Switch Materials’ $11.6 million windows of opportunity

Every week Techvibes republishes an article from Business in Vancouver. This article was originally published in issue #1068 – April 13 – 19, 2010.

After closing a $7.5 million Series B financing round in January, Burnaby’s Switch Materials Inc. has been awarded $2.1 million in government funding through the Innovative Clean Energy (ICE) fund.

Switch, which was founded in 2006, anticipates it might now have a long enough runway to commercialize its smart windows, which contain a film of organic material that lightens or darkens windows at the flick of a switch.

The company’s positioning its technology initially as a tool to control sunlight heat in commercial buildings and automobiles and in turn help building owners and drivers reduce their greenhouse gas emissions.

The company was spun out from research done at Simon Fraser University (SFU) by Neil Branda, a professor of chemistry at SFU and executive director of 4D LABS, a $40 million research centre for advanced materials and nano-scale devices.

Branda, who is also Switch’s CTO, developed the company’s technology through his research in organic materials and how such materials react and change to stimuli like light, chemicals, heat, pressure and electricity.

In the lab he discovered that certain light-sensitive or photo-chromic compounds, which darken when exposed to sunlight, will bleach when stimulated with electricity.

“That opened a huge door to make different applications, one of them being these dynamic glazings,” said Branda of the thin films that the company applies to windows.

Switch has hired seven employees since the beginning of the year, bringing its headcount to 17. The company plans to have more than 20 employees by years’ end.

Switch is negotiating with manufacturers and distributors, but wouldn’t put a timeline on when its windows will hit the market.

With ICE fund capital, Switch is testing its technology in outdoor facilities.

To date, most of its research and testing has been done under simulated light and conditions in the company lab in Burnaby.

One of its largest potential markets is California. That state’s Air Resources Board adopted “Cool Cars” regulation last June, requiring that, beginning in 2012, new vehicles must be equipped with solar control windows to reduce air-conditioning use.

And while Switch’s windows might eventually be available to homeowners, the firm is targeting larger commercial buildings where its product could yield bigger energy savings.

“If you can make a building a little more energy efficient, it pays off pretty rapidly for the building owner,” said Caleb Willis, Switch’s vice-president of business development.

The company has competition.

Founded in 1989, Minnesota’s SAGE Electrochromics Inc. has received $100 million in U.S. government funding this year to build a production facility that’s slated to be producing the company’s electronically tinted windows in 2011.

California’s Soladigm Inc., which is venture-backed like Sage and Switch, is in the pre-commercial stage with its electro-chromic tinting windows.

Switch’s thin-film technology differs from that of its competitors because it reacts to sunlight and electricity.

Its competitors use compounds that react only to electricity.

The company believes that it beats the competition on price.

Willis said the proprietary organic compounds that the company uses in its thin films are inexpensive to source and to synthesize.

As well, a simple and inexpensive laminating process is all that’s required to apply the thin films to windows.

“The market has already proven that it’s not interested in a product at above a certain cost threshold,” said Willis. “That cost threshold has yet to be determined, but we think we can come in under whatever that needs to be.”

Switch’s inexpensive manufacturing process was among the factors that convinced the Business Development Bank of Canada (BDBC) to lead Switch’s last financing.

Another factor was that BDBC had previously invested in other ventures involving Doug Wiggin, Switch’s CEO and – according to Geoff Catherwood, BDBC’s director of venture capital – a reputable entrepreneur.

Catherwood and the BDBC expect Switch to reach a couple of milestones in the next year.

“Right now they have a prototype,” said Catherwood. “We would like to see engagement with customers trying their samples out and increases in the lifetime and durability of their material.”

The company’s technology could potentially be applied in other markets such as medical imaging, computer circuitry and even drug therapy.

Switch has a full patent portfolio, including a patent on a photo-dynamic drug-delivery system.