Scio Diamond Technology Corp Raises $2.5M For Growth FundingDecember 23, 14
In addition, the two companies agreed on terms for a second phase of funding from HGI that will take place in 2015 to further increase the company’s production capacity by up to 10 times.
The funding from HGI will be used to refinance a $1.5 million loan from Platinum Capital Partners at more favorable terms, reducing Scio Diamond’s borrowing costs by more than 10 percent. The doubling of capacity will come from the purchase of additional production platforms in a larger size.
“Scio Diamond has been a pioneer in developing the technology behind the success in lab-grown diamonds,” noted Vivian Wong from HGI. “We believe the company is well-positioned to be a major factor in expanding the market for lab-grown diamonds.”
“Our growth strategy is designed to take advantage of both near-term and future market opportunities that we believe will make Scio Diamond the leader in lab-grown diamonds,” said Gerald McGuire, President and CEO, Scio Diamond. “Our investors and board members believe strongly that lab-grown diamonds are a promising growth market. These investments illustrate the high level of confidence that they have in Scio’s management team and business plan.”
Lab-grown diamonds, with identical properties as mined diamonds, are a growing portion of the market and expected to increase by 50 percent per year CAGR through 2018, according to Frost & Sullivan’s 2014 market assessment of grown diamonds, Scio said.
In the report, Frost & Sullivan pointed out that “change in consumer preferences tending towards environmentally and socially responsible products is a key driver for the acceptance of grown diamonds.” Bain & Company’s 2014 report on the global diamond industry noted that “diamond demand is expected to outpace future supply”. These developments could accelerate demand for grown diamonds, Scio stated.
In 2014, SCIO named a new board of directors, hired a new executive team and developed a new business plan. The company added “fancy” colored diamonds to its product lineup, along with colorless stones for jewelers and cutting devices and electronics for manufacturers.
In its fiscal year ending March 31, 2014, the company increased net revenue by more than $500,000 from 2013 and reduced operating expenses to $5.6 million in 2014 from $8.1 million in 2013.