He was a professor at Nanyang Technological University (NTU).
Now, Dr Shi Xu is a billionaire. His company, Nanofilm Technologies International, is a maker of wear-resistant carbon coating used in products such as auto parts, optical lenses, and smartphones.
That’s after the university lab-created tech solution became commercially successful. He also recently made it on Forbes Singapore’s 50 Richest 2021.
The 57-year-old founder and Executive Chairman of Nanofilm has come a long way since he started out his career as an academic.
Nanofilm’s market cap, currently worth around S$2.5 billion, once reached as much as S$4.3 billion on the back of rising earnings and revenues.
We take a look at how this professor-turned-successful-entrepreneur made it with a university-led technology research breakthrough.
An Associate Professor for over 11 years
Shi moved to Singapore from China in 1991 when he was 27 years old. He then worked at NTU as a professor for the School of Electrical and Electronic Engineering.
Prior to his work in Singapore, Shi had completed his Bachelor’s degree in Physics from Tongji University in Shanghai, China, and his Doctorate in Physics from Reading University, UK.
The business Nanofilm was founded in 1999 with US$300,000. It started as a tech startup spun off from NTU, after Japanese conglomerate Hitachi sought to adopt Shi’s coating technology to its hard disk drives which validated the solution’s commercial potential.
NTU decided to create a company to commercialise the technology. The school, which provided seed funding, then asked Shi to lead it as he had spearheaded the research into this technology.
In a 2018 article with The Peak, Shi said he “was ‘forced’ to go into business as they felt I was most suited for the job.” He had expected to be a consultant on the research and development front.
But the opportunity to take his research out of the lab and into the world and to test his product commercially, in addition to interest seen by world-renowned companies like Hitachi, proved to be tempting to Shi.
He initially negotiated to take no-pay leave from the university for two years as a back-up plan.
Ups and downs of entrepreneurship
Shi said that financial stability and job security were the two dreams that he and his wife Jin Xiao Qun had when they moved to Singapore from China in the early 1990s.
In a dialogue with NTU, Shi spoke about his experiences as a technopreneur over the past 20 years.
He recalled that he was persuaded to invest his efforts in Nanofilm due to the potential industrial applications of his research and the numerous technological breakthroughs he had under his belt.
However, the entrepreneurship journey was not always smooth sailing for Shi, who encountered many setbacks and challenges with Nanofilm.
Shi would often return home to tell his wife he had failed, during the initial commercialisation of the startup’s innovative technologies. To solve problems, he had to take a pay cut for years.
For example, in 2004, Nanofilm faced a major setback when the hard disk drive industry – which accounted for over 80 per cent of the company’s revenue – consolidated, causing a significant drop in sales.
The company had difficulty making ends meet and paying its employees, and was in danger of shutting down. Shi then took a 60 per cent pay cut for two years to keep the company afloat.
Nanofilm’s patented method of depositing a diamond-strength film on the surfaces of objects thankfully continued to be attractive to customers. It is seen as the “gold standard” in the vacuum coating industry, due to it being chip-resistant and its exceptional smooth effect on materials.
In 2017, Shi received the EY Entrepreneur of the Year award. In the same year, Shi stepped out of his CEO role to lead the company as Executive Chairman.
Nanofilm has since grown to more than 1,400 employees in offices in Singapore, Japan, China, and Vietnam. It provides solutions for several prominent industry partners and customers, including Fuji Xerox and Microsoft.
In the first half of 2020, its revenue climbed more than 40 per cent, after growing 16 per cent in 2019.
In October 2020, the firm went public on the Singapore Exchange. With the listing of his company, Shi became a billionaire.
Buying a GCB, listed on Forbes S’pore’s Rich List 2021
After its market debut at an Initial Public Offering (IPO) price of S$2.59, Nanofilm shares more than doubled – it even touched a record high of S$6.53 on July 26, 2021.
The rally boosted Shi’s net worth to US$1.8 billion, according to Forbes.
Earlier in March, Shi’s wife, Jin, bought a 32,159 square feet freehold site with an old bungalow on Nassim Road for S$128.8 million. The move set a record price of S$4,005 psf in the area.
The Good Class Bungalow (GCB) beat the previous record of S$3,311 psf recorded in 2019 when British billionaire James Dyson paid S$50 million for a brand new GCB on a smaller site of 15,101 sqft on Cluny Road.
At S$128.8 million, the price of the GCB is equivalent to seven per cent of the value of Shi and Jin’s shares in the listed company. Jin also works at Nanofilm.
Shi’s latest “fortune” landed him a spot in Forbes Singapore’s Rich List 2021. The publication ranked him the 24th richest person in Singapore, in close ranks with frozen food manufacturing tycoon Sam Goi and Binance founder Zhao Changpeng.
Shares decline, business volatility amid Covid-19
Nanofilm however, surprised investors earlier in August. It announced that its earnings for January to June 2021 had dropped by 3.1 per cent. Analysts were expecting a continued growth trajectory.
The news saw a knee-jerk reaction from investors, with shares sinking 29 per cent to close at S$4.25, the biggest decline since Nanofilm was listed last year.
Even as revenue increased 24 per cent to S$96.6 million, investors were disappointed that Nanofilm’s net profit had slipped to S$17.9 million from a year ago.
The announcement of then-CEO Lee Liang Huang’s resignation and the subsequent sudden resignation of COO Ricky Tan also impacted the share price negatively, and some research firms like UOB-Kay Hian downgraded their “buy” recommendation on the stock.
The new CEO will be Gary Ho, who is currently Nanofilm’s deputy CEO and Chief Commercial Officer.
In a statement on the company’s results, Shi said that the company is gearing up for future growth with the commissioning of a new manufacturing facility in Shanghai and new projects in the pipeline.
Shi has been taking action to stabalise Nanofilm’s share price conditions.
Back in July, Nanofilm had announced that it had entered into a joint venture with Temasek to invest in Sydrogen Energy. The two entities will develop solutions to overcome limitations in the use of hydrogen as an energy source through Nanofilm’s core technologies.
Last month, the founder sold one per cent stake of the company’s total issued shares to Venezio Investments, an indirect wholly-owned subsidiary of Temasek Holdings.
This month, he increased his stake in the company, buying 200,000 shares for S$741,580 or S$3.70 each. With the transaction, Shi’s total interest in the company increased to just over 356 million shares or 54.09 per cent, from 54.06 per cent.
No regrets leaving academia
In an NTU forum held in May 2021, Shi listed some key attributes that he believes all aspiring technopreneurs need.
“I would say for technopreneurs themselves – there are certain attributes that they should have. There are two layers, and the first includes passion, determination, and execution. The second layer includes technology, business astuteness, and financial knowledge,” he said.
He added that it is important for entrepreneurs to have financial knowledge, dubbing it as a “crucial technical skill” that they should have if they want to run a sustainable business in the long term.
The former professor doesn’t seem to have regrets for leaving the academic life, which his wife, Jin, viewed as an “iron-rice bowl”.
“At the age of 35, life became predictable, and I didn’t think it was a good thing. I have no regrets taking this step forward and have never really looked back,” he shared.
“Business is so much more challenging, compared to teaching,” Shi told The Peak in a separate interview. “If you asked me to go back, I might feel bored.”
Get $20 off your order on VP Label when you checkout with Pace and the code PACEVP20 (min spend $80). Discover and shop exciting homegrown brands now:
Featured Image Credit: Singapore Exchange, Nanofilm