LED company BridgeLux sells out to Toshiba

In recent articles we have looked at various investments held by Harris and Harris Group (NASDAQ:TINY) such as Solazyme, Adesto, Molecular Imprints, and Champions Oncology. In TINY’s most recent 10Q filing made late last week, it was noted that LED company Bridgelux is TINY’s 6th largest equity holding as seen below.

TINY_TOP10

In Q1 and Q2 of 2013, TINY wrote up the value of Bridgelux by 46% and 86% respectively which was the largest write up in TINY’s portfolio for the first half of 2013. The value of Bridgelux now sits 246% higher than it did at the end of 2012.

Bridgelux_Logo

Founded in 2002, California based Bridgelux is a vertically integrated provider of light emitting diode (LED) lighting solutions that are protected by 200 worldwide patents granted or filed. Since inception, the company has received over 210 million in various rounds of funding from VCs such as El Dorado Ventures, DCM and Harris and Harris according to Crunchbase.

When compared to incandescent bulbs or fluorescent lights, LED lighting offers the following advantages:

  • Can produce light more efficiently lowering energy costs (10 times more efficient than incandescent bulbs and 2 times more than fluorescent lighting)
  • Has a much longer life therefore lowering maintenance and other related costs. Many of the original LEDs produced in the 70s and 80s are still in service today
  • Is much more environmentally friendly as there are none of the disposal problems associated with the lead and mercury found in  incandescent or fluorescent lights.

As with many new emerging technologies, LED lighting has not been widely adopted due to the cost of manufacturing not being economically viable when compared to other commonly used lighting solutions. Bridgelux claims that their unique vertical integration will give them the cost advantages and economies of scale needed to offer their LED lighting solutions at a disruptive price therefore accelerating adoption.

Toshiba Relationship
Since early 2012, Bridgelux has worked with Toshiba in a joint partnership to accelerate the commercialization of Bridgelux’s LED technology. In April 2013, Bridgelux announced the sale of their newly developed LED technology to Toshiba. They have then licensed this same technology back from Toshiba and continue to develop more intellectual property on their original platform.

Media commentators have not looked upon this transaction as overly favorable as discussed in an April 2013 Wall Street Journal article titled “Bridgelux Deal Points to Pressures in LED Market“. In this article, Bridgelux’s chief operating officer talks about various options the company had to reach high-volume LED manufacturing and how for all of these options the company would have needed to raise further capital. With this deal, the company has decreased their staffing costs, received a cash injection from Toshiba, and can continue to develop more LED intellectual property. Based on TINY’s valuation write ups that took place in the first half of this year while the deal was transpiring, the other options for BridgeLux must have been bleak.

In a recent article on CNBC, Goldman Sachs announced 8 disruptive technologies that will reshape industries and draw in an increasing number of investors, one of these being LED lighting. In future articles we will look at various publicly traded companies that expect to benefit from this trend along with a number of exciting startups in this space.

Pure-play disruptive tech stocks are not only hard to find, but investing in them is risky business. That's why we created “The Nanalyze Disruptive Tech Portfolio Report,” which lists 20 disruptive tech stocks we love so much we’ve invested in them ourselves. Find out which tech stocks we love, like, and avoid in this special report, now available for all Nanalyze Premium annual subscribers.

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