Physics professor Daniel Shaddock has left the lab and turned his hand to entrepreneurship, using technology he helped develop at NASA to tap into a $25 billion market. Now, he’s raised US$8.16 million ($12 million) to take his digital signal tech startup Liquid Instruments global.
The round is led by US-based Anzu Partners, and also includes ANU Connect Ventures.
Shaddock, co-founder and chief of startup Liquid Instruments and professor at the Australian National University, tells StartupSmart his research has always focused on detecting gravitational waves.
He worked at NASA’s jet propulsion lab creating measurement technology for these waves, to send into space.
“In doing that we developed a lot of cool measurement technology,” he says.
“To detect gravitational waves you have to make the most sensitive measurement device ever made.”
On returning to Australia and his job at the Australian National University, Shaddock started to consider other uses for the technology, “that would maybe be more beneficial to society at large”, he says.
He recruited 11 additional co-founders, including students and researchers at the university at the time, and set about finding a way to commercialise the measurement tool.
According to Shaddock, the startup has doubled its revenue year-on-year since its first product, Moku:Lab launched in 2014. Sales of that product totalled $1 million in 2018.
But, Moku:Lab has nothing to do with gravitational waves, he says. Rather, it’s a device for testing and measuring electrical systems.
Traditionally, engineers and scientists will use various devices for measuring different electrical signals.
“Labs are filled with these different devices that all do slightly different functions,” Shaddock says.
“There are literally hundreds of different types,” he adds.
“Our one device could now replace many, many instruments in the lab.”
While most of the 12 co-founders are still on board, some of those who were students at the time have moved on for now. One followed in Shaddock’s footsteps to work at NASA, while another is currently working for Apple.
However, the chief executive sees a time “when we have enough funds to blow the horn and call them all back, bringing their years of experience with them”.
A $25 billion opportunity
It’s not a market most of us are familiar with, but according to Shaddock the testing and measurement space is a lucrative one, with $25 billion spent globally every year.
Electronic testing is an important part of the telecommunications, aerospace and defence, and semiconductor manufacturing industries, he says. And any electronics manufactured must be tested as they come off the product line.
“It’s a type of product category that most people don’t even know exists,” he says.
But Liquid Instruments is revolutionising it.
“At the moment this is a hardware industry. We’re making that transition to doing more of this with software,” Shaddock says.
“That’s a very powerful transition that the industry is coming up to now, and with our tech, we’re at the forefront of that transition.”
This funding will be used to launch the next phase of the startup’s growth. Shaddock admits none of the founding team had any commercial experience – they just designed something they would like in the hope that someone else would like it too.
Now, they will try to gain some more information about the market and their customers.
Moku:Lab was the MVP, he says.
“We have big plans about how to change it, how to expand it, and how to diversify our product,” he adds.
In the short term, Liquid Instruments has used the funds to move out of the university and into new offices. It will also push its presence internationally.
Australia only makes up 0.6% of the startup’s global market, Shaddock says. Most of the opportunity is in the US, Europe and China.
“We were born global,” he says.
That said, the engineering team will remain firmly in Australia, partly because it’s cost-effective, but also because if the team they’ve been able to create.
“We’re very lucky to have been able to cherry-pick the best ANU has to offer,” Shaddock says, and the startup is “hiring furiously” in a bid to double that workforce.
For the first four years of its life, Liquid Instruments was “incubated within the university”, Shaddock says, supported by $1.3 million in seed funding from ANU Connect Ventures.
From the beginning, an important part of the strategy was in speed to market, he says, and so integration with the university made for a successful model.
“We wrote a research contract to the university,” he says.
“All the people who were founders of the company could continue to work in that environment with little disruption, and could continue with getting the product to market as quickly as possible.”
For Shaddock, the agreement also served to reduce the “us-and-them” mentality that can often exist between universities and their industrial partners.
“We have a lot of challenges in Australia of industry-university collaboration, and this was a great way of breaking that down,” he says.
And, at least in this field of highly complex technology, this is likely how the industry will develop, Shaddock says.
“We tend to not have as much of a high-tech industry in Australia, relative to other countries,” he says.
“A lot of the excellence is locked up in the university system, and while that’s the case, unlocking that and getting it out is a role that startups can serve.”
Partnerships with universities can give academics a head start as they strive to commercialise their technologies, but then allow them to “go out into the big world and spread their wings” as viable startups, Shaddock says.
“It’s about getting a lot of that expertise, and those high-quality people, out of the universities and working in industry,” he adds.
Founding a startup similar to being an academic
In fact, as a first-time founder himself, Shaddock says running a startup is “not too different from being a modern academic”.
He still has to come up with new ideas, manage projects and turn ideas into a reality, source funding, and recruit a team and keep them motivated.
“Academia was actually pretty good preparation – surprisingly so,” he says.
Shaddock’s main piece of advice for new founders is to make sure they address a large enough market.
“That’s really key, particularly if you’re going to be venture-backed,” he says.
Also, some founders may be enamoured with the idea of running a startup, rather than the business of their startup, Shaddock suggests.
“In the early days, it really does pay to focus on product,” he says.
“There are a lot of distractions, and a lot of things that people tell you as a founder you should be doing … but you need to make sure you’re doing them for the right reason, and that they need to be done at that time,” he adds.
“If your market is big enough, and you focus on your product, it will put you in good stead for the future.”