The global market for lighting is $75BN. If the U.S. converted completely to LED lighting, we would save $15BN per year in electricity. The critical barriers to mass adoption of LEDs for lighting are long payback period and poor light quality. A team of MIT engineers and MBAs is working on a patented optics technology that addresses both of these issues. Our technology when applied to LED lighting provides a 2yr payback period while delivering a high quality white light, and critically color tunability. The ability to tune the color output allows us to enter the market. There are 20,000 museums that would love to be able to tune the color of their lights to complement their exhibits. Beyond museums, the industry projects the market penetration of LEDs to increase to 50-80% by 2020. Our breakthrough technology will accelerate the mass adoption of LED lighting. We are looking for $1.25M to manufacture and implement demonstration products.
The PolyChroma team consists of four students at the Massachusetts Institute of Technology with academic and industry experience in energy, global operations, entrepreneurship, and product development. These skills will enable PolyChroma to develop the product and business strategy, develop a supply chain, and transition from early-stage to mass production. Additionally, the team includes MBAs with experience in finance, marketing, and startup management. PolyChroma’s advisors include the technology’s inventor, the owner of a lighting design firm in Manhattan, and an expert in intellectual property strategy. We will supplement our team with optics engineers during prototype development and build out the marketing and sales team to grow the business.
Figure 1 - Conceptual drawing of PolyChroma standard Edison-socket lamp. Blue and purple layers are polychromat optics, green layer contains the LED array.
There are four main components in a PolyChroma lamp: LED light sources, power circuitry, optics, and packaging. The technology behind the LED light sources and the power circuitry is advancing rapidly with costs dropping at 50% per year. PolyChroma will be able to capture these falling costs into the overall margin because the polychromat component is a small fraction of the total package cost. PolyChroma will manufacture its core technology, the polychromat optics layer, and design the system package in-house, while outsourcing other component production and assembly to one of many experienced LED contract manufacturers. This approach will keep the core technology under the control of PolyChroma while leveraging the experience and cost savings of contract manufacturers globally. PolyChroma will initially produce a small range of standard lamp packages which have been identified for the target markets and can serve as drop-in replacements. PolyChroma will own the final product, as well as the large customer relationships critical to protecting our product.
PolyChroma will market its product to high-end lighting consumers who value premium quality light. The museum lighting market alone is estimated to be $500 million annually. Other initial markets where tunable LED lighting has key advantages include galleries, showrooms, and other “experiential” lighting spaces. Moving forward, we will leverage our initial market to expand into general LED lighting, which is projected to grow to $60 billion by 2020.
LED lighting is significantly more efficient, cost-effective, and environmentally friendly than both traditional incandescent and compact fluorescent lighting. Currently, technological barriers are delaying the mass adoption of LEDs for general purpose applications. Conventional white LED light is created by applying a phosphor chemical to the surface of a blue LED, which gives off a mix of yellow and blue light that is perceived as white. This approach has several drawbacks: 1) The light output is often harsh and “cold”, 2) the efficiency is inherently lower, and 3) the phosphor degrades over time, diminishing the color quality. The switch to LED lighting is necessary both for environmental, economic, and regulatory reasons. As the current issues are addressed, LED lighting will come to dominate the general lighting market. PolyChroma’s high efficacy lamp will deliver premium quality light that is tunable over a broad color spectrum, driving sales in this growing market.
Museum directors as well as architectural lighting designers demand a product that allows them to precisely manage exhibit lighting. PolyChroma's product does exactly that, while cutting energy costs by 90%.
Incandescent lamps produce high quality light, but they are inefficient and a discrete lamp is required for all color temperatures. Conversely, color tunable LEDs are available, but cannot produce high quality white light. Fluorescent lighting produces lower quality light and emits ultraviolet radiation that degrades artwork.
In addition to surmounting the drawbacks of incumbent technologies, investment in PolyChroma lamps generates realizable savings through energy efficiency. PolyChroma generates an NPV return of approximately $250 per lamp, or $250,000 for a typical museum, solely based on lifetime energy savings and bulb costs. This figure does not include the reduced labor costs of frequent lamp replacement, nor does it include the intangible value of improved exhibit quality, reduced downtime for maintenance, and significant reduction in lamp inventory.
PolyChroma will build its first production representative lamp in-house within six months of $1.25 million in initial funding. This will be followed by six months of product design, component sourcing, supplier selection, and customer collaboration to finalize the product. Cumulative production will ramp up to 5,000 lamps by month 16, and 30,000 lamps by month 24. PolyChroma will be profitable in month 27 with 22 employees and annual revenues of $8 million. Through this phase PolyChroma will be expanding its client base through trade-shows, lighting conferences, and government programs such as the GATEWAY Demonstration Program. The product will be distributed through high-end showrooms in New York, Los Angeles, Miami, and elsewhere. These showrooms have warehousing resources, extensive client lists, and have shown interest in distributing this product. By ensuring our products provide distributors with high margins and the business models are aligned, PolyChroma will work to generate both push from distributors and pull from customers interested in the product.
The LED lighting market is positioned for rapid growth: switching to LED lighting can save the U.S. $15 billion in annual energy costs and the phase out of incandescent bulbs has been legislated. Once the product is demonstrated and a reputation established in museums, showrooms, and galleries, PolyChroma will expand into general lighting markets, where there is tremendous demand and opportunity. PolyChroma brings significant technological advantages over existing products, and is poised to become a leader in the LED lighting market.