You haven’t seen it, but it’s probably seen you – especially if you’ve stepped into a full-body scanner at an airport.
It’s called terahertz light, and while it’s invisible to the human eye, it can pass harmlessly through clothing, body tissue, wood and masonry, among other things.
One of those other things is plastic, which is where a Waterloo startup called TeTechS (pronounced tee-tech-ess) comes in.
The company, tucked inside a former BlackBerry building at 170 Columbia St. W., has just begun shipping its core product, called TeraGauge, which uses terahertz light to precisely measure the thickness of plastic bottles without damaging them.
With three to four trillion plastic bottles produced annually around the world, it’s safe to say this product – based on sophisticated technology developed in partnership with the University of Waterloo – is addressing a large market.
“It’s huge,” Daryoosh Saeedkia, CEO of TeTechS, said in a recent interview with Communitech News.
In the manufacturing world, the niche TeTechS is pursuing is known as non-destructive testing, or NDT. By accurately gauging the thickness of plastic and other packaging, its technology – housed in a slender box measuring 17 x 15 x 5 inches – saves bottle makers the cost of plucking bottles off the production line and cutting them open for inspection.
The precision of terahertz measurement also helps ensure that manufacturers use no more plastic than is necessary in each bottle, which cuts waste and boosts profits.
“A lot of those products also have an oxygen barrier layer in them,” Saeedkia said. “We measure those layers too, which are hidden within the wall, and do the quality control. These are basically the unique features that our technology brings to the table.”
That technology has been several years in the making, much of it in collaboration with UW, where Saeedkia earned a PhD in electrical engineering in 2005 – three years after he had come to Canada and settled in Waterloo to work with a professor he had studied with in his native Iran.
“We came in on a snowy day in January, knowing no one in town,” Saeedkia recalled of arriving in Waterloo with his wife in 2002.
“In the first month or two, we were seriously considering going back,” he said. “It was really a big shock; like, we cannot take this much snow and cold. So it was a tough few months, but as soon as it became spring, the whole thing changed to a beautiful scene.”
Following his 2005 graduation, Saeedkia co-founded an earlier terahertz-related startup whose CEO, eager to take the company public, ultimately changed direction towards spectroscopy for use in cancer detection. Eager to keep pursuing his work with terahertz light, Saeedkia left that company in 2010 to start TeTechS and, to get to market as quickly as possible, decided to focus on manufacturing over medical or security applications.
“Going after medical or security, you need to have a big name with you or a big pile of cash to get people’s attention on what you’re offering,” he said. “Whereas, in the manufacturing space, you can start with even a proof-of-concept product that gets the attention of certain early adopters, and then make a name for yourself and start to penetrate into that industry in a shorter time, with less capital needed.”
In the early days of development, the company benefited from government programs such as the National Research Council’s Industrial Research Assistance Program (IRAP) and Ontario Centres of Excellence (OCE). TeTechS also generated early revenue by developing terahertz technology for universities, and raised investment from local angels.
This support enabled Saeedkia’s team to develop its own core components and obtain patents. The biggest challenge was in making sure the technology would be easy to use on the factory floor, he said.
“If you look at our core technology, there’s really difficult science in it, versus a lot of other products that some other companies would build, where components are already there.” He said. “They’re integrating things that are off the shelf and trying to create intellectual property around it . . . you don’t find many companies that create the core technology themselves.”
Overcoming that challenge, however, gave TeTechS a technical advantage that has now placed it at the front door of a large and growing market.
To tap that market, the company has not gone after the bottle-makers, but the companies that manufacture inspection equipment for bottle-makers.
“We are a measurement gauge manufacturer, like the heart of the system or the brain of the system,” he said. “Imagine the relationship between Intel and Dell; Intel builds the processor and puts it inside the Dell computer or an HP computer or whoever builds the computer. We don’t want to be a computer manufacturer or, in this case, a machine builder. We want to build the measurement gauge.
“So, in that model, we pair up with channel partners where they put those machines onto factory floors and already exist in that space.”
A couple of months ago, TeTechS shipped its first TeraGauge to IMDVista, a Swiss manufacturer of bottle-inspecting machines and one of two big players in that niche. Further orders are already on the books.
This business model allows TeTechS to run lean, since it doesn’t need a large sales team to pursue individual bottle-makers, nor an army of service technicians, since companies like IMDVista are the primary point of contact with bottle-makers.
Saeedkia can foresee about $20 million in annual revenue for TeTechS from the bottle-testing niche alone, a number that could grow to $100 million once the company expands into other areas of non-destructive testing. At that level of revenue, the company could employ 100 to 150 people in Waterloo, up from the current 10.
Having already secured investment from most of the area’s angels, TeTechS is not unique among early-growth-stage companies in facing the challenge of funding that growth. If there’s a gap in government programs, it’s in that scale-up space, Saeedkia said.
“We are pretty much in that chasm at this point,” he said, “and that part is difficult in this region, to really find the right resources to cross that gap.”
It’s a chasm Saeedkia hopes to cross through sales and without having to raise venture capital, now that his product is in the market.
“That is actually helping a lot,” he said. “We get down-payments for the orders we get and that helps with working capital.”