TechAlert - November 2007
Welcome to the November 2007 edition of TechAlert, the bi-monthly newsletter of the Illinois Technology Development Alliance. Our issues feature articles of great interest to entrepreneurs; to investors interested in leading-edge, high-technology opportunities, and to established companies looking for innovative solutions to pressing business needs.
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ARTICLES
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Firefly Energy, Inc. Wins The Wall Street Journal's 2007 Technology Innovation Award
Ground-breaking Graphite Foam Battery Honored
As Co-Winner in Energy Category
Firefly Energy, Inc. (www.fireflyenergy.com) of Peoria, IL continues to have a banner year.
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**CORRECTION: THE ITDA TechAlert e-mail stated that FireFly Energy closed out 2006 with a '$10 billion equity financing round'. The correct amound was $10 MILLION. ITDA apologizes for this mistake and the confusion it has caused.
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After closing out 2006 with a $10 million** equity financing round, the company executed a $5 million contract with the federal government, won R&D Magazine’s 2007 R&D 100 Award, and most recently was recognized as a co-winner in the energy category in The Wall Street Journal’s 2007 Technology Innovation Awards.
The Technology Innovation Awards competition, now in it seventh year, recognizes technological breakthroughs by individuals, companies, and organizations around the world in medicine, energy, software, hardware, the Internet, the environment, and other categories.
“It’s an honor for our company to be selected by for this award,” says Edward Williams, CEO and co-founder of Firefly Energy. “This recognition is a reflection of the ingenuity and dedicated of Firefly’s entire team. We are committed to delivering lower cost, higher performing, and greener battery technology.”
That Los Alamos National Laboratory was Firefly’s co-winner in the energy category says almost as much about Firefly Energy’s accomplishments as does the award itself.
The competition received more than 800 entries—up 30 percent from last year. Judges were demanding; less than 4 percent of the applicants received awards. Earning this recognition places Firefly Energy among an elite group of companies. Prior winners include Sun Microsystems Inc.; 454 Life Sciences, a 2005 winner with 2006 revenues of $38 million, and Riverbed Technology Inc., a 2006 IPO whose share price has gone from $9.75 to more than $45.
In his Editor’s Note, Lawrence Rout of The Wall Street Journal wrote, “…a final prediction: We’ll be writing bout some of these innovations for many years to come.”
Firefly Energy’s battery technology fits military and commercial markets
A traditional lead acid car battery can have more than 120 heavy, corrosion-prone, lead metal grids that provide the surface for the chemical reaction that produces energy. Firefly replaces these grids with light-weight, carbon-graphite foam which provides significantly extended battery life; enables faster, deeper, and more reliable discharges and recharges; is more environmentally friendly, and is less expensive than lithium and nickel battery chemistries.
“We are in this gear-shift from product development to manufacturing,” says Mil Ovan, senior vice president and co-founder. “We have lined up manufacturing partners and are in discussion with companies to expand our sales, distribution, and marketing. We are confident that we have the momentum to carry us through this next stage of our company’s development.”
The US Army is assessing Firefly’s prototype batteries in a “silent watch” program with the goal of allowing the military to perform reconnaissance in ground combat vehicles without being detected by the enemy.
Firefly recently announced manufacturing partnerships with two world-class producers of batteries—NorthStar Battery Company of Springfield, MO for manufacturing batteries for military use and Crown Battery Company of Fremont, OH for producing batteries to serve commercial truck markets.
The sleeper cabs of many over-the-road trucks are like mini-apartments—with micro-waves and televisions that require an on-board power source. The Firefly truck battery would have enough power and charge to operate these appliances as well as heating and cooling systems without having to run the engine of the truck. This application is driven by fuel costs and by pending California legislation that restricts engine idling to five minutes per hour.
Firefly aims to ship batteries for both the army and the commercial truck application in the second half of 2008.
$30 billion worldwide market for batteries
“I’ve never been with a start up that is better positioned to take advantage of multiple trends,” Ovan says. “You have rising price of precious metals used in lithium ion plus certain safety issues with advanced batteries. Then there is the increasing consumer awareness and acceptance of hydro-electric vehicles caused by rising oil prices and environmental concerns. Finally there is an entire set of product companies looking for better battery technology at this unique intersection of cost, performance, and safety. Firefly is very well positioned for taking advantage of all these trends.”
John Noel, ITDA interim president and vice president, agrees. “Not only are Firefly’s products seen by experts as some of the most significant products introduced worldwide,” he says, “this company’s focus and execution have produced a track record of achieving committed, critical milestones—a true measure of company excellence.”
