At the intersection between the worlds of high-tech and show-biz, Israeli start-up Formaglow hopes to find its place. The company has developed a unique technology for a one-time chemilumiscent light source that approaches the strength of a television screen or light bulb, that can be molded into any shape, from a sheet of paper (similar to the day-glo stickers of our childhood but much brighter), to a balloon or a cube.
It is also possible to control the light’s color, resolution and time by altering the chemical composition of the material, a formula that Formaglow intends to keep confidential. And all this is accomplished without electrical or battery power.
Formaglow VP technology Yuval Goychrach, who invented the product, and Formaglow CEO Dafna Zourdeker say the product is equally suitable for the entertainment, security and many other markets.
“Globes”: In a single breath, you mention both the entertainment and military markets. Are you developing two products for the two markets simultaneously?
Zourdeker: “We decided to start with the entertainment market because it’s much easier to penetrate. The faster you develop products, there are fewer demands and a lot less bureaucracy. But we have ideas for many more fields. We’re about to unveil our only product, solely for the entertainment market. We don’t want to discuss it in detail, because the wolves will start circling. Later, we foresee a range of products, and even a group of subsidiaries.”
How will you market the product?
Goychrach: “We’ll first cooperate with toy or media companies.”
Such as Disney, for example?
“I wouldn’t say no to Disney. A good rule in life is never say no to Disney.”
How to spot a fly-by-night investor
Zourdeker and Goychrach met at Rad-Bynet. Zourdeker was a procurements manager and Goychrach was network systems manager.
How did you get from Rad-Bynet to chemistry?
Goychrach “I was a serial inventor in my spare time. When I met Dafna, I already had a registered patent and prototype. I was looking for someone to join forces with me and give it their all. We first started working concurrent to our jobs at Rad-Bynet, but we began to feel that we were wasting our time on the job, and that it was possible to run with the product.”
They left Rad-Bynet in 2002, during telecommunications crisis. “We told ourselves that this was the time to leave, so that when the market revives, we unlike others would have a product ready,” says Zourdeker.
Finding investors wasn’t easy, and at one point, Formaglow even published an ad on the Internet.
On the Internet? Didn’t you get a lot of spurious investors?
Zourdeker: “We expected a lot of responses, but times were hard. Today, we’d probably get a lot more responses through every channel. But the Internet is the Internet, and we got a lot of serious, as well as a lot of spurious, responses,
How did you spot the spurious investors?
Goychrach: “It’s possible to quickly screen out the people who ask irrelevant questions or who only want to talk about themselves. It’s also easy to see who makes promises, but when the moment the time comes to sign a contract, things begin to slip away. The contracts change, the agreements change. We also got responses from people purporting to be investors, but who were actually trying to mediate between us and other investors.”
Zoudeker: “Even more dangerous were the people seeking to come into the company in order to take it in another direction. When picking an investor, it’s important to see whether he believes in your way, or whether he’s scheming to change the venture.”
Goychrach: “It’s better to avoid, if possible, an investor with a small budget, who might be able to give you some seed money, but then you find yourself burdened with someone who has no potential. It’s better to get less money at the outset, but from someone who over time can give you millions.”
Formaglow’s team decided that the Advanced Technologies Center Association incubator in Dimona, which has provided $300,000 in financing to date, was the right place. “We chose an incubator in an outlying area, which we could join without a first financing round,” says Goychrach “It also added a few more jobs in the south.” Formaglow now has a US investor coming to its Dimona headquarters.
Zoudeker and Goychrach claim that the company’s product will be ready within months, and they’re seeking a large international company as an investor-partner. “Thanks to the technology,” says Goychrach, “we can develop a new product every year. We’re looking for a partner to market the product through its own channels, but won’t buy out the company, because someone who wants the product for the entertainment market, won’t necessarily have anything to with a product for the defense market. We also want to continue managing the company for years to come. We are not thinking about an exit.”
Isn’t there a risk that someone else might enter your other potential markets while you’re still developing?
Goychrach: “We’ve seen that since the patent was issued, other companies have tried to overtake us. But their solutions pale in comparison to ours. Nonetheless, every time my mother sees some kind of shiny product on the television, she calls me in hysterics, even if it’s just a light bulb. And I panic, every single time.”
Published by Globes [online] - www.globes.co.il - on November 14, 2004