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Transcript of Company Overview
Lightwave Technology , Inc . was founded by George Kinson and Dr . Schyler Weiss in the pass of 1997 .
The company focuses on marketing blue LED (light emitting diodes ) lighting products as a replacement for an ordinary LED lighting . The idea of blue LED technology rooted from Weiss and Kinson ‘s hobby in electronics during 1990.
The two had always claimed that LED ( conduct ) was the technology and the future of illumination thanks to its numerous economical and environmental advantages.
Attributes of modern lightening product
Sold by industrial, architectural and retail businesses, the LED has many advantages
Faded over time (No burn out)
Long life times/energy efficiency (outlast incandescent lamps by a factor of 10)
Flexible form factors
Low UV output
Strong color contrast
Small feature size (compact size)
Low maintenance cost
From an idea to an opportunity
PhD degree in electrical and computer engineering (thesis: Low power digital circuitry)
In 1997 , they filed for patent protection on their color mixer .
financing: $44.000 from kinson s saving
Lightwave is capable of expanding the color producing capabilities of conventional lighting by linking the 3 colors to a microprocessor that controlled the combination and their intensity -> generates
16.7 million colors.
They debuted their growth at The International lighting Exposition in Las Vegas
Immediate appeal in the retailing markets, residences hospital, businesses ( Long life times/energy efficiency (outlast incandescent lamps by a factor of 10), Low UV output, Strong color contrast, Small feature size, Low heat )
Traditional VS modern illumination products
Lightwave technology, INC
Salma MAthlouthi DBA 670
Solid state lighting
(2001 )the lighting market has 2 segments:
USA; 26% of the world's market
MNCs 90% of the US lamp market
share+ supply 60%of the world lamp market ( wild range product)
Light passed through a colored filter
UV radiation damage many products +Skin/ Eye conditions in humans
The energy level changed to produce a colored light( red/green) -> No UV radiation .
Exp: blinking clocks, appliances, microwaves, stereo...
SSL (solid state lighting) generates color directly from the emission itself -> reduces 70 to 80% of luminous output
Energy benefits of up to $100 billion in less than 30 years.
saves up to 120 gigawatts of electricity annually.
Research engineer at the field robotic center
Earned a duel major in electrical and computer engineering
They conclude that the LED technology was the future of illumination.
Anticipate a blue LED -> create a full spectrum of colors
Co founded what would become a successful online securities portal (online information company)
Started up Weiz solutions, developer of a mass spectrometry data acquisition software package.
Kinson and Weiss got to work right after a japanese group discovered blue LED to develop a digital palette to blend the primaries-> they utilize the three primary colorize of the LED to develop a digital palette pioneering the wise manufacturing of intelligent semiconductor illumination technologies.
They began developing the business model, writing a business plan, and perfecting their initial prototypes.
In anticipation of an IPO, should the co founders move forward with an additional round of bridge financing? Why and why not not ?
Yes definitely. If they want to expand their business, the co founders will need to get loan through Bridge financing which is a short-term loan that is designed to provide temporary financing until a more permanent form of financing can be obtained because bridge financing is the easiest way to solve immediate problems and help current plans and some of the operations need fast cash especially to support rapid adoption of their products across a wide range of industries.
The only issue about bridge financing that Kinson and Weiss should pay attention to is the fact that they have to repay the loan quickly than they would a more long-term loan, the payments will be larger (the lenders are less likely to be flexible when it comes to late payments. They will charge larger fees and penalties)
How would you structure and price this round, and why?
The team developed supply agreements with a number of LED manufacturers, it s finished products and control systems were manufactured by other companies, which allow the production of LEDs at favorable pricing.
The price strategy should be different for the product introduction, growth, maturity and decline. Consider the fact that the product is in the first phase of the cycle, I think that the team made a good choice by setting affordable prices because this is how to increase sales volume, resulting in high profits and to attract potential customers.
In addition, the income statement exhibits a loss of $ 14,682,214 in 2000 and a predicts a profit of $ 6,229,000 in 2004 which prove that the company will be successful thanks to its price strategy in the first place.