**CORRECTION: THE ITDA TechAlert e-mail stated that FireFly Energy closed out 2006 with a '$10 billion equity financing round'. The correct amound was $10 MILLION. ITDA apologizes for this mistake and the confusion it has caused.
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WhiteMoss, Inc.: Designing the Next Generation Heating and Cooling Systems...Now
Carbon dioxide (CO2) causes plants to grow; dough to rise, and life jackets to inflate. Now WhiteMoss, Inc. of Peoria, IL (www.ecothermics.com) is using the same CO2 that fizzes sodas and extinguishes fires in an out-of-the-box and ecologically responsible cooling system that promises up to 50 percent more energy efficiency than current technology.
The U.S. Army selected WhiteMoss to develop a “clean-sheet” design for a scalable environmental control unit using CO2 as a refrigerant; in 2006 this project was completed successfully.
“Our engineers solved several tough, long-standing technological hurdles precluding the use of CO2 as a refrigerant in compressors,” says Thomas S. Lewicki, WhiteMoss chief financial advisor. “We went on to up the ante by designing a unique hydronic heat exchanger and heat pump system that will deliver thermal energy via hot and cold liquid circuits.”
CO2 offers powerful heating and cooling properties
CO2 is a global warming gas that occurs naturally when humans and animals breathe and is also a by-product of manufacturing and fossil fuel consumption. CO2 offers both powerful heating/cooling characteristics as well as environmental benefits when used as a refrigerant.
With heat transfer properties that are considerably more efficient than other gases, CO2 has a global warming potential (GWP) of only 1. Synthetic hydrofluorocarbon (HFCs), which are the gasses that are in widespread use today as refrigerants, have GWPs ranging from 1200 to 12,000 and are, therefore, thousands of times more toxic to the environment than CO2.
“Considering global warming concerns, one can understand why artificial coolant gases are now heavily regulated,” says Rodney D. Hugelman, Ph.D. and WhiteMoss chief scientist. “Releasing them into the atmosphere is very harmful and illegal, adding significant disposal and recovery costs to maintenance of today’s refrigerant systems. Mounting worldwide research and political pressures point to CO2 as the truly viable, long-term refrigerant solution; synthetic chemical refrigerants may eventually be banned entirely.”
WhiteMoss uses fresh approach to overcome challenges to CO2 as a refrigerant
The first challenge with using CO2 as a refrigerant is that compressing the gas requires much higher pressure than compressing synthetic hydrofluorocarbons. The team at WhiteMoss has extensive experience with high pressure hydraulic pumps, so dealing with high pressure gas compression was well within their traditional range of expertise.
However, the second hurdle with CO2 presents different challenges. CO2 is a very effective solvent. When the gas mixes with the oil needed to lubricate moving parts in a compressor, the oil breaks down; metal rubs metal, and parts burns up.
“Our unconventional approach cultivated a unique compressor which isolates the compressor lube oil from the working CO2 gas,” says Marc Albertin, a WhiteMoss founder and vice president of field operations. “This was a development goal and no simple achievement, and we believe this opens the door for durable CO2 compressors.”
CO2 technology meets near-term DoD need
Their original thinking helped WhiteMoss receive both Phase 1 and 2 Small Business Innovation Research (SBIR) DoD contracts. “The military was the first to recognize the potential of CO2 as a refrigerant, and they have an immediate need,” Albertin says. “They approached us because we were thinking out-of-the-box and were intensely focused on advancing the science.”
The Army requires worldwide deployment. “They recognize the global procurement benefits of using an unregulated refrigerant with a sustainable supply and low raw material cost,” Lewicki says. “The use of CO2 largely eliminates the huge logistical burden of storing and training involved with a myriad synthetic refrigerants, many of which are already banned around the world.”
Another unique feature of the WhiteMoss compressor is that it is variable. Conventional systems are controlled by routinely switching off and on—many times in a single day. This creates wear on the compressor and other components and wastes energy.
“Our variable compressor smoothly ramps itself to match the system heating/cooling requirement,” Dr. Hugelman says. “The compressor uses only the amount of energy needed to satisfy the immediate demand. This can boost performance by as much as 20 percent, which not only saves money but produces greater comfort.”
CO2 compressor + unique heat exchanger create thermal grid system
WhiteMoss’s second innovation, a hydronic heat exchanger, transfers heat using water, which is a very efficient conductor of thermal energy, or other liquids such as water/glycol blends. Think of hot and cold water lines supplying thermal energy similar to the way you think of wires supplying electricity in an energy grid.
