomaterials potentially good for energy storage applications.

But soon after the team members began talking directly to battery companies, they realized they had to pivot and apply their technology to other applications.

 “We found out pretty quickly that our process did not have significant added value for battery companies, and that the industry is extremely difficult to compete it,” Caron said. 

That’s when, working with his mentor Clayton Poppe, Caron turned to LEDs.

Poppe is the chief technology officer for e2e Materials, an Ithaca cleantech startup spun out of Cornell University in 2007. The company develops and sells soy-based biocomposite materials for the furniture, automotive, casket and cabinet industries.

“Many of the same steps that Joe’s team went through, we went through as well. As engineers and researchers, we want to solve the problems that we think are important, and we have in our minds what the solutions look like,” Poppe said. “But the biggest issue is that we don’t understand where the biggest need for our technology might be and, therefore, who our customers really are.”

A key focus of NEXUS-NY is idea validation through customer interaction to address this very issue. Through an immersive learning environment, the program’s mentors and teaching team offer advice and networking opportunities as well as strategies for productive conversations through role-playing and asking tough questions.

"The curriculum accelerates startup formation by getting at the root of the most basic questions that companies must ask themselves to stay in business: Who are my customers and what are their biggest problems?"

- NEXUS-NY Executive Director Doug Buerkle

"NEXUS-NY contains an intense experiential business discovery process. Teams conduct dozens of interviews with potential customer and industry participants to inform their evolving business models,” Buerkle said.“The curriculum accelerates startup formation by getting at the root of the most basic questions that companies must ask themselves to stay in business: Who are my customers and what are their biggest problems?"

Through his customer discovery work, Caron found that the best potential commercial application for his quantum dots would be to use them to create nanophosphors for LEDs.

“It’s been a fantastic trial by fire for us,” Caron said. “In the business world, you learn the most by just getting out there and doing it, and that’s exactly what we did.”

On the Fast Track

NEXUS-NY is administered by High Tech Rochester (HTR), a nonprofit business incubator that aids early-stage technology-based startups in Rochester and the Finger Lakes region.

NEXUS-NY, which serves all of New York State, has formed partnerships with several research universities in Central and Western New York. It also works with multiple entrepreneur and investor collaborators, who serve as program advisors and mentors.

NEXUS-NY accepts applicants from its partner institutions as well as from emerging startups. The yearlong program, which provides educational, business and financial support, helps engineers, scientists and technologists take their lab inventions to the marketplace through a step-by-step process that has evolved into three phases.

In Phase 1, business discovery teams work in a structured curriculum for 10-12 weeks to explore whether a viable and scalable business model exists and to decide how best to pursue their commercialization objectives. The curriculum uses a “lean startup” methodology based on the National Science Foundation’s I-Corps (“I” for “innovation”) program.

The teams usually are made up of at least three members: a technologist (the researcher developing technology in the lab); an entrepreneurial lead, who can be a graduate student with an interest in entrepreneurship (such as the case with Caron); and a mentor who is typically an experienced entrepreneur.

“Encouraging scientists to step out of their lab is hard enough, but pushing them to talk to potential customers can be culture shock,” Buerkle said. “That’s where our mentors are most helpful. They have experience doing it. They know what questions to ask and are not encumbered by any biases.”

In Phase 2, teams are awarded about $50,000 to build their prototypes and develop market plans. Some teams will form companies during this period, and these companies will seek third-party validation for their technologies and business models. In Phase 3, the most promising startups receive additional financial assistance to help them achieve their next commercialization milestones.

NEXUS-NY is a great example of the way New York State’s Proof-of-Concept Centers are playing an integral role in the transfer of research from the laboratory to the commercial marketplace to help grow a vibrant cleantech economy. 
- John B. Rhodes, President and CEO, NYSERDA

“NEXUS-NY is a great example of the way New York State’s Proof-of-Concept Centers are playing an integral role in the transfer of research from the laboratory to the commercial marketplace to help grow a vibrant cleantech economy,” said John B. Rhodes, President and CEO, NYSERDA. “As the State proceeds with Reforming the Energy Vision (REV) — Governor Andrew M. Cuomo’s strategy to build a clean, resilient and affordable energy system for all New Yorkers — the growth of innovative clean energy companies will continue to help us reach our energy goals.” 

From the Ground Up

American Fuel Cell, an early-stage startup that was launched in 2014 as a result of NEXUS-NY, completed all three stages of the program. Company founders Daniel O’Connell and David Wetter are former General Motors (GM) executives who are well-versed in the business culture. What they needed assistance with, however, was learning how to jumpstart a high-tech business from the ground up.

