Digital Lumens, Finding Its Identity, Brings Cost and Energy Savings to Light
Among local startups, Digital Lumens is a different kind of animal. It’s a hardware company. It’s a networking software company. It’s an energy-efficiency company. It’s an LED and “smart lighting” company. So what is it?
Well, all of the above. Interestingly, Brian Chemel, a co-founder of the Boston startup, penned an op-ed earlier this year entitled “Boston’s hardware startups need an identity.” Luckily enough, his company seems to have found one.
Digital Lumens is best known for making specialized LED (light-emitting diode) strips and fixtures that contain sensors, computing, and control software aimed at lighting up warehouses and large industrial spaces in a more energy-efficient way. For example, the system can sense ambient light and motion, and switch off (or dim down) LEDs in places where they’re not needed; a central computer keeps track of lighting patterns over time, which can be used to improve efficiency on a large scale. The company says its technology is deployed in more than 500 industrial sites around the world.
Last month, Digital Lumens rolled out a new partnership program that speaks to the firm’s latest strategy. The startup is looking to integrate its software and systems into other manufacturers’ LED fixtures, as well as continuing to make its own. The goal is to move beyond the confines of Digital Lumens’ own hardware, and to drive down the overall costs of smart lighting systems. (It’s part of a broader collaborative effort to integrate intelligence into LEDs, which could lead to new industry standards.)
Indeed, adoption of this sort of technology is all about cost. Digital Lumens is aiming to cut the price of controlling commercial lighting from dollars per square foot to pennies per square foot. And, as Chemel (pictured with hardware) says, “Our goal is to make added intelligence zero net cost to the customer.” Of course, that will depend on more widespread adoption of LEDs in industrial circles.
Things do seem to be moving in the right direction—if not always as fast as a startup would like. The Bay Lights project in San Francisco, for example, has brought mainstream visibility to LEDs. Consumers are beginning to warm up to the technology as an alternative to inefficient incandescent lights and unattractive compact-fluorescent lights. And industrial customers now seem more interested in being able to cut their energy costs for lighting by something like 90 percent in the best cases.
“We’re seeing a move toward data-driven efficiency,” says Tom Pincince, Digital Lumens’ chief executive.
With that move comes plenty of competition in lighting control. The field includes traditional companies in lighting such as General Electric, Philips, Samsung, Toshiba, Osram Sylvania, and Acuity, as well as more recent entrants like Adura Technologies, Albeo (bought by GE Lighting), and Redwood Systems.
Not surprisingly, Digital Lumens sees itself as different from the rest of the pack—nimbler and more focused than the big guys, and stronger in its market niche than other startups. “We have a chance to build a large, standalone company,” Pincince says, and to position it as “an intelligent lighting company, not an industrial lighting company.”
What’s more, the firm sees its technology as a kind of “Trojan Horse of light.” Meaning that once smart-lighting systems and the accompanying sensors are installed in enough places, you can start to do completely new things in areas like security (making parking garages safer, say, by alerting you if there’s a person hiding by your car) and retail (tracking patterns of occupancy over the course of a day or week).
Digital Lumens was founded in 2009 and has raised some $35 million in venture funding from investors including Flybridge Capital Partners, Stata Venture Partners, and Black Coral Capital. Its most recent financing round, a $10 million Series C, was in January 2013.
On a visit to the 60-person company earlier this year, Pincince, Chemel, and marketing director Allison Parker showed me around their offices in the Seaport District. The first- and second-generation fixture designs were on display (see photos), as well as a big light-measurement sphere (pictured at top) for testing the startup’s LED systems. Chemel also demonstrated a set of lights, above a dartboard, that dimmed in response to the level of ambient light in the room.
So, what are the startup’s prospects for becoming a big, influential company? It may be too early to say, but Chemel points out that, according to industry projections, in the next 10 years we’ll see more energy saved from lighting control than that produced by new solar, wind, and other renewable installations combined.
That’s a sobering prediction—but it speaks to the potential impact of the company and its peers. And, of course, if Digital Lumens does go on to become a big player, the beleaguered U.S. cleantech industry will be quick to claim it as a success story.
At least one prominent observer thinks the cleantech downturn has been exaggerated in some circles—and that Digital Lumens’ market is a “nice growth opportunity area.”
Ian Bowles, the former secretary of energy and environmental affairs for Massachusetts (he’s now an investor with WindSail Capital Group), says that “cleantech has actually shown steady and impressive growth.” As he sees it, “The industry has made a transition away from tech development into rapid deployment. Industries like energy efficiency and solar are booming despite a small but high-profile handful of tech companies going bust.”
On the smart-lighting front, Bowles says, “LEDs are here to stay, and folks like Digital Lumens who are integrating/installing and finding savings have a nice business model that will continue to grow as costs come down.” (Bowles is not involved with the company.)
He adds that Massachusetts now spends more per capita on energy efficiency than any other state—and that legislation in that subsector is really done at the state (not federal) level. That would seem to bode well for Digital Lumens, in terms of regional support and customer adoption. (Though the company is also shooting for about 25 percent of its installations to be outside of North America.)
Yet Bowles would admit that cleantech venture capital has been a mess in recent years—in part because VCs “didn’t focus on disruptive business models,” he says. “In some cases, they got killed by betting heavily into solar, which the Chinese made into a commodity much quicker than anyone expected. In other cases, like [energy] storage, the cycle is long and utilities are risk-averse.” Despite the ups and downs of the VC industry, he says, plenty of businesses are “growing explosively.”
Which is all to say that many groups have a lot riding on Digital Lumens’ future—from its VCs to the state of Massachusetts, and from cleantech and hardware startups to big lighting companies. Not to mention its own founders, team, customers, and partners. No pressure though.