Why battery startups fail

Business news |
By Nick Flaherty

High profile starteups such as Aquion and Alevo have raised hundreds of millions of dollars in venture capital (see below) but still failed, even when the technology was in the market.  

The scientific research needed to bring the necessary advances in materials to market in the US remains a formidable challenge. Hurdles include high upfront capital costs and long timelines to success – leading many startup companies to fail, even with generous funding from venture capital and esteemed investors such as Bill Gates. The study in MRS Energy & Sustainability investigates why so many of these US battery materials startups are failing under the current venture capital funding model.

They worked with Chicago battery startup SiNode Systems team up to provide recommendations to the different stakeholders in the battery industry.

Eve Hanson, a materials scientist with venture capital experience, Vinayak Dravid, a battery research professor, and Samir Mayekar, a battery startup CEO, found that pharmaceutical products face many similar hurdles, yet there is an established track record of pharmaceutical startup successes.

The authors looked at the battery and pharmaceutical markets, and use the pharmaceutical market as inspiration for new stakeholder recommendations in the battery market.

In particular, the authors provide detailed recommendations for battery materials startup entrepreneurs, as well as for investors, manufacturers and policy-makers. The report recommends that battery entrepreneurs should incorporate pharma-like strategies such as: developing several strategic partnerships with large battery manufacturers to more effectively guide R&D strategy; targeting fundraising to specific acquisition scenarios; and initially pursuing niche, high-margin applications as their first “beachhead” market.

The authors provide a case study of these recommendations in practice based on Mayekar’s experience leading battery startup SiNode Systems.

“With numerous clean energy technologies, such as electric vehicles and intermittent renewables, dependent on gains in battery performance, improving new battery materials commercialization is critical to a carbon-neutral future,” the authors conclude. “Taking a fresh perspective, this paper provides a novel set of strategies to battery market stakeholders to improve the chances of direly needed battery commercialization… We hope that these ideas spur the battery community to more successfully commercialize and deploy transformative technologies.”

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