In the post-recession world, it’s still a difficult and long road to success for LED lighting start-ups. Despite an attractive and growing market, getting new technology to market is difficult and time consuming, leaving little hope for a quick and successful exit. Yet this is the perfect time for disruptive innovations to take root, as the product design is still evolving.
Start-ups along all parts of the lighting value chain, from basic materials to advanced user interfaces, proves that technology innovation is shaping the digital lighting industry into something that is going to be far different than today.
Start-ups are exploiting the intersections of technologies and are proposing new business models that are forcing the lighting industry to change. The advent of “digital lighting” has opened up vast potential for start-ups, but there is still trouble getting to real, sustained revenue. Most digital lighting start-ups require development of both hardware and software to realize their concept and that requires more time and money than most venture funding sources are willing to provide. Not to mention that customers expect products to be complete, integrated and “hardened” for commercial use. Lighting already exists for most purposes so potential customers can always stick with the status quo. Your hurdle is to get the chance to demonstrate your new and valuable innovation. But what’s the path to success?
Major lighting manufacturers have had to rethink the way they’ve always done development and quickly take up and implement solid state lighting technology innovations. LED lighting has created the need to work with, and within, the innovation ecosystem. Most lighting companies, like OSRAM, have created a specialized group to provide a startup-friendly interface to the company. This new function helps to increase the chances for appropriate consideration of your innovation by the organization.
Working with established lighting companies could be critical as they know about key issues for bringing a lighting product to market such as regulatory, market channels, integration with existing controls (or other infrastructure), performance and design for manufacture. Very often, start-ups with brilliant teams and solid ideas fail to realize their ultimate success by approaching customers while still missing pieces of the formula. There is truly a win-win solution through strategic partnerships such as joint development agreements (JDA) that can provide business, technical and financial support for the start-up and benefit the corporation by assimilating innovative technology and genes into the organization.
It can be challenging to work with a major lighting company. For example, lighting companies have long used IP as a critical business tool and that remains true today. You should expect negotiation around ownership rights on any IP developed cooperatively. But they understand that IP is often the only asset that underpins a start-up. Working with smaller companies, the majors look to create value through speed to market, exclusivity or other creative ways to create an advantage in the market.
Exciting times. Start-ups with new and disruptive technologies are a sure sign of fundamental change in the lighting industry ecosystem. But there are many hurdles to bring a successful technology or product to market, and there is a lot to learn and leverage from established companies like their deep understanding of lighting, global market channels, large-scale manufacturing and involvement in the regulatory process. Working with strategics might not be as hands-off as you’d like but that could be a good thing in the long run. The rigor and resources could be just what you need to ensure market success.