It certainly catches the eye when a chief executive of a prerevenue start-up to berate the market for failing to support its vision when it has just collected £15m ($22m).
But then Oxis Energy, a UK-based rechargable battery maker for electric bikes and cars, does have a strong position in battery storage systems.
As Huw Hampson-Jones, chief executive at Oxis Energy (formerly known as IntelliKraft) since January 2010, said: “Over the past two years, it has become apparent to me that the European and North American energy companies lack the understanding of the significance of the Oxis Energy technological breakthrough, and its impact on the future method of propelling vehicles and energy storage.”
However, he added: “Sasol fully understands the profound implications of this new chemistry and technology. Together we shall demonstrate this.”
This was because, last month, Sasol, a South Africa-listed energy and chemicals company, invested the £15m as a single-tranche payment at the deal’s close for a 30% stake in Oxis.
Henri Loubser, managing director of Sasol New Energy (SNE), said: “This strategic investment in Oxis Energy will allow Sasol to apply its extensive experience of commercialising and scaling up chemical processes to assist Oxis Energy in realising the full potential of the polymer lithium sulphur, [Poly Li-S,] technology they have devel-oped. Energy storage will be a critical link in the success of a low carbon mobility value chain.”
Founded in the 1950s, Sasol was established to develop and utilise technology to convert some of South Africa’s extensive coal reserves into oil and gas, and associated chemicals.
And when SNE was strategically looking at renewables one area of interest was battery power to store energy that can be irregularly produced but where the challenge is cost.
Sasol’s confidence in its abilities meant it went to first principles, such as whether emerging technologies such as lithium-air, zinc-air and Poly Li-S could be better technologies than lithium-ion used by many existing electric battery makers, according to Loubser’s deputy, Cavan Hill.
Hill added: “Once that was done we looked at the market at who was working in these area and saw Oxis. Oxis, in turn, realised their technology needed scaling and ommercialising and we could help.”
Such potential collaborations between the two companies could include leveraging Sasol’s research and development expertise, chemical process commercialisation capabilities, and using Sasol’s laboratories.
Hill said that, in the longer term, it Oxis’s technology could link with Sasol’s other demonstration plants on sources of renewable power within a few years.
One potential option for Oxis would be to work with UK-listed industrial group GKN, which last year made a corporate venturing investment in electric vehicle motor maker Evo Electric.
Hampson-Jones said he would be delighted to work with GKN and added the range of potential markets included defence and aviation as well as land vehicles, where the importance of safety and weight to power and storage capacity were important issues.
The technology is also ultimately biodegradable, whereas existing lithium-ion battery systems contain toxic materials, such as nickel and cobalt.
And with the backing of Sasol, which has a $30bn market capitalisation, Hampson-Jones said Oxis was already having better talks with potential customers.
He said: “Overnight [after the deal was announced], the world woke up to us and gave us the strength to engage with customers. One said, ‘Huw, this really gives us comfort to take this forward’, as our finances are now stable and we have the support of a major corporation. It really is transformative.”
The £15m is expected to last Oxis until 2015 and take its technology to mass production by battery manufacturers.
Oxis batteries are to be used in Netherlands-based QWIC Hartmobile’s electric scooters expected go on sale next year and into Norway-based Engbo Innovation’s electric boats in 2014, while its batteries are already being used by France-based Induct’s electric buses and cars (Induct’s Modulgo is pictured).
Oxis, however, will face a challenge in its market as rivals develop similar technology.
The SNE investment in Oxis follows US-based peer Sion Power, formerly known as Moltech, which also uses Poly Li-S technology for its batteries having spun off from Brookhaven National Laboratories in 1994, receiving $50m in January from Germany-based chemicals company BASF’s corporate venturing unit.
Sion batteries are used in unmanned air vehicles developed by the UK government’s defence research spin-off, Qinetiq.
And while Sion has a longer history in developing its technology, Oxis has also spent years in development and early funding.
Oxis Energy was originally founded in 2000, and was renamed Oxis Energy in 2005, when the company decided to focus on the development of a safe alternative battery chemistry and technology to that of lithium-ion.
Oxis has spent the past seven years on the Poly Li-S chemistry and its development and with Sasol the intention is to move the technology forward towards mass production of cells and battery systems made by third parties using licences from Oxis.
Prior to the Sasol investment, Oxis‘s shareholders, which have included venture capital firm Hazel Capital as well as individual angels, had invested £14m.
For Sasol, this early funding helped prove the concept, but by being pre-revenue the deal brought its own challenges.
Hill said Sasol had only done one or two similar deals in past decade so it could not use its normal approach and process, which are designed for mergers and acquisitions of larger companies.
As examples, he said the processes involved in valuing mature companies and prerevenue start-ups and different, as are methods of due diligence.
And Neil Foster, London-based partner at law firm Baker Botts, which represented Sasol in the deal, said: “An important area of corporate venturing is on every deal there is a range of outcomes for the corporation, from buying, selling or holding so you have to prenegotiate at entry for the what-ifs.” Law firm Bird & Bird advised Oxis.
But now the deal is completed comes the challenge of making it a success.
Hill said: “For us, success metrics will come down to whether Oxis’s technology is successfully commercialised and applied, which will give financial success as a result.