What should Kinson and Weiss do to grow their company?
International exposure: Even though they opened a European sales office in London ,The co founders should Expand in other continents like Australia or Africa.To do this, they will need a foreign distributor who can carry the product and resell it in their domestic markets.
They can expand to the Internet as well . Very often, customers discover a business through an online search engine. Since they don't have a website, their business must have an online presence in order to maximize their exposure and increase their notoriety.
Kinson and Weiss had already established a joint venture Japanese distributor in Tokyo but they can offer their business as a franchise to another group in other countries. Franchising Lightwave technology will allow for growth without requiring them to manage the new location. This will help to maximize the time they spend improving their business too.
How should the company evaluate and decide on whether to pursue an IPO at this time? How do they go about planning and managing that process?
According to Haitz's law, between 1965 and 2020, Leds are exhibiting dramatic increases in intensity and longevity while the cost of making them is rapidly decreasing.
After seeing 150 prospective investors, the co founders raised money by $ 842 ,347 in financing from angel investors (individuals who provide capital in exchange for ownership equity. )
In 1998, they rented a space, built the first computer's server and hired the first outside employee as a vice president of the finance.
Their strategy was to file for all the intellectual propriety -> wide ranging market and licensing opportunities in a number of markets in the future.
They shipped their first order in September 1998
Significant economical and environmental benefits: reduction in carbon emission by 200 million tons
Significant savings: $100 billion in electricity cost annually
How an LED emits a colored light
Step 1: An electrical source connected to a semiconductor (LED) releases electrons that flow through the semi conductor
Step 2: Electrons flow into the p region of the semi conductor and combine with positive charges.
Step 3: As the charges combine, light is emitted. The color of the light is a product of the wavelength of the light, which is determined by the semiconductor's bandgap
signage lighting: 23%
display applications on communication equipment: 22%
Displays for computers and office equipment: 21%
Consumer application: 15%
Automotive display and lighting 11%
Industrial instrumentation 8%
Kinson and Weiss, as pioneers of a disruptive technology, were in position to influence the course of the entire lighting industry into the next century thanks to the introduction of the SSL to the market reducing by that the cost of the energy and bringing many environmental and economical solutions to the future generations.
Lightwave technology growth
As the troupe grew, it moved to a large office space, expanding to over 75 employees, undetermined a European gross sales office in the United Kingdom in 2000, established a joint venture Japanese distributor in Tokyo and bring outsourced manufacturing to companies in the conjugated States and China .
By 2001 they had secured everywhere 31 million in four rounds of investment financing and were planning to go public in order to support rapid adoption at their products across a wide range of industries.
The internet driven boom had ended and the 9 /11 attacks hale them put their plan on hold as in that location was a sudden drop. They made a restructuring plan of $3.9 million reorganize operation, the advantage is to maintain the leadership of market (proprietary capacities ).
However , they were fit to put behind this reverse and by 2003 , the troupe had stabilize and hoping to breakeven within a form . In readable of the new-fashioned successes , Kinson and Weiss once again started evaluating whether or not to fall out an initial public offering. As the company is planning an IPO , it would be a good idea to raise more capital.
The beginning of Lightwave technology
Commercial and civic architecture
Retail and merchandising
Entertainment, events, and theatrical production
Electronic signage and corporate identity
Exhibits, display, and museums
There are many advantages for a company going public, the financial benefit in the form of raising capital is the most distinct advantage. Capital can be used to fund lightwave technology's research and development, fund capital expenditure or even used to pay off existing debt. Another advantage is an increased public awareness of the company because IPOs often generate publicity by making their products known to a new group of potential customers.
Kinson and his team planned their public offering for the summer of 2001 but they had to put it on hold because of the 9/11 terrorist attack ( the capital markets were softening) and because the internet driven boom has ended. The team was toward between going public or waiting until achieving higher numbers. They made a restructuring plan of $3.9 million reorganize operation and in 2003, the company had stabilized.
Market size: $680 M in 1999-> $1.75 B in 2004