LED Lights At Home

BusinessGreen.com has a news item about a recent acquisition, that also gives background on the general consolidation in the market.

The acquisition of Lumina  by Lighting Science Group is the latest of a number of acquisitions the article discusses. The reported valuation of Lumina — up to $15 million, depending on future sales — will no doubt be disappointed to many entrepreneurs and VCs. It appears to be a story of vertical integration, where Lumina has technology and capabilities in creating the LEDs and Lighting Sciences Group creates luminaires (ie, light bulbs) and lighting solutions.

The article also mentions Cree buying LED Lighting Fixtures, vertical integration going the other way, with a LED manufacturer buying a luminaire company. This deal, $16 $77 million up front with another $26 million earn out potential over 3 years, still falls far short of the kind of valuation that gets VCs excited. And even Philips’ acquisition of Lumileds with a multiple of roughly 3x trailing 12 month sales isn’t all that exciting.

With more products coming to market, more LED companies should see significant revenue growth and with increasing focus on energy conservation and greenhouse gas emissions the hype factor should increase valuations.

Energy conservation is acknowledged as a critical element in solving the energy crisis, but it isn’t perceived as terribly “sexy” to investors: how excited can anyone get over , for example, better insulation? But LEDs are one of the few sexy energy conservation strategies and something that companies can tout as an investment in going green. Maybe it is time to buy some LED company stock while valuations are still low….