“We call our methodology a ‘thermal energy grid’,” Dr. Hugelman explains. “We move heat from anywhere it is not needed or desired to where it may be effectively and flexibly used. Moving heat is many times more efficient than creating it and it should be discarded only as a last resort. Hot and cold water circuits from our heat pump may be tapped from anywhere on the grid for virtually any use requiring hot or cold thermal energy.”
WhiteMoss receives ITDA commercialization award
“We’ve known WhiteMoss for several years,” says John Noel, ITDA interim president and vice president. “They have built up credibility by delivering on what they say they are going to do. We saw them hitting their milestones, and this award will help them continue on that critical path.”
The ITDA award funding helped WhiteMoss achieve critical milestones. “We are confident that we can build viable systems based on our core compressor,” says Lewicki. “We attribute ITDA with exceptionally high marks, not only for their support through this funding, but also because they proved to be seasoned and dedicated advisors that have stuck by us.”
Success requires competing with some very large players in the industry and changing the way consumers think about heating and cooling their homes and places of business—but that isn’t slowing WhiteMoss down. “Although our initial focus is on Homeland Security solutions, the commercial possibilities are endless and not all that far out. We would like to have a pre-production prototype system in place in less than two years,” Lewicki says.
“Today we heat here, cool there, paying every time,” says Dr. Hugelman. “What we throw away will be created again. Our goal is to never throw away energy which could be used elsewhere on the thermal grid. History reminds us that today’s core technologies were once impossible dreams.”
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Entrepreneur Briefcase Light:
It’s Never too Early to Invest in Your Brand
The executive summary—an entrepreneur’s initial face to a potential investor—is more like a movie trailer than an article abstract. You want to offer up the best scenes, not the whole plot. The goal is to get the investor sufficiently engaged, not exhaustively educated. Your objective is to get a follow-on meeting, not to explain every last detail of your technology.
Think Hollywood, not white paper. You want to get the investor personally intrigued in your company. Here are the steps to accomplish that.
The Grab:
Lead with a concise sentence that makes it absolutely clear what your business is and what you have that is different from everything else the investor has ever seen.
The Problem/Opportunity:
Make it clear that there is a big, important problem that you are going to solve, or that there is an enormous opportunity that you are going to seize.
The Solution:
What specifically are you offering to whom? Use common terms to state what you have or what you do. If you have prototypes, client trials, or revenue-producing customers, make that clear. If not, tell the investor when you will.
The Market:
Make it clear that you understand your market's segments, size, growth, and dynamics. Talk about your sepcific opportunity from the bottom up, customer by customer and product by product, not as percentages of macro numbers.
Your Competitive Advantage:
All businesses have competition, even your incredibly innovative start-up.
Your Revenue and Profit Model:
How are you going to generate revenues and from whom? Will your model scale, which is another way of saying, can you turn early losses into significant, sustainable profits?
Your Team:
Show how your team is uniquely qualifies to win in the markets you have chosen to serve.
The Promise:
Your fundemental promise to investor is that you are going to make them a boatload of money. Summary financial projection should demonstrate this realistically.
The Ask:
Be specific about the amount of funding you are requesting.
There is no one executive summary template that fits all companies, but you should be able to make your points on each key issue in two to three simple, clear, specific sentences.
In the September Entrepreneur Briefcase, Bill Reichert, managing director of Garage Technology Ventures, a seed and early stage venture capital fund in Palo Alto, CA, tells readers how to develop an executive summary that will make a potential investor want to hear more. Visit Entrepreneur Briefcase to learn more.
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Monday Morning Meeting: Companies Talk Trucks, Trading, and Taking Television to the Internet
The Illinois Technology Development Alliance’s Monday Morning Meeting series continues to provide the best venue in town for entrepreneurs to learn how to get an audience excited about their solutions in 13 minutes or less.
“We continue to see companies with original and inventive applications of technology,” says LeAnne Tourtellotte, ITDA director of Venture Development. “The three client companies that presented at the October event are using ITDA commercialization services to serve such markets as the specialized field of options trading, the huge opportunity to convert hundreds of thousands of gasoline and diesel burning vehicles to hybrid technology, and the revolutionary space of Internet video content searchability.”
NetGain Technologies, LLC, of Lockport, IL (www.go-ev.com) has a patent-pending technology that puts truck fleet operators—think Federal Express and UPS, Holsum Bread, or the US Postal Service—on the road to going green with a smaller investment than buying new hybrid trucks.