“We each had lucrative consulting firms when we started this company,” said O’Connell, who worked for GM for 35 years, most notably as director of GM’s fuel cell research initiatives at its Honeoye Falls facility until the plant closed in 2012. “But figuring out how to start a company was a little more difficult. For example, we needed to understand what was required to get insurance for our R&D lab. Although I wore a lot of hats at GM, I never had the opportunity to do some of the things that I now have to do to run my own company. ”

“There are many things that you have to do yourself when you’re starting your own business — finding insurance, banking, raising funds, patent work, legal work, setting up the proper corporate structure … ,” said Richard Richmond, O’Connell’s mentor. The level C executive and serial entrepreneur is continuing to work with American Fuel Cell through the NYSERDA Entrepreneurs-In-Residence Program, which HTR also administers.

American Fuel Cell is developing a membrane electrode assembly (MEA) for proton exchange membrane (PEM) fuel cells. MEAs are the most critical component within a fuel cell. American Fuel Cell’s new MEA is expected to significantly reduce the cost of these fuel cells.

PEM fuel cells are lightweight, have cold-start capability and run at low temperatures compared to other types of fuel cells, making them useful for applications ranging from transportation to portable generators.

However, high production costs remain a barrier to more widespread implementation. One of the biggest cost barriers is having to use platinum-based metal in the MEA. The precious metal is used as a catalyst to speed up the reaction that combines hydrogen with oxygen to produce electricity.

American Fuel Cell’s MEA contains only a fraction of the precious metal now used in other MEAs. The startup is marketing its product for fuel cells used for backup emergency power units as well as for forklifts and airport baggage carts.

The startup is located in the Eastman Business Park in Rochester, where it is working with Kodak’s thin-film coating manufacturing equipment to produce its MEAs. American Fuel Cell’s first customer is the U.S. Department of Defense. The company has six employees.

“I can’t say enough about all the things that NEXUS-NY does to help you grow rapidly as a company. Sure, we could have done it on our own, but it would have taken much longer,” O’Connell said.

Daniel O'Connell
Pictured here is Daniel O'Connell,
cofounder and CEO of American Fuel
Cell, a startup that grew out of
Proof-of-Concept Center.

Hands-On Approach

“The key to NEXUS-NY is that it is experiential. We provide a hands-on, structured framework,” said Michael Riedlinger, a seasoned entrepreneur and business strategist who is part of the NEXUS-NY teaching team. “You absolutely have to build a prototype to receive feedback from potential customers.”

Jason Vollen, co- founder of EcoCeramic, can attest to the effectiveness of this approach.

“The NEXUS-NY program was challenging and also very rewarding,” Vollen said. “As a result, we now have a commercialization strategy, a business plan and a working prototype.”

EcoCeramic, which also participated in Phase 3 of the program, is an early-stage startup that is commercializing new types of ceramic tiles for exterior building envelopes.

“We are developing what are essentially climate-specific bricks that would respond directly to local resources to maximize energy and comfort. We do that through surface texture, color, general morphology, and through the recipe of the ceramic itself,” said Vollen, who co-founded the startup with Shay Harrison and Kelly Winn.

The tiles come in unusual shapes and sizes. There’s one, for example, that Vollen describes as an eye socket with an eyebrow over it.

“Any problem that you approach carefully, you are likely to end up with a solution that looks like something that already exists in nature in some form because nature has already solved a similar problem for another application,” Vollen said. “For example, our eyes are maximized to allow the useful energy in at the right time and block the excess energy at the right time. That’s essentially what we want to do for buildings.”

EcoCeramic started out as a project at the University of Arizona, when as an assistant professor, Vollen took his ceramic expertise to the next level, integrating traditional ceramic materials with digital design and advanced manufacturing processes in the university’s School of Architecture Digital Fabrication Laboratory.

The Sonoran Desert, one of the hottest deserts in North America that covers 110,000 square miles in Arizona, California, as well as parts of Mexico, provided a perfect testing ground for the project. Extreme temperatures annually can range from over 120 degrees Fahrenheit during the day to below freezing at night.

During the cooler months, the “eye-socket” bricks maximize passive solar collection to heat the building envelope. In the warmer months when the sun is higher in the sky, the depression and the rough surface texture of the bricks serve as a shading system and offload the sun’s rays to the outside rather than to the inside of the structure. 

Vollen began prototyping new types of tiles in a laboratory at Rensselaer Polytechnic Institute’s Center for Architecture Science and Ecology in New York City. NEXUS-NY allowed Vollen and Harrison’s team to develop the next round of prototypes using different materials.

The team has built a range of configurations for a high-performance masonry system for full-scale testing, the next phase of planned development for which the team is currently seeking additional funding.

Through NEXUS-NY’s customer discover process, Vollen found that his most likely customers include design companies that require innovative products to build their brand as well as long-term commercial and residential building owners in metropolitan areas who are concerned about energy costs and the durability of their buildings.

“When we signed up for NEXUS, we were already looking at New York State as a place to build our company,” Vollen said. “But what we didn’t know at the time was who would be an early adopter of our technology and our regular customer stream, as well as what qualities in the product would be most valuable for widespread market adoption. We now have a much better idea.”