Displair, an award-winning startup based in Astrakhan, Russia, is preparing itself for bankruptcy, said founder Maxim Kamanin in a voice message to the project’s team that the Russian tech publication Siliconrus.com leaked a few days ago.

The company, which not long ago was considered one of the best Russian startups, became well known as the developer of an innovative display technology that projects digital pictures in the air.

Translucent and permeable images are formed by an aerodynamic layer of dry fog composed of ultra-fine water droplets. The images can be captured by hand movements – allowing for virtual object manipulation in free space in a way that reminds observers of Tom Cruise’s famous gesture in the film “Minority Report.”

With a prototype developed over 2010-2011, Kamanin won a series of awards at Russian innovation contests. The technology also drew the attention of international tech media – including Mashable, TechCrunch and Wired – and investors.

In early 2012, Displair raised several hundred thousand dollars in a seed-stage round of financing involving Russian and Western investors. Among these were US business angel Esther Dyson, digital marketing expert Bas Godska and East-West Digital News co-founder Adrien Henni.

A few months later the startup secured $1 million from Leta Capital, the newly created venture arm of a major Russian IT security holding. The fund then injected approximately $2 million.

“Many mistakes” recognized

Enthusiastic media reports, strong investor commitment, a leading position in Russian startup ratings and Kamanin’s personal charm together proved sufficient to attract top experts and employees from across Russia and beyond.

Yet the combination was not enough to ensure the startup’s success.

In his message to the team, Kamanin admitted “many mistakes” and acknowledged that his technology is “far from ideal.”

“Honestly, our product cannot even be called a normal prototype. Its electronics are worth virtually nothing, the MPI stage has not been completed, and assemblage costs are colossal. All this has kept us from launching production in normal conditions.”

In addition, the startup “grew too quickly,” Kamanin acknowledged. “Over the last month I have done everything possible to reduce costs,” he said, but these efforts were “not understood by the team,” the 25 year-old CEO complained.

According to a recent audit, “more than $3 million” would be required to reach break-even – a sum that Kamanin judges “practically impossible to find.”

Displair was burning more than $200,000 per month, an insider told East-West Digital News.

CEO statements presented as “rumors”

As a consequence, Displair’s board of directors “has decided to shut down the company,” Kamanin said in his voice message. “All the [remaining] money will be used to complete this procedure as required by law.”

“I will personally continue pushing the product, but without money, without a company and without any guarantees,” he added.

Shortly after his message to the team was leaked, Kamanin sent the company’s shareholders an email that characterized the news of Displair’s closure as “rumors” spread by “a few dissatisfied former employees.”

A press release explained that the company “changed its strategy:” it will now focus on R&D and sell technology licenses to third-party manufacturers. The Astrakhan office will be shut down, but the project will continue.

“Creating an own production capacity and launching the product worldwide would require hundreds of millions of dollars,” the press release reads – without explaining which manufacturers could invest even a fraction of these amounts in such a technology.

Leta Capital’s Managing Partner Alexander Chachava said he was committed to supporting this new strategy.

Displair did not respond to EWDN’s questions.

  • Disclosure: EWDN co-founders Alexander Baderko and Adrien Henni were among Displair’s seed-stage investors. Henni also mentored the startup in its early stages. However, due to divergences with Kamanin, the mentorship agreement was terminated in mid-2012. Baderko, Henni and another seed-stage investor sold their shares a few months later.