Lopsided Investments Leave Asian Start-ups Underfunded

Venture fundingkey technologies and Asian start-ups short of funds


Venture capital funding has come off the 2007 peak of $990 million, but lopsided investment has left key technologies and Asian start-ups short of funds, says Lux Research.

Since 1996, printed, flexible, and organic electronics have garnered more than $7.5 billion in venture funding, led by investments in display and smart packaging technologies. However, funding has sharply declined from a peak of $990 million in 2007 to $626 million in 2011.

"A number of high-profile failures like Konarka have soured many investors' impressions of this space," said Lux Research Associate Anthony Vicari.

While the process cut away some unwarranted hype, it potentially raised the hurdles for companies with more promising technologies who wanted to secure funds, he said.

"Our analysis shows glaring funding imbalances," he said. "While there are areas such as organic photovoltaics that are overfunded, promising technologies such as electrowetting and electrochromic displays haven't received investment that matches their potential."

Lux Research analysts surveyed the investment landscape, assessing the current state of affairs and identifying opportunities. Among their findings:

  • Display technologies have huge potential. Electrowetting, electrochromic, and metal oxide thin-film transistors (MOTFTs) are potential gold mines, offering high technical performance and value, relative to competing reflective displays and TFTs.
  • Asian startups underfunded. North America leads overall investment at $5.1 billion, or 67% of the world total. However, Asian start-ups, like OLED developers in South Korea, account for just $506 million of investing "“ indicating not a lack of innovation but the need for an alternate funding model.
  • Dow, Samsung, Intel are the corporate investment trendsetters.Dow Chemical, Samsung, and Intel lead corporate venture capital (CVC) investors, with high levels of activity in this space. Their best bets have targeted the more promising, higher- potential technologies such as OLEDs and RFID.