The funding, from Chrysalix Energy Venture Capital and Rockport Capital, is the first round of VC funding for GaN Systems Inc., which is in the pre-commercialization phase of developing gallium nitride semiconductors for clean-tech applications.
"This round is to retire the technology risk, demonstrate we can build a commercial product and to determine our route to market," said GaN chief executive officer, Girvan Patterson.
Since opening in 2008, a "half-dozen loyal" angel investors have provided capital, adding to the personal investments from GaN's founders, Mr. Patterson and John Roberts. The company has also received assistance from the National Research Council of Canada, Ontario Centres of Excellence and Sustainable Development Technology Canada.
With a lack of venture capital funding in Ottawa and the clean-tech sector, Mr. Patterson said he hopes GaN's VC announcement serves as an encouragement to other firms looking for funding.
He said new-generation semiconductors will comprise 10 per cent of the $14-billion power devices market within the next five years, displacing silicon. Harnessing the technology creates a great opportunity, and he anticipates GaN's technology will represent a large portion of that market share.
Mr. Patterson said GaN anticipates a launch of their first sample product to market by the middle of next year. Once commercialized, the company will sell to other semiconductor companies that want to use gallium nitride technology, in addition to selling its own energy efficient, low-loss diodes, transistors and integrated systems.
With very few semiconductor firms demonstrating gallium nitride capabilities, semiconductor companies will either try to create the technology themselves, or work with a company that does, Mr. Patterson said.
"A lot of other semiconductor companies are very aware that gallium nitride is the solution for the next generation of power electronics. It will replace silicon," he said.
The aerospace, defence, and resource drilling industries are some of the sectors that will attract customers for gallium nitride semiconductors. Mr. Patterson said the technology will revolutionize the semiconductor industry because it has applications wherever energy is converted.
With gallium nitride semiconductors converting 99 per cent of the energy received, the technology is more energy efficient than those made with silicon, which converts 95 per cent of the energy received. This increases the power conversion efficiency in clean-tech applications, which is a universal requirement for those applications.
Using hybrid cars as an example, Mr. Patterson said the current Prius model needs a separate coolant tank because of the amount of heat generated from the energy conversion of the battery. When cars move to gallium nitride switches, the separate coolant system will be unneccessary because the heat emitting from a car's battery will be minimal.
The National Research Council is a valuable asset because of its research on gallium nitride, Mr. Patterson said. The NRC developed the production process for growing the semiconductor material, while GaN has designed the chips that power the semiconductor.
"We couldn't have done it without that presence there," he said.
The company currently employs six people in its Kanata-based office.