The light source in Jin Bingguo's hand is only 6 mm across. Once turned on, it emits a dazzling brightness that almost blinds the eyes. This is the flagship product of Kim Jong-il's start-up company, Soraa, which has emerged from stealth mode today with over $100 million in venture capital support. It represents a new approach to LED lighting, a promising technology whose high costs have been a barrier. Soraa has developed its unique process for creating LEDs, increasing the amount of material used to produce the quantity of light generated. The Fremont-based company plans to begin shipping bulbs this quarter, targeting businesses such as hotels and retail stores. Like other LED lights, Soraa's will be expensive—at least initially. Jin, the company's CEO, would not disclose specific prices but said they would be under $25. Jin stated that the bulb's lifespan of 25,000 hours and low energy consumption—approximately one-quarter of what an incandescent bulb uses—would quickly offset the initial cost. He anticipates that costs will decrease rapidly as Soraa scales up production. "If you're a restaurant or hotel, you can have this running 24/7, for 16 hours a day," Jin said. "If they can buy our bulbs for less than $25, the payback period is less than a year. At that price point, it's a no-brainer."
Other LED companies have already offered similar bulbs that mimic the halogen lamps popular in business-to-business settings. However, these bulbs are more complex, requiring multiple diodes to produce the same amount of light that Soraa's single diode can generate. Some competing bulbs even have small fans for heat dissipation.
Once limited to digital watches, LED lights for homes and businesses have been around for years. They last longer than spiral energy-saving lamps (compact fluorescent lamps), work with dimmer switches, and provide a bright, warm glow. However, few consumers have been willing to buy bulbs priced typically between $20 and $40.
"LEDs simply aren't competitive in the consumer market until prices come down," said Edwin Mok, an analyst at investment banking and asset management firm Needham & Co. "Many people cite around $10 as the tipping point in industry talks."
Thus, Soraa will target businesses first instead of jumping directly into the consumer market. Soraa's first bulb is designed to replace a specific type of halogen lamp, the MR16, which is used in restaurants, retail venues, and some home track lighting systems.
The company was founded in 2008 by the inventors of the first high-brightness blue LED in 1993, researchers at the University of California, Santa Barbara, one of whom, Shuji Nakamura, is part of the trio. Silicon Valley venture capitalist Vinod Khosla approached the three and suggested forming a company.
"I wanted the founders at UCSB to do something that could open up and truly make an impact," Khosla said.
The company started in Goleta (Santa Barbara County) and moved to Silicon Valley in 2010 to tap into the region's talent pool. Soraa's small staff, now numbering about 140 people, occupies an unassuming office building near the Dumbarton Bridge, where administrative offices and a small LED factory are located.
The company's main innovation lies in how it makes LEDs. Most competitors grow gallium nitride crystals on a thin layer of sapphire. Soraa, whose name derives from the Japanese word for "sky," grows gallium nitride crystals on a layer of gallium nitride—a technology the company calls "GaN on GaN." As a result, Soraa's crystals have far fewer defects than those grown on sapphire. Jin said they can handle more current and produce more light.
"We believe this is a pretty solid path forward and the right road to take," he said.
Khosla referred to his insistence that new energy-related technologies must be inexpensive to succeed. He sees potential here.
"I'm optimistic that we have the technology needed to save 60% to 80% of the energy we use for lighting without subsidies or asking consumers to accept a ten-year payback," Khosla said. "This is exciting."
In addition to Khosla Ventures, Soraa is supported by New Enterprise Associates and NGEN Partners.
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