EnergyX

EnergyX

Growth Stage

EnergyX develops next generation battery technology and direct lithium extraction technology.

EnergyX develops next generation battery technology and direct lithium extraction technology.

Overview

Raised this Round:
$1,070,000 - RegCF
$1,521,935 - Total

Total Commitments ($USD)

Platform

Netcapital

Start Date

12/09/2020

Close Date

02/05/2021

Min. Goal
$10,000
Max. Goal
$1,069,998
Min. Investment

$103

Security Type

Equity - Common

Series

Seed

SEC Filing Type

RegCF / RegD 506(c)    Open SEC Filing

Price Per Share

$4.90

Pre-Money Valuation

$54,114,620

Year Founded

2018

Industry

Energy, Power, & Natural Resources

Tech Sector

Cleantech

Distribution Model

B2B

Margin

High

Capital Intensity

High

Location

Dorado, Puerto Rico

Business Type

Growth

EnergyX, with a post-money valuation of $57.18 million, is raising crowdfunding on NetCapital. The company is leading the global transition to renewable energy. It has developed the next-generation battery technology and direct lithium extraction technology and built Lithium-ion Transport and Separation( LiTAS). Teague Egan founded EnergyX in 2018. The current crowdfunding campaign has a minimum raise of $10,000 and a maximum raise of $1,069,998. The proceeds of the raise will be used towards intellectual property, battery design, pilot plants, marketing, accounting, and other expenses. EnergyX already has agreements with four of the top ten lithium producers of the world. The company’s technology will improve lithium recovery rates from 30% to 90%.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-786,027

$0

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$159,939

$0

Accounts Receivable

$0

$0

Total Assets

$171,801

$0

Short-Term Debt

$102,250

$0

Long-Term Debt

$313,000

$0

Total Liabilities

$415,250

$0

Financials as of: 12/09/2020
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
EnergyX 12/30/2024 Dealmaker Securities $475,000,000 $47,249,457 Equity - Common Active RegA+
EnergyX 08/19/2021 Netcapital $306,492,600 $3,039,768 Equity - Common Funded RegCF
EnergyX 05/08/2021 Netcapital $306,492,600 $0 Equity - Common Funded Test the Waters / RegCF
EnergyX 02/04/2021 Netcapital $54,114,620 $1,521,935 Equity - Common Funded RegCF / RegD 506(c)
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Revenue History

Note: Revenue data points reflect the latest of either the most recent fiscal year's financials, or updated revenues directly from the founder, at each raise's close date.

Valuation History

Price per Share History

Note: Share prices shown in earlier rounds may not be indicative of any stock splits.

Employee History

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Synopsis

As technology expands and we move away from fossil fuels, battery demand is slated to grow. This is especially true of lithium-ion batteries. This growth, though, could face some challenges. The production of lithium is an expensive, grueling process that takes an extraordinary amount of time. Throw into this the reality of low recovery rates in lithium recycling programs, and there’s a nice opportunity for any firm that can create efficiencies for the industry.

This is where EnergyX comes into play. Simply put, the company has technology that will drastically reduce the time needed to produce market-grade lithium. This can all be accomplished while lowering the cost in the process. To understand how this is done, it’s best to understand how traditional lithium is produced. The key stage for the purpose of understanding EnergyX involves salt brines. These are large evaporation ponds with high amounts of saltwater in them. The water is slowly evaporated and the remaining brine is pumped to a treatment facility where lithium is eventually extracted. This evaporation process averages about 18 months in all. 

As an alternative to this, EnergyX has developed a product it calls LiTAS. This stands for Lithium-ion Transport and Separation. This is a membrane created by the business that separates lithium from magnesium, calcium, and other impurities. Instead of the months typically required, this technology can reduce the extraction process down to days. Not only does this save time, it saves on labor. Management also claims that the technology increases lithium recovery rates from an average of around 30% to about 90%. 

The LiTAS is currently EnergyX’s primary business line, but it’s not the only thing the firm is working on. The company is presently developing a second generation version of this technology. This, it claims, will reduce operating and processing costs for lithium producers even more. EnergyX has also partnered with Dr. John Goodenough with the goal of working on next-generation battery technology. Dr. Goodenough is a Nobel Prize winner responsible for the lithium-ion battery. It is also worth noting that management boasts perpetual and exclusive licenses for five mixed-matrix membranes and metal organic framework patents. This isn’t as good as owning the patents, but it’s still a huge asset for the firm that centers on its core technology.

