put out visible light—not the ultraviolet that Erchak’s lab prototypes produced. “That would require a totally different chip design and manufacturing technology and package design. So we were going to have to take a clean slate and redesign everything from the ground up.”
But fortunately, Luminus was still so young that it didn’t have anything to lose. Says Erchak, “I would argue that that is the only real advantage that startups have—the ability to start from scratch.”
And if the company could solve the projector problem, there was an even bigger market right behind it: TVs built around Texas Instruments’ Digital Light Projection (DLP) technology. “The big kahuna that got investors really excited was the rear-projector TV market,” says Erchak. “They’ve got the same guts as a conference table projector, but the image projects from behind. It used to be the only way the average Joe could buy a 60-inch HDTV for under two grand.” That “used to be” is the operative phrase—but more on that in a second.
To fund the development of its large LEDs, Luminus raised three more rounds of venture financing. The photonic lattice technology was still fundamental—and to make it work economically on a large scale, the company had to invent an entirely new nanolithographic technique for patterning the lattices on a silicon wafer. But there was also a “laundry list of 20 or 30 or 40 other technologies that had to be implemented to solve this problem,” Erchak says.
The company invented some of these technologies and licensed others. By 2003 it had produced its first LEDs, and by 2006—a miraculously short time later, in the world of semiconductor development—it was producing red, green, and blue LEDS for a chipset used in projectors and in the world’s first LED-powered, rear-projection TV, a Samsung model. “So in three years, we went from nothing, not having made a single LED in visible wavelengths, to being on the shelves at Best Buy,” Erchak beams.
Luminus sold hundreds of thousands of its LED chipsets to Samsung. Then came 2007. That was the year, in Erchak’s words, that “LCD prices dropped through the floor and completely decimated the DLP market.”
Simply put, Taiwanese semiconductor makers had built vast factories for churning out large LCD screens at low cost, and were now selling them at razor-thin margins. In 2004, when Luminus was out raising $50 million to build its LEDs for projectors and TVs, the most conservative estimates were that consumers would buy 11 million DLP TVs in 2008. Less than half a million were actually sold. Consumers flocked overwhelmingly to the cheap LCD TVs—which also had the advantage of being only a few inches thick, as opposed to DLP models’ two-foot-thick profile.
So it was time to clean the slate once again. Fortunately, says Erchak, “We had selectively chosen VCs that we knew were going to have the stomach for what was certainly a roller coaster ride.” By this time, the company had raised money from Stata’s group, from the New England wing of Draper Fisher Jurvetson (now New Atlantic Ventures), and from Battery Ventures and Argonaut Private Equity. Braemar Energy Ventures, CMEA Ventures, and Paladin Capital Group joined for the huge $72 million fifth round in early 2008.
Erchak says the investors could see beyond the TV market to the other applications that Luminus, which had quadrupled the brightness of its LEDs since 2006, could now address. The equipment doctors and surgeons use for fiber optic-illuminated endoscopic exams, for example, depends on small, high-intensity lamps. The company’s LEDs are also ideal as replacements for
