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Jan. 8, 2003 — For Alan Marty, the executive-in-residence at JPMorgan Partners charged with ferreting out nanotechnology-related investments, Optiva Inc. was the first nano company he found in a yearlong search that met two criteria: It had technology that could be commercialized within 18 months, and an existing market that could adopt the product in the same time frame.
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On Tuesday, South San Francisco-based Optiva announced a second close of $21 million in third round financing. In addition to $9 million announced in June and $11.3 million raised in two previous rounds, the company has raised $41.3 million to date. The 60-person firm now intends to attack the liquid crystal display industry with an innovative new approach to making polarizers and other optical films for LCDs.
JPMorgan Partners led the second closing of the round with a $13.75 million investment and was joined by a trio of additional new investors that includes Korea’s Daehong Corp., DSM Venturing and Eastman Chemical Co. Existing investors Fidulex Management Inc., Harris & Harris Group, Merifin Capital N.V. and NextGen Partners LLC also participated.
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“The polarizer market is a $1.1 billion market that already exists,” Marty said of Optiva’s near-term strategy. “It’s really a replacement market.”
Polarizing films, invented in the late 1920s by Polaroid founder Edwin Land, reduce glare and improve visibility for LCDs, sunglasses, glare-reducing windows and other products.
The LCD market is divided into passive matrix displays (calculators, watches and cell phones) and active matrix displays (laptops, flat-panel TVs and computer monitors). Especially for low-end displays, the polarizer can constitute as much as 30 percent of the cost.
Traditionally, 200-micron thick polarizers are applied as external laminates to LCDs. Optiva says it has invented a new class of self-assembling nanomaterials that give it the ability to print thin crystal film (TCF) structures on almost any type of surface. Its 300- to 400-nanometer polarizers could be coated onto the inside of the glass encasing an LCD. This makes for a simpler construction and makes the display more durable, according to Greg King, executive vice president in charge of operations and marketing. He said the result is a thinner, less-expensive display that allows for better viewing angles.
Pat Dunn, director of technology for DisplaySearch, an Austin, Texas, market research firm specializing in the flat panel display industry, said he discussed Optiva’s technology with major flat panel suppliers. “They feel the polarization’s efficiency is not high enough and that it will have reduced contrast [for active panels] … but for portable [passive] displays like you’d find in a cell phone, calculator or watch, it’s fine.” Top suppliers of passive matrix displays include AU Optronics, Casio, Epson, Samsung, Sharp, Seiko and Optrex.
King said Optiva’s initial customers would be on the passive matrix side. “It’s a pretty hyper-competitive market,” he said of the choice. “Everybody’s looking for ways to reduce prices.” He said the company’s roadmap calls for active matrix display products to be released later this year when the technology is more advanced.
However, the larger question is whether Optiva can displace entrenched polarizer vendors like Nitto Denko Corp. or Sanritz Corp., both of Japan. Dunn estimates they control roughly 85 percent of the world market.
“Polarizers work well enough,” said David Nakamura, president of Dana Enterprises of Fremont, Calif., Sanritz’s exclusive North American distributor. “Why reinvent the wheel when LCD manufacturing is incredibly refined at this point?”
Nakamura said Optiva’s approach means that LCD manufacturers must integrate the polarizer into the manufacturing process rather than add it at the end, which he said could create new quality control challenges.
King agreed that doing inline coating would be a more integrated approach and would require working very closely with customers. However, he challenged Nakamura’s quality control concerns and said Optiva’s more integrated and automated approach is actually an opportunity for higher yields. He also said Optiva will be offering its polarizers in the form of a conventional laminate for customers who prefer it that way.