French start-up Oledcomm demonstrated the technology at the Mobile World Congress, the world's biggest mobile fair, in Barcelona. As soon as a smartphone was placed under an office lamp, it started playing a video.
The big advantage of Li-Fi, short for "light fidelity", is its lightning speed.
Laboratory tests have shown theoretical speeds of over 200 Gbps -- fast enough to "download the equivalent of 23 DVDs in one second", the founder and head of Oledcomm, Suat Topsu, told AFP.
The technology uses the frequencies generated by LED bulbs -- which flicker on and off imperceptibly thousands of times a second -- to beam information through the air, leading it to be dubbed the "digital equivalent of Morse Code".
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It started making its way out of laboratories in 2015 to be tested in everyday settings in France, a Li-Fi pioneer, such as a museums and shopping malls. It has also seen test runs in Belgium, Estonia and India.
Dutch medical equipment and lighting group Philips is reportedly interested in the technology and Apple may integrate it in its next smartphone, the iPhone7, due out at the end of the year, according to tech media.
"We are going to connect our coffee machine, our washing machine, our tooth brush. But you can't have more than ten objects connected in Bluetooth or Wi-Fi without interference," said Topsu.
Deepak Solanki, the founder and chief executive of Estonian firm Velmenni which tested Li-fi in an industrial space last year, told AFP he expected that "two years down the line the technology can be commercialised and people can see its use at different levels.