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The following interview appeared in Dow Jones VentureWire on 3/20/12.
Albeo Shines With $8M From New Investor As It Approaches LED 'Tipping Point'
By Ben DiPietro
Albeo Technologies Inc., a light-emitting diode manufacturer for industrial and commercial customers, has completed an $8 million financing round that its chief executive says positions the company for the many opportunities ahead as the LED industry reaches the "tipping point" in its competition with flourescent lighting.
The Series C round--led by Braemar Energy Ventures with participation from Series B investor Green Spark Ventures--included $6.5 million in equity and a $1.5 million working capital line provided by Silicon Valley Bank. The round was completed last week, CEO Jeff Bisberg said in an interview, adding that the original goal was to raise $5 million but was raised after the round was oversubscribed.
Bisberg said the company has been profitable the past two years thanks to revenue rising to more than $10.5 million in 2011 from $1.7 million in 2008. It will use the new money for product line expansion, sales support and developing a new integrated chip technology to bring LED costs close to parity with flourescent products, he said.
Though Albeo competes with large LED manufacturers such as Philips Electronics, Samsung Group and LG, and smaller competitors including Dialight PLC, Bislig referenced a 2011 report from McKinsey & Co. that shows LED penetration of the $100 billion worldwide lighting market is expected to grow to more than 50% by 2015 from 7% in 2010.
"With this growth round we're looking to improve performance and reduce costs, and over the next two to three years we will come close to parity or within a factor of two of flourescent," Bisberg said. "LED is fundamentally a better lighting source, and we've been waiting a long time for where the cost and performance hit that magical total cost-of-ownership tipping point."
While it's hard to say precisely when that tipping point will occur, Bisberg said "clearly in the next two years we're in that tipping point...where the majority is going to shift over to LED. The opportunities are really enormous for us over the next two to three years."
Bisberg said Albeo, formed in 2004 and based in Boulder, Colo., has an advantage over its competitors in that it offers customers a flexible system that works in a range from 6,000 lumens to 80,000 lumens, and allows for field-changeable lenses, modules and power consumption. While many of its competitors develop one-off fixtures for specific applications, he said Albeo's modular platform is unique.
The company says it has lit more than 7 million square feet of space to date, including a 750,000-square foot Caterpillar Inc. facility in Indiana. Other clients include Dole Food Co., AmeriCold Logistics LLC and the Natural Grocer grocery chain.
"The main competitor remains traditional flourescent lighting," Bisberg said. "The people who are coming to us are lead users who have problems with flourescent...the mercury, the humming, the buzzing, the constant maintenance," Bisberg said. "As our technology continues to improve in performance and reducing cost, we really see the ability to successfully compete with flourescent."
Albeo has 37 employees and plans to add 20 more by the end of this year, and another 20 next year. "We are very bullish, and hoping over the next couple of years to keep the business growing at an exponential rate," Bisberg said. "We really see good times ahead the next two to three years."