Summary

In the military carrying fuel to the frontlines can be costly, and unfortunately deadly. For these reasons, finding a way to create a more efficient engine is of the utmost importance to the US government.

This is why Alex Shkolnik and his team at Liquid Piston have been working closely with the government to completely reimagine the diesel engine construct to produce an engine that is 30% more thermal efficient and 2X more fuel efficient to gasoline engines.

With a tremendous amount of R&D progress the team has come back for a second round of capital raising on Wefunder.

Funding Round Details

LiquidPiston logo
Company: LiquidPiston
Security Type: Equity - Common
Valuation: $184,000,000
Min Investment: $1,000
Platform: Dealmaker Securities
Deadline: Oct 25, 2023
$28.0M
View Deal
Learn more about this investment opportunity in our latest founder profile below with Alex Shkolnik.

Alex, can you provide us background on how you decided to found Liquid Piston?

My father Nick is a physicist by training, and worked as an optimization engineer and then as an innovation consultant for a while, with a focus on clean energy systems. Growing up, thermodynamics was a normal discussion topic at the dinner ta ble. When I was doing my graduate studies at MIT, the ideas we were tossing around started to coalesce.

The issue is that today’s cars only convert about 15-20% of the fuel energy into useful mechanical work – the rest is wasted out the tailpipe or radiator as heat energy. We took a physics and optimization based approach, started with the thermodynamics of the engine, to improve the engine, and then rethought the entire concept of how engines operate.

How does the Liquid Piston engine differentiate from the energy production of currently available engines?

Today, Diesel engines are more efficient than gasoline (Otto) type engines – the major reason for this is because they can achieve a higher compression ratio. The problem with a Diesel engine is that it takes a while to inject, mix, and burn the fuel.

As this is happening, the piston keeps moving. Burning fuel adds heat and builds gas pressure, while the expanding piston volume decreases the pressure. Diesel engines are therefore modeled as limited pressure cycles. If a piston could be magically stopped and held at its maximum compression point for a period of time while the combustion complete, a diesel engine would be much more efficient.

By using a new kind of rotary engine architecture, we are able to take advantage of the high compression ratio of a Diesel, but also to hold the volume constant for a longer period of time, thereby increasing thermal efficiency by 30% over a Diesel engine, and up to 2x better fuel consumption vs a gasoline engine.

This is your 4th generation version of the engine. What have been the major developments between versions, and how have they helped to improve the product?

The first concept was a “Liquid Piston” (hence the name of the Company). In that iteration, we used water as the piston. It was a pretty far out concept, but it helped us advance the thermodynamics ideas. The next concept was a “split cycle” engine, with a rotary compressor, isolated combustor, and larger expander.

The idea was to do each part of the cycle in different regions of the engine, and optimize each stroke independently. We quickly realized that transferring gasses between cylinders created losses, so we then moved to a rotary design that had gates. That design had a lot of moving parts and complexity, and complicated seals that wouldn’t quite work right.

Finally, we simplified the design, converging on the ‘X’ engine, that has one rotor, one shaft, a total of 5 gas seals for 3 chambers – basically 10x fewer parts than a comparable 3-c ylinder 4-stroke piston engine.

Can you talk about the various pain points you can help the military solve with your engine technology?

Today the U.S. Military is the single largest consumer of oil on the planet. Further, it can take up to 100 gallons of fuel to push 1 gallon to the front line. Not only is this expensive, but the fuel is protected in convoys, and they lose soldiers – its measured in lives. The military has a single-fuel mandate, which is JP8 – a heavy fuel.

Today’s heavy fuel (Diesel) engines are very large and heavy, which creates logistical burdens and reduced operating capability. We can help improve efficiency, reducing the amount of fuel that needs to be pushed to the front line, and we can reduce engine and generator size and weight by approximately 10-fold.

Inherently there are risks in selling to government organizations. How are you working to minimize these?

The government is only one avenue for our commercialization strategy. We are leveraging government R&D to help launch early engine products, but our technology can also be applied commercially. We are actively in discussions with commercial partners, as well as military contractors to complement government funding.

Our business model is to develop engines and customized power solutions for our customers, and then partner with manufacturers to produce the engine. This decreases the capital requirements, and most of our development costs are paid for by partners, reducing our risk.

You talk about piloting programs with the military, but plan to scale the business by selling to manufacturers. Who are these manufacturers, and would you be selling them the technology or fully produced engines?

We are in discussions with a large number of manufacturers, especially to support military and aerospace applications (our first target markets), but also some automotive manufacturers and suppliers.

Most of these value the expertise that LPI brings, and they are looking to partner with us to co-develop solutions. As the engine matures toward production, we would be increasingly looking to lean on the manufacturing partner for their expertise.

The ability to adapt this engine for really any amount of horsepower from 1 up to 1000’s is pretty fascinating. Are there significant challenges in producing / manufacturing engines of such different sizes, and how do you minimize these challenges as you scale the business?

Within LPI, we are only equipped to test engines up to 100 hp, so developing larger engines will require investment in infrastructure, or working with partners. Overall, the development and scaling of our engines is pretty similar to the approaches taken by piston engines.

Obviously there is a significant amount of R&D cost on the front end prior to commercializing. When do you think you will be able to ramp down R&D cost and ramp up commercialization spend?

We are in discussions with OEMs, and separately intend to raise an A round to help with remaining development, and we think we can get close to a pre-production solution in about 24 months if we are adequately financed to do so.

We want to focus on only 1 or 2 programs during this period, allowing us to commercialize a first product as quickly as possible. After we launch a first product, we intend to continue developing new products, but these will be customer programs (the line between R&D cost and commercialization is blurred, as the R&D costs will be paid for by the customer). This is similar to the Dolby Labs model for engineering services / development and licensing.

What types of margins can you build into products being sold to the military, since the government can be very price sensitive?

This really depends. The government is price sensitive when buying a commodity.  But when buying a new capability there is a lot more flexibility on pricing. We have found so far that the government has been fair and reasonable to work with.

They understand that developing a new engine is time consuming and expensive, and we have been very fortunate to work through three phases of development with DARPA, and an additional program with the Army, and look forward to continuing working with government partners to bring engines into production.

What is the current makeup of the team and how do you plan to add to it with this round of capital?

I am the cofounder and CEO. I hold a PhD in Artificial Intelligence from MIT. My father, Nick Shkolnik, PhD from UConn in Physics, is the CTO. Per Suneby, MBA from Harvard and 30 years of experience working with VCs and startups, leads our Corp. Development.

We currently have 15 engineers on staff, with a mix of degrees including PhD from leading engine research universities. With the A round we plan to continue to build testing and development capability, add experienced engine and productionization engineers to the staff, and round out the management team.

Alex and his team are building an intriguing product that has the backing of major government organizations like DARPA. Some of the most momentous changes in technology come from government led programs. This just may be one of them as it relates to power production.