OptionsCity™ Software, Inc. of Chicago (www.optionscity.com) is developing a real-time trading platform that solves current problems for options traders, and Industry Production, LLC of Chicago (www.industryprod.com) is working on a service that will help companies take broadcast video, cut it in pieces, then key-word and tag those sections to make it searchable over the Internet.
The October event was co-sponsored by the ITDA and the Jules F. Knapp Entrepreneurship Center at the Illinois Institute of Technology (IIT) in Chicago. The Knapp Center provides a range of advisory and mentoring services as well as access to resources from IIT and other academic and community partnerships.
Making thousands of hours of video accessible in useful bites
Industry Production, LLC of Chicago provides video production services to producers and directors who want to film in the Midwest. “Viewers want to see the country,” says Mark Goodman, vice president of business development at Industry Production. “They don’t want everything filmed in LA or New York. That’s our core business.”
While working on a major project for an internationally known network, the team at Industry Production saw an opportunity. “The client has over 100,000 hours of high quality knowledge video in their inventory,” Goodman says, “but finding a way to make money on that asset is problematic.”
Consider the example of a home improvement program.
“Think of all the wonderful tips that are in these shows,” Goodman says. “Suppose you watched an episode a couple of months ago that showed removing wall paper, and now you are ready to do the job yourself. You probably wouldn’t want to dig through an entire 40-minute episode to see the part on wallpaper, but you would want to be able to find on the Internet a one- to five-minute video clip that showed the wall paper tip.”
Industry Production works with the cable network by editing broadcast length video files into a shorter, Internet-useable subject length and tagging them for keyword searchable content.
This editing/tagging service opens an advertising revenue stream for the cable network and Industry Production.
“The idea is that advertisers will be associated with the wallpaper tip,” Goodman explains, “and that because of the way Google works, the advertisers can be local to the person watching the clip. The more the person visits the site, the more the advertising would be tailored to their needs.”
Industry Production is working with the ITDA to put together a business plan and funding strategy to move into this new space. “They ask really good questions and really make us think,” Goodman says. “The Monday Morning Meeting was excellent from the perspective that we hadn’t gotten up and talked about our proposition. It gave us an opportunity to validate that we can articulate what we are doing in a simple enough manner that people can understand it.”
Converting from gasoline to hybrid may become almost as easy as changing a tire
NetGain Technologies, LLC has developed a system that converts gasoline or diesel vehicles to hybrids by installing a battery-powered electric motor in the drive train that is activated by a “black box” that recognizes when the vehicle is running at poor fuel efficiency and switches to electrical power. The system uses NetGain’s Electronic Assistant System (EAS) patent-pending technology to tell the truck when to run on fuel and when to run on battery power.
“With our system, the vehicle drives the same way it did before with up to a 25 percent improvement in fuel usage,” says Dennis Bieschke, NetGain presenter and partner. “A truck can be converted in less than a day. Except for our black box, the system uses standard parts. The battery capacity can be engineered based on the length of the truck’s route, and the battery pack is usually installed under the truck so it doesn’t use up interior space.”
A key element in NetGain’s commercialization strategy is to establish strategic partnerships. “We are idea developers,” Bieschke says. “We are good at perfecting a system and getting it rolling, and then we need strategic partners on the supply side to build components and on the demand side with the physical distribution and sales capability to get to market quickly.”
MMM format supports entrepreneur’s objectives
“The opportunity to get in there and talk in an open forum among friends is very positive,” Bieschke says, “and we wouldn’t have that without ITDA. The people in the room want you to succeed. That makes for a much better process. You get better ideas when you are thinking win-win and that feeling is generated in the room.”
Joel S. Dryer, owner and principal of Lab To Company, moderates the Monday Morning Meetings, setting a tone of cooperation and delivering direct and efficient feedback. The presenters and other company representatives appreciate Dryer’s rapid understanding of their businesses.
“Joel is a person that you respect,” says Bieschke. “He’s very professional, gets to the root point quickly, and doesn’t beat around the bush. If there’s a problem, presenters want to know it so we can do something about it. I was amazed at how he picked up on a lot of things and reached the right conclusion about what we and the other companies are trying to do and where we want to go. He generated ideas about where we can look for partners and research and from that the audience came up with more ideas.”
Bieschke says that he attends the Monday Morning Meetings regularly. “Even if you aren’t presenting,” he says, “you get to meet people before and after the presentation. It’s the networking, but it’s also the ability to relate to other projects that aren’t even connected. The diversity of all these ideas helps stimulate creativity.”
© 2006, Illinois Technology Development Alliance.
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