From Computer Business Review, a sister publication.
When Danny Chapchal was headhunted for the chief executive job at Cambridge Display Technology, CDT, last year, he almost turned it down. Chapchal, a 20-year software industry veteran who calls himself a ‘company doctor’ specializing in turnarounds, felt that CDT was more in need of a midwife. But when he visited the company, he was so impressed with its technology, he had a swift change of heart. CDT took root in 1989 when two Cambridge University researchers discovered that they could make light emitting diodes out of polymers. This breakthrough, they believed, would enable the development of a new breed of flat screen, applicable for everything from the backlight screens of mobile phones to virtual reality headsets. Using 150,000 pounds supplied by a local venture capitalist – Cambridge Research and Innovation Ltd, CRIL – the researchers spent the next two years filing patents, before forming CDT in 1992, with the equity split equally three ways between the founders, CRIL and Cambridge University. It was not until the arrival of Chapchal in 1996, however, that the 23-strong company started to exploit its technology commercially. Chapchal’s initial remit was to raise funds to set up a pilot manufacturing line. But Chapchal believed that a quicker and less risky route to growth was to concentrate solely on the development of LEPs and to leave the product development work to partners. It took him three months to convince the board that he was right, and a further month to sign the first licensing deal – with electronics giant Philips Electronics NV. It was an important step – not only because Philips adds a lot of credibility to the technology, but also because part of the agreement was that Philips dropped its opposition to some of CDT’s patents. More recently, CDT also signed a deal with the other company which had been opposing its patents, Univax of California. Chapchal believes that CDT is now in such a strong position that, No-one can move into the manufacture of LEPs without talking to us about at least one of our patents. The most pressing task facing the company now is proof of concept.
But while Chapchal admits that until recently there was still a question over whether or not LEPs would work out, he says that the licensing agreements have added a huge base of LEP developers across the world, ensuring its success. The first LEP-based products will be aimed at low-information devices but eventually, says Chapchal, the technology should scale up all the way up to high information content displays. This financial year, to June, will be the first year that CDT books any revenues – expected to be around 1m pounds- but royalty revenues are unlikely to appear until late in the calendar year. This means the company will need more money to help it continue to expand. In 1993 its first funding round raised 1.4m pounds from a diverse range of sources including European entrepreneur Herman Hauser, and pop group Genesis. Hauser then helped the company execute a second, smaller round in 1995. Chapchal says he is now finalizing more funding from a ‘big name’ investor, which is likely to bring in 2m pounds this year and 4.6m pounds over the next few years, in return for ‘a sizable chunk of equity’. But what of CDT’s long-term aims? Chapchal admits that an initial public offering is a long way off and, indeed, is fairly unlikely. We’ll probably get snapped up, he says.