VCs Continue Investing in Batteries: Sila Nano Gets $70M for Silicon Anode Tech

Image Credit: Sila Nanotechnologies

Will batteries replace the internal combustion engine? Not without “fundamental breakthroughs in energy storage,” according to Sila Nanotechnologies CEO Gene Berdichevsky. 

Sila Nano, his startup, just won another $70 million of venture funding to develop advanced battery materials that improve power performance of electric vehicles and consumer electronics. The Alameda, California-based startup, founded in 2011, is looking to commercialize a new set of high-performance silicon anode materials that could replace the commonly used graphite in lithium-ion battery anodes.

This latest funding round was led by Sutter Hill Ventures and joined by earlier investors Bessemer, Samsung, In-Q-Tel, Matrix Partners and Changwei Capital along with Next47 (Siemens' VC arm), and Chinese battery builder Amperex. This round brings the firm's total funding to $125 million, along with a $350 million valuation, according to PitchBook.

There's always been a bit of a mismatch in VC expectations and new battery technologies. Faced with the harsh reality of thermodynamics, battery startups have to make enormous efforts in time and capital to make just incremental performance gains. VCs are conditioned to seek product improvements that wreck markets, not incremental gains.

But despite the challenges of battery science and manufacturing, venture capital and private equity firms have invested more than $1.3 billion in energy storage technologies in 2018, according to Wood Mackenzie. In June, QuantumScape landed a $100 million funding round for its solid-state battery that eliminates the liquid electrolyte typical of today's batteries. 

And Asian investors are starting to move significant capital into energy storage. Chinese lithium-ion battery developer and manufacturer Farasis received a $790 million investment earlier this year. China's Skio Matrix raised $159 million for lithium-ion battery and EV development. 

Everybody needs a better battery 

The rapid growth of a viable EV industry is driving the advanced battery industry to new heights in revenue and technological progress. This is why venture capitalists are eager to invest in batteries, relative to say, solar hardware. Assorted forecasters peg the 2025 market for electric car batteries as ranging from $36 billion to $125 billion a year. That's big enough to get a VC's attention. 

Berdichevsky is adamant that the performance and cost of electric vehicles will depend on the battery itself.     

On the smaller end of the spectrum, mobile phone battery performance still struggles to keep up with the needs of power-hungry apps, advanced optics or a 5G network — and needs its own set of battery breakthroughs.

And so, despite the less-than-stellar record for VC-funded battery firms such as A123, Envia, Aquion, Imergy, Alevo, etc., there is still a movement of talent and capital into the battery business.

Range anxiety solved, charging time is next

With the Chevy Bolt offering 240 miles of range, one could argue that the issue of EV driving range is slowly getting solved. Attention is shifting toward charging time, according to battery expert David Snydacker of Dosima Research.

He notes that today, most fast-charging EVs can reach an 80 percent charge in 30 to 40 minutes. But he points out that Porsche's recently announced Taycan EV can charge to 80 percent in 15 minutes. 

“Presumably, this 15-minute charging is being done with conventional lithium-ion cells that have been made especially thin so that the lithium can move more quickly from the cathode to the anode during charging. The tradeoff with this approach is that these thin cells contain less active material and therefore have lower energy density.”

How do you get 15-minute charging time without sacrificing energy density? Answer: silicon anodes. 

Silicon stores more charge than traditional graphite anodes, and so thinner anodes can be built that speed-up charging without sacrificing energy density. However, says Snydacker, “Silicon fractures during charging, and this mechanical stress needs to be managed.”

He adds, “Recently, a new class of silicon anode technologies has emerged based on porous silicon particles. These porous silicon particles mimic the conventional graphite particles, offering mechanical stability and lower surface area, while also enabling higher energy density.”

That's the new class of materials that Sila is developing.  

Battery claims  

Sila makes a number of claims on its website and in its press releases: high cycle life, ultra-low swelling, high energy density, getting its product into “millions” of consumer devices electronics in 2019 with a “drop-in manufacturing process.” The startup suggests that its materials can increase the capacity of a lithium-ion battery up to 40 percent.

Sila has reputable investors and a founding team with strong battery pedigrees. The CEO was employee no. 7 at Tesla where he worked on battery system development for the Roadster. But 40 percent capacity improvement is an audacious claim and remains to be proven in the real world. It would be a breakthrough — although I am reminded of the words of Thomas Edison regarding battery entrepreneurs. 

The recent injection of cash will allow Sila to build a facility in Silicon Valley with a capacity of up to 20-megawatt-hours worth of batteries each year as it works to qualify its products with major battery manufacturers, as reported in Quartz.

What is the exit strategy?

Sila appears to be a materials supplier, not a battery builder. This situates Sila as a component supplier in a wildly competitive and rapidly commodifying business with a plummeting ASP.  

Those are difficult business conditions for a startup — but if its 40 percent performance improvement is real, then plenty of automotive OEMs are going to be interested in learning a lot more about Sila's technology

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Read more: greentechmedia.com

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