Last week, Benny Landa's Landa Digital Printing reported receiving orders worth €450 million at the drupa international printing trade fair in Germany. There are at least two other Israeli companies, however, that are set to emerge as major players in digital printing. The first, which is fairly closely linked to Landa and his work, is Highcon. Not only was it founded by two ex-Indigo employees, but Landa Ventures, Landa's venture capital fund, invested in it, and holds a quarter of its capital. "I and my partner in founding the company, Michael Zimmer, worked at Indigo for 18 years, and we realized that the industry wanted to press a button and get a finished product, not just a printed piece of paper," says Highcon founder and CEO Aviv Ratzman, talking about the company he founded seven years ago. "In order to print something with a shape, you need a mold. The technology is 150 years old, and hasn't changed much, and we saw an opportunity to change it from analogue to digital."
Ratzman explains that every mold has knives that cut and knives that make the fold lines of the packages, "and this entire process is done with hammers and things like that. It's all rather primitive. We decided to make it possible to use laser rays for the cutting and the folding with injections of polymers." Thus was born the company's first machine, and others were developed later at the demand of customers. "You put in a file and get a finished product, and that's true not only for the packaging market. It's true for commercial printing market, business cards, greeting cards, and so forth - anything with form cutting, even if it's flat."
Ratzman explains that in the first stage, the company decided to focus on the folding cardboard market (including packaging), an $80 billion market. "This market grows in step with the GDP of each country, because it depends mainly on the food and cosmetics markets, but in developing countries, it grows at a faster pace."
"Globes: How many machines have you sold so far, before the last Drupa exhibition?
Ratzman: "We started selling in 2013, six months after the previous Drupa, and we've sold 30 so far. During this time, the customers' needs changed the development process: one type of customer, who prints a lot, told us that he needed faster machines. Another type, who only prints a little, wanted cheaper machines. The ones who printed medium-sized quantities went on working with the first machine."
At this point, Ratzman adds that Highcon is casting its eyes at the 3D printing market. "We've created capabilities, still in the R&D stage, for printing a 3D product, meaning in layers. For example, a paper mold for a concrete bench into which the concrete can be poured. It simplifies the production process," he says, and shows us a picture of a concrete bench that he creates using the company's mold.
"We use paper to make a product out of concrete. We cut the paper, and the paper creates a mold two meters high. The printing firm's customer is the one who pours the concrete into the mold. This solution is designed mainly for the artistic graphics market, such as exhibition, which has a $30 billion turnover."
So what happened at the last Drupa?
"Our pavilion was right next to Benny's (Benny Landa, T.T.). We got binding orders, not letters of intent, amounting to $40 million. The prices for our machines are $400,000, $800,000 and $1.5 million."
How is that in comparison with you revenue last year?
"We had $8 million in revenue last year, and we didn't make a profit. We'll supply these orders in 12-18 months, so it’s a pretty big step up for the company."
From whom will you get most of your orders?
"Mostly from customers in Asia, such as China and India. The Asian market is huge. There's a lot of money in it, and guys are willing to take chances."
Other than the machines, do you sell perishable products?
"Yes, our polymers, and the customer has to buy them from us."
Will you hire more employees?
"Yes, definitely at least 20 more people in mechanical/software/electronics engineering, and others."
Now that you've completed the development stage, what's the next challenge?
"Just to keep up with growth. We've waited for this, and now it's here. In addition to the $40 million in orders, we made price bids for $100 million, and we'll have to keep us with this very rapid growth rate."
Ratzman notes that following drupa, the company will enter 11 new countries, such as India, Chile, Puerto Rico, Colombia, the Netherlands, and Germany, and will therefore have to bolster its distribution activity.
What about financing? Will you do another financing round?
"Yes. We'll announce another financing round soon."
What else is in store for the company?
"As I said, we're getting into the 3D printing market, and yes, this market has had troubles recently, but that's exactly the problem we're trying to solve. 3D printing company focus on printing a prototype, in other words, small products at high prices. We're developing capabilities for printing large products at low prices, which is more like mass production. We can print 10 chairs an hour. This is a chair printed by cutting cardboard and gluing layers until it in effect becomes wood. This is a solution designed mainly for the furniture and design industry, and we think it will be ready in 3-4 years."
"More than 100 orders"
The second company is Scodix, which is two years older than Highcon. Scodix specializes in upgrading digital printing, which means "all the polishing, highlighting, metallization on the packages, commercial printing, and things like that," explains Scodix CEO and former Camtek Ltd. (Nasdaq: CAMT; TASE:CAMT) CEO Roy Porat. "Our printers don't print the color; they print the improvement. They do the finishing for the printing."
"Globes: Give me an example.
Porat: "An iPhone box. It has the Apple Computers logo on it in gray. The logo isn't printed; it's created on the paper during the upgrading process. You take a sheet of silver, and print the logo on the white box. Another example is a box of perfume that has something raised or sparkling on it. We do this by injecting digital ink; in other words, we take a process that has been analogue up until now, and make it digital. Among other things, that reduces printing costs and provides printing capabilities that formerly did not exist."
How did the current drupa help the company make a big step forward?
"We got over 100 binding orders for our existing product, and if you add this to the letters of intent for our future product, the value is over $100 million. Our future product will reach the market next year."
How long will it take you to supply the binding orders?
"The next 6-9 months."
On what scale have your orders been so far?
"Much, much smaller. We sold machines, but only a few. Drupa has its effect. We've grown nicely in recent years, and now comes are big step up."
Porat says that a company like Scodix measures itself from one Drupa to another. "Before the previous Drupa, we installed the product for 12 customers, and for 200 before the current Drupa. After the current Drupa, it looks like over 300."
What is the average price for a machine?
"$600-700. The future machine will cost $1.5 million."
What upgrade will the future machine offer?
"It's a machine for large formats, so it will be faster, and is meant for the more industrial market, such as packaging."
Will you hire more employees?
"Yes, we're in the process of growing, and we're looking mainly for development people."