You’d be hard pressed to meet any startup without global ambition, but the path to building an international business requires quite a bit of leg work.
For Canadian greentech startup Nanoleaf, makers of the world’s most energy-efficient LED lightbulb, their global journey started with choosing the right co-founders.
The three founders, CEO Gimmy Chu, COO Christian Yan and CTO Tom Rodinger, banded together in University of Toronto’s solar car team — but true entrepreneurial connections were forged by their passion to create energy-efficient products.
The real test of their future as collaborators would come after graduation. Yan moved to China to help run his family’s factory while Chu worked out of a number of North American cities as a consultant. Still, Chu and Rodinger continued to collaborate on projects whether it was in-person in Vancouver or Hawaii or via conference calls in Dallas and San Diego.
“We really conceived this idea internationally. Tom, after he quit his job, went to travel the world and he lugged around his electronics kit and developed this stuff all around Europe,” which explains why one of Nanoleaf’s products was signed off as ‘designed on Planet Earth.’
“It’s the truth,” said Chu, “it wasn’t designed anywhere specifically. We were traveling and doing this all over the place. It was manufactured in China but the three founders have Canadian roots — we learned everything at U of T.”
Come 2012, Chu decided to head east to meet up with Yan as it made sense to manufacture their first product in China. They incorporated in Hong Kong, Chu threw in his life savings of US$10,000 and the founders worked out of Yan’s family factory. It would be Yan’s connections and experience in China that gave the young startup an essential leg up in the hardware development game.
“It was around that time that we set up our first China office. For a hardware company, if you don’t have your manufacturing and supply chain down, it’s really difficult to be successful. So we built a team up there in our first year, as cost of labour is a bit cheaper in China,” he said.
He remembers facing cultural barriers when wheeling and dealing with factories in China.
“You’ve got to go and sell your idea to the factory. Usually you need a prototype and convince them that you can create volume. If you want a bigger and more reliable factory, they’re going to want a commitment of say 10,000 light bulbs to manufacture in a month,” he said, noting that hardware startups should be cautious when working with smaller factories in China.
“At a smaller factory, you worry about the quality and whether they’re going to pull through. You have to work closely with them. We’ve experienced factories delivering products using cheaper materials to save money — you ask for A and you get B. And they wouldn’t always understand why it was a problem,” he said.
Besides raising over US$200,000 in a 2013 Kickstarter campaign, Nanoleaf also caught the eye of Hong Kong business mogul Li Ka-shing and received funding from his VC firm Horizon Ventures the following year. According to Chu, that was when the startup decided to also officially set up shop in Canada to tackle the North American market.
Turns out, having offices in Asia and North America was advantageous for Nanoleaf when hiring the right engineering talent. While Shenzhen, China, which has been called “Makers Paradise,” is home to very talented electronics engineers, Chu said his hometown Toronto produces superior software developers.
“The way that it’s divided is most of the hardware development is done in Asia. The people in Shenzhen have more hands-on experience developing electronics. They know how it’s done, they know where to buy and prototype,” he said and notes that the University of Toronto taught him and his co-founders a lot of theory but they didn’t glean enough hands-on experience.
“You don’t have a lot of companies in Toronto that are developing electronics or circuitry—it just doesn’t exist. Meanwhile, software development is in demand here so you’re able to find that kind of skill set in Canada,” he said.
In terms of funding, Chu shared that they’re almost about to close on a strategic deal with “one of the biggest connected lighting manufacturers in China,” and that they’ve also received recent investment from Chris Burch, founder and CEO of NYC-based Burch Creative Capital.
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The Nanoleaf team can perhaps relate to wearable-maker Misfit, who is technically headquartered in San Francisco but has about 100 employees in their Vietnam office.
Chu referenced Misfit when answering a question about his startup’s identity. “Where’s our headquarters? Is it in China or Canada? We’re a global company and I don’t want to say it’s one of the other. Here in Toronto, my focus is expanding North America starting with Canada and growing into the US and Christian is focused on the Asia side.”
Meanwhile, Rodinger is, according to Chu, a bit of a digital nomad and splits his time between Canada and Asia. Perhaps the secret sauce to helping your startup go global goes back to picking the right co-founders. In Nanoleaf’s case, you’ve got it’s C-suites scattered all around the globe and it’s panning out for them.