How the Chinese system of 'guanxi' helped take Dublin's OCE Technology into space
As part of our weekly Startup Spotlight series, we profile the space tech company.
OCE TECHNOLOGY MAY be a startup, but its origins go back 30 years.
Co-founder Michael Ryan started the company in 2013 – alongside co-founders Gerry Clarke and Chris Fairclough, who has since died – when he reconnected with an old college friend from China.
Jun Yan, the chairman of Zhuhai Orbita Aerospace Science and Technology, had studied for his PhD in DCU in the 1980s and co-authored a computing book on ‘fuzzy logic’ with Ryan in 1994.
Zhuhai Orbita, which trades on the Shenzhen Stock Exchange, develops chips for use in aerospace that became widely used by Chinese space programmes and the European Space Agency (ESA). In 2013, Jun Yan contacted Ryan with a business proposition.
The Chinese company was developing a number of system-on-chips – a miniaturised computer system – and needed fresh software tools to help in the debugging of these devices to find and repair any faults.
This meeting led the founders to set up OCE Technology with the knowledge that they already had their first customer ready and waiting in China. Barry Kavanagh joined as chief executive shortly afterwards.
As Kavanagh explains, the growing complexity of chips – and their ever-decreasing size – has made the upkeep of the technology more of a challenge. OCE, which has a team of eight, eventually created a tool for debugging embedded software applications in system-on-chips.
After developing the software-fixing tool, the Irish company saw some interest from the ESA and agencies in South Korea to further develop the software and add more features.
The startup also moved into selling component-level hardware – its own system-on-chips and processors for satellites and spacecraft – as well as hardware components like batteries, star trackers and tools for altitude control.
Investment
OCE went on to raise an initial sum of around €500,000 from private investors and Enterprise Ireland as the company was established at its base in the NovaUCD centre.
Barry Kavanagh
In September, it raised a fresh €200,000 from Zhuhai Orbita. The money will be used to expand into the US as the company hasn’t “really made inroads in there yet”, Kavanagh says.
“The American market is probably one of the biggest markets for us and has a lot of commercial satellite operators. We knew it was going to cost us a fair bit of money to start marketing there,” he says.
Most of OCE’s manufacturing and assembly takes place in China through Zhuhai Orbita, with some parts sourced and developed in Singapore and Japan.
Kavanagh says that the Chinese company’s continued backing of the company, as a customer and an investor, is partly down to Jun Yan’s commitment to ‘guanxi’ – a Chinese tradition of maintaining social networks that is a common term applied to deal making.
“For a number of reasons, both business and sentimental I would say, he wants to maintain a connection with his old friends in Ireland. The Chinese very much work on personal connections,” says Kavanagh.
Business and profit is still the primary driver though.
“For every sale that we make of the hardware products, they’re getting a portion of that sale as being the manufacturer so they essentially have an interest in expanding our business.”
Costly
Developing tech for space can be a long slog. The upfront manufacturing costs are often hefty, and in some cases it can take years to get from the design stage to deployment. Given the conditions it will face, the equipment also has to be built to survive extremes.
“Processors that are operating in space have to deal with very low temperatures, very high temperatures, they’ve to deal with vibration during launches and they have to deal also with radiation,” Kavanagh says.
OCE is “always on the lookout for investment” to continue its growth, he says, but the ultimate plan is to float on the Nasdaq Nordic stock exchange in Sweden by 2020.
“Sweden has more individual investors per capita than any other country in the world, and they tend to be quite savvy investors on the technical front,” he says.
Related Read
“We’ve already had a number of discussions with them about the revenue level and the profit level we have to be at before we can float.”
Just how much funding it will need in the interim will depend on the success of the US expansion, he adds.
“We do have some very large proposals out there, and if one or two of them came in, that could give us enough funding to do it.”
Niche industry
However, funding and development costs are just two of the hurdles that space startups need to contend with.
“The thing about the space industry is that while it sounds very sexy and people are interested in it, it’s a niche industry with very long lead times,” Kavanagh says.
Ireland has seen some success in recent in years in the sector, a notable example being Limerick’s Arralis, while Dublin’s InnaLabs secured a €2.6 million contract from the ESA this year.
Kavanagh says startups interested in the sector can’t be too fixated on space and should look at how their technology can be applied elsewhere. In OCE’s case, that strategy applies to a new operating systems it’s currently developing for the ESA.
“When we develop this space-qualified operating system, it would be suitable for the automobile industry, it would be suitable for the medical devices industry,” he says.
“It would be suitable for other industries and I think that’s how companies in this area have to grow.”
Correction: This piece was amended to update OCE Technology’s previous funding figures.