EnergyX’s current NetCapital raise has been rated a Neutral Deal by the KingsCrowd investment team.

Next Section: Price

Price

At present, EnergyX is asking investors to assign the company a pre-money valuation of $54.115 million. This amount would be high even if it were generating a few million dollars in revenue and if it owned its patents. For a pre-revenue business that won’t be generating sales until at least late 2022, it’s off the charts. It is because of this that EnergyX’s price score is quite low. 

Next Section: Market

Market

Fortunately for EnergyX, it fares a little better on the topic of market potential than it does price. According to one source we found, the global lithium-ion battery market is valued at about $44.2 billion this year. The expectation is for it to continue growing at a rate of about 16.4% per annum. If this comes to fruition, then by 2025 it should expand to $94.4 billion in size. A different source pegged the opportunity at $36.7 billion in 2019, with growth of 18% per annum increasing the market to $129.3 billion by 2027. And a third source pegged the market at $36.4 billion in 2019 with an eye at $116 billion by 2027 assuming a 15.6% annualized growth rate. 

At first glance, this looks great. It will be impressive if management does, indeed, make good progress when it comes to next-generate battery technology. However — from the way it has been framed by the company — that is still a distant dream. The real opportunity for EnergyX right now is on the lithium extraction side of the space. One source we found pegged the global lithium market at $4.2 billion last year. Its forecast was for the industry to grow at a paltry 1.9% per annum until 2027. Though this is more in-line with what investors might expect, a better way to value the opportunity might be from the bottom up. 

At present, management intends to generate revenue through technology licensing fees. Other revenue will come from product sales and initial implementation of its technologies. The licensing fees side of the equation will be, by far, the real opportunity for EnergyX. Their goal here is to charge $1,000 per ton of lithium extract. One source we found estimated that global lithium extraction should expand from 354 thousand tons this year to 820 thousand tons by 2025. A second source pegged the market at 500 thousand tons this year with the potential to grow to 1.5 million by 2025. If we take this range, we are looking at upside potential of between $820 million and $1.5 billion in sales annually. 

Taking all of this together, the market is certainly small for EnergyX. This is, of course, unless it ultimately does make real progress into the next-generation battery category. Absent that, I would say that the opportunity is disappointingly small. Balancing the small market opportunity against the market’s positive growth rate, EnergyX’s market score is middle of the road. 

Next Section: Team

Team

When it comes to the success of a startup, the team managing it can go a long way. At present, there are two key team members in charge of EnergyX. The first of these is Teague Egan, the company’s founder and its CEO. Prior to starting EnergyX, Egan was a Managing Partner at Innovation Factory VC. Before that, he served as an Advisory Board member for The Nantucket Project, and prior to that he was the CEO of 1st Round Enterprises. That firm operated as a sports agency and record label. Very little of Egan’s past experiences seem to pertain much to the market he is in today. 

The other key person at EnergyX is Bob Wowk, the company’s CFO. Prior to serving as CFO of EnergyX, he was the CFO and Director/Advisor at Gulf Cryo, an industrial gases and services company. Before that, he worked as Interim CFO at Fluence Corporation. There, he helped to build out the finance operations for the firm’s distributed water and wastewater sector. He also aided in the integration of RWL, LLC into the public Fluence entity. His role before that was as a Managing Director at Tyczka Air Austria. At that firm he led the negotiations and acquisition of a minority stake in an industrial gas company. While none of these activities relate directly to the market that EnergyX is in, Wowk does have substantial experience that should serve him well in his current role. 

Due to the lack of relevant industry experience or prior entrepreneurial endeavors, EnergyX rates below average on its team score.

Next Section: Differentiators

Differentiators

Though there are some weak spots for EnergyX, an area where the firm is very strong is on the differentiation side. Simply put, the firm’s technology and its licenses are highly valuable. And it is clearly and radically different compared to the existing technologies on the market. The speed with which the technology works and the implications it has for cost reduction should help industry players as well. Additionally — due to the technological complexity of EnergyX’s product — it is unlikely that a competitor will easