Cavet Technologies Inc.
What it does: Produces systems that slash power usage in fluorescent bulbs
President and CEO: Albert Behr
Four years ago, the LumiSmart ILC was just another promising invention struggling to find a market. Now, this device—which dramatically cuts power usage in fluorescent light bulbs—is rapidly emerging as a game-changer in the US$80-billion global lighting industry.
Albert Behr, president and CEO of Cavet Technologies Inc., the LumiSmart's Toronto-based maker, says his firm has sold several hundred intelligent lighting control (ILC) systems since launching them in January: "The sales most startups hope to do in a year, we did in our first month."
In 2012, says Behr, Cavet is likely to sell tens of thousands of LumiSmarts, at $2,000 a pop—yielding revenue of at least $50 million. After that, he predicts, sales will accelerate exponentially.
Behr's bullishness is rooted in a simple sales pitch that Cavet makes to operators of commercial spaces and big buildings—who, as electricity costs soar, are keen to reduce power usage: "We can save you 30% to 40% on an escalating fixed cost with a device we can install in 30 minutes and that costs just $2,000—not $200,000."
Unlike rival ILC systems, "This is a plug-and-play solution with instant savings," says Dallas Kachan, Vancouver-based managing partner of Kachan & Co., a cleantech consultancy and research firm. "It's the first technology to cut down drastically on lighting costs without a complex installation." That's why Kachan characterized this device as a "disruptive technology" in a report his firm published last year.
Yet the LumiSmart languished for more than a decade until it caught the attention of Behr, an überconnected technology executive. His skillful networking and strategic partnerships with resellers, distributors and a contract manufacturer offer a model for how SMEs can overcome the scalability challenges of bringing innovative new products to market.
Patented in 1995 by Markham, Ont.-based inventor Vito Rinaldi, a specialist in high-speed electrical switching, the LumiSmart spent more than a decade in limbo until OCETA, a quasi-government commercialization agency, flagged it to Behr in 2007. Behr cites two reasons for the long delay: it took many years to get the device's price down to where it needed to be, and Rinaldi couldn't access the funding or expertise needed to commercialize the product.
Behr, whose Vaughan, Ont.-based consultancy, Behr & Associates, helps high-tech and cleantech firms go to market, reviewed the patents and whether any similar products existed. Only when both these reviews came back clean did Behr allow himself to get excited. Really, really excited.
Rival systems require extensive rewiring or costly installations. But the shoebox-sized LumiSmart attaches directly to a circuit-breaker panel (a big building may have dozens of these), and an electrician can install one in just half an hour. The device injects impulses into the panel that repeatedly cut power to the lights for a few millionths of a second, then turn the power back on quickly enough that the lights don't go dark.
In 2008, Behr joined with Rinaldi and other partners to found Cavet to commercialize the LumiSmart. The firm aimed for a global presence right from the outset in order to reach the largest market possible. Almost immediately, Behr began showing the LumiSmart to prospects and to product marketing and distribution contacts he'd made in his years in the cleantech sector.
Enter challenge No. 1. Behr's contacts told him the lack of global standards governing voltage could force Cavet to manufacture several versions of the device. To avoid this huge expense, the firm's engineers would need to develop a single product usable anywhere. They did so by developing software and hardware that senses voltage, power levels and Hertz ratings, then adapts the electrical impulses accordingly.
Behr says he avoided one mistake common among tech companies: waiting too long to seek input from people outside your firm. "You need to be sure what you're building will work in the country you're selling into," he says. Behr advises other entrepreneurs to meet with potential investors, partners and clients to present the idea, get feedback on the product and secure early buy-in. True, not every CEO can match Behr's little black book, padded by years of working in Silicon Valley and other tech hotbeds. Still, he says, patent lawyers, accountants and people at the federal Scientific Research and Experimental Development (SR&ED) tax-incentive program can open doors that you can't on your own.
As Cavet's R&D team perfected prototypes of the LumiSmart, Behr faced another challenge: how to scale up. The prototypes had been made in the inventor's tiny shop and tested in third-party labs. While Cavet was well funded with money from its founders, plus $600,000 in private equity and several hundred thousand dollars in SR&ED refunds, the 12-employee firm was too small to launch worldwide on its own. Again, Behr tapped into his network, including friends and Silicon Valley contacts, to line up Toronto-based contract-manufacturing giant Celestica Inc., as well as distributors and resellers.
Today, says Behr, prospective clients "from Silicon Valley to Sweden, Australia and Canada" are testing the LumiSmart in about 100 locations. He says some prospects are testing the device in five locations and then, if they green-light it, will roll it out across hundreds of panels.
Cavet is also developing devices for non-fluorescent light bulbs. And it's working hard to crack markets such as California, where electricity costs are twice those in Ontario, and in Europe, where costs are four times as high. With geopolitical instability further boosting power costs, says Behr, the opportunities in energy efficiency are enormous—which helps explain why he's just one of many high-tech industry veterans invading the sector: "This has all the hallmarks of IT in the early 1990s."