E-Ink: Financial Growth

Presented by:
Group 10
Maithli Choudhary PGP10153
Siddhant Verma PGP10175
Abhilash Gaurkhede PGP10186
Anshu Kandpal PGP10192
Kashish Baranwal PGP10210
Pawan PGP10218
Sujeet Kumar Pal PGP10238
Vishal Rallapali PGP10239
E-Ink: The Company
● E-Ink was incorporated on 2nd April 1997 by Jacobson and Wilcox. Wilcox
was able to raise seed funding of 1.7 Billion $ in convertible debt from 3 local
venture capitalists and $ 2 million capital equipment credit facility from
Imperial Bank
● It raised another $14.1 billion from venture capitalists including four large
major corporations
● By October 1998, the company had a team of 22 people working on R&D
● A large number of patents and licences were acquired by the team
● The company had recently signed a deal with JC Penny to test E Inks latest
prototype large display signs in 10 stores located across 4 different US Cities
● The deal was significant as it was the first major commercial deal for E Ink to
test its revolutionary electronic ink technology
E-Ink: The Product
● E-Ink is an electronic ink which can be printed onto virtually any surface
● This was done by use of electrophoresis and microencapsulation
● This created an electronic image display using suspended white particles in
black liquid
● The ink consists of capsules the width of human hair containing charged
particles submerged in black liquid. The motion of the particles is manipulated
to print on the surface
● Further improvement had the potential of using this product as a means to
beam information from a wireless transmitter directly to the sheet of electronic
ink that incorporated an antenna and a processor
● Large market potential: News Papers, E-Books and graphical displays
Key People
● James P Iiluano: President and CEO- Expertise of running an analytical
instrumentation life-sciences company (Molecules) and driving it through
successful initial public offering and growing market capitalization to $250
million. Recruited to develop and implement strategy of commercializing
electronic ink.
● Javed Chaudhary, VP Operations: Experience in building assemblies and
holds an M.S in Engineering Management
● Russel Wilcox: VP Business Development- Led the company’s first 10 months
of operations. Instrumental in initial recruitment, raising capital and licensing
intellectual property
Key People (continued)
● Albert, Comiskey: Principal Scientists- MIT Media Lab
● Drazic, Morrison: Directors of Display and Ink Technology
● Joseph Jacobson : Assistant Professor: MIT Media Lab: Visionary behind
electronic paper-books
● Rubin, Silverstein, Spray and Steadman: Key members of strategic
partnerships formed from the first round of funding
Opportunities
● To revolutionize print communication through electronic ink displays
● Pursue opportunities that could generate short term profitability while serving
to develop the technology along the path for radio paper
● Phase wise growth into different markets
Phase 1: Large Area Displays
● This is the first step in the company’s critical path
● Market size of Large Area Displays was $610 million
● Currently, LEDs are being used as large area displays however, E-ink
possesses many advantages against LEDs.
● It takes 90 days to update an LED as it needs to be uninstalled and reinstalled
with each update. An e-ink would update instantly without the need for
reinstallment
● Once in mass production, e-ink would cost half the rate of an LED, which
costs a little over $2,000 to install
● Wilcox estimates revenue to hit $20 Million in 2003 and $100 Million in 2004
● The investment needed for this would be $10-20 million
Phase 2: Flat Panel Displays
● This would be the second step in the company’s critical path
● Flat panel displays, for eg cell phones & computers, are the most widely used
variety of display
● The current relevant market size was $5 billion and was expected to grow
40% by 2002
● Liquid Crystal Displays were the dominant player in this market
● Advantages e-ink enjoyed over LCDs were that e-ink consumes less energy,
is cheaper, more lightweight, and is very flexible
● Iuliano estimates that the investment needed to enter the flat panel displays
sector would be around $30-50 million
Phase 3: Publishing
● The current market size was $135 billion
● Dominated by newspapers and books
● Revenues expected to grow to $160 billion by 2001
● Benefits to all sectors of publishing from a paper free distribution model which
reduced 20-40% expenses of the publisher which was a multi-billion problem
and E Ink’s opportunity
● For newspapers, newsprint prices were volatile and each newspaper spent
$350 annually on an average towards a subscriber
● E-Inks hope was to eventually dominate the electronic book industry with its
superior electronic ink technology
● Iuliano estimates that the investment needed to enter the publishing sector
would be around $50-100 million
Deal (Financing)
● First round of financing raised a total of $ 15.8 million and the company was
still left with $9 million in hand
● Iuliano is meeting with CFO of Newstime Publishing, Eller, for an additional
$20 million 2nd round of financing
● Further financing is crucial as the company progresses onto each phase on
its critical path
Need for financing
● Consumption of $500,000 each month and burn rate expected to increase to
$1 million a month
● Need atleast $16 million to sustain progress over the nest five quarters
● High ambitious plans of revolutionizing the industry within the next five years
so moving slow is not an option
● 2nd round of funding to be used to fund large area displays and second
generation technology development
Context (Challenges)
● Pace of business was extremely aggressive moving to new facility, ramping
production of large area displays, doubling number of inhouse scientists
● High competition for entering into the flat panel displays: Improvements in
LCDs (reducing size, battery power, weight and thickness), other technologies
like: microdisplays, OLEDs, FEDs, Plasma and Gyricon (a direct replacement
and competition for electronic ink technology)
● Estimations of publishing revenues based on radio paper being accepted as
replacement for traditional paper
● Microsoft driving force in the publishing sector to provide a standardized
operating system for electronic books
● Competing electronic books Rocketbook, Softbook, Everybook, Librius
(Priced at 20-25% less than paper)
Problem Decision
● Should E-Ink conduct a second round of financing?
● Raising funds is not an issue for E-Ink. In fact Iuliano is having trouble turning
away various venture capitalists, technology companies, and publishers
● Raising finance comes with a partnership. The company’s plans & timeline
should be enhanced by a new partner
● VCs move very quickly however E-Ink already has existing VC partners.
Corporate investors tend to be cautious and may majorly restrict their actions
● Chemistry companies can tremendously help speed up R&D while handheld
device manufacturers & publishers would help achieve the objectives of
phases 2 & 3 in the future
● Keeping all these points in mind, is Newtime Publishing the correct firm to
partner with?
Recommendations
● Since their ultimate goal in the critical path is radio paper and transforming the
publishing industry they should: Go ahead with NewsTime Publishing and put
forward the need of additional rounds of funding for collaboration till
implementation of phase 3 to avoid conflict of interest between the critical
success path of the company and the investor goals with flexible rules and
restrictions
● The company should go forward with VC financing as moving qucikly is
paramount for the company
● A strategic partnership with a manufacturing company to increase their
manufacturing capability will also help in this regard
THANK YOU