EnerG2, Backed by OVP and Firelake, Wants to Own Energy Storage in the Electricity Economy
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processing steps to “craft these materials at the molecular level,” Luebbe says, thereby optimizing their structure and properties for particular energy storage applications. “We really want to innovate the materials from the ground up,” he adds.
For the first few years, EnerG2 was funded through the Washington Technology Center and other sources in the region, including Seattle-based WRF Capital, the Sustainability Investment Fund of Portland, OR, and members of the Northwest Energy Angels. As the technology matured, Luebbe says, the company worked with UW TechTransfer on the licensing and sharing of intellectual property. He also began to look for greater funding opportunities through venture firms.
Enter Rick LeFaivre and OVP. In June 2006, LeFaivre says, he had been “roaming the halls” at the UW, and was introduced to Luebbe and Wheaton, and then Feaver. (Wheaton is EnerG2’s chief operating and financial officer, while Feaver is vice president of research and development.) The initial meeting took place at the Washington Technology Center, and LeFaivre says UW TechTransfer helped set it up. “Here’s a couple of refugees from the IT world who said, ‘I’ve been in a couple IT-oriented startups and frankly that was getting kind of boring,'” he says. “I began to advise them on, here’s what you need to do to get funding, and I kept meeting with them.”
At the time, OVP didn’t have much expertise in cleantech. LeFaivre himself is a former professor of computer science and a veteran of the tech giants Apple, Borland Software, Silicon Graphics, Sun Microsystems, and Tektronix. So he spent time talking with energy experts, faculty, and graduate students at the university. “Our own strategy evolved here to have an actual focus on the cleantech space,” he says. In some respects, OVP applied the same strategy as in biotech. “When you’re an investor, you’re looking for emerging areas that have promise, that are hitting the inflection point of the S-curve. Both in the biology space and energy, we’re hitting those,” LeFaivre says. “We decided this is definitely an area we need to develop points of view on.”
Which is all well and good, but EnerG2 wasn’t ready for venture funding just yet. The first issue was finding the right market. The startup initially focused on hydrogen storage, says LeFaivre, but that didn’t pan out. Instead, EnerG2 quickly refocused on electrode materials for making better batteries and “ultracapacitors.” These are devices that can store and release electricity 1000 times faster than conventional batteries and have much longer lifetimes—all because there is no chemical reaction involved. Luebbe says the market for ultracapacitors is $600 million, and is growing by 70 to 100 percent per year as costs come down. Ultracapacitors are commonly used in elevators, cranes, and forklifts, but they could spread to more everyday uses (more on this in a minute).
The second issue was scale. As LeFaivre puts it, “there are a lot of university projects out there.” He looked at perhaps eight to ten projects—such as making an ultracapacitor using carbon nanotubes—where the technique could be demonstrated in a lab, but “there is a lot of skepticism about whether it can scale” to industrial applications. In other words, can you make a ton of the stuff, instead of just a few grams? “I want you to prove you can build the material on your dime instead of mine,” says LeFaivre.
EnerG2 got to work on that, linking up with a large, undisclosed chemical company to … Next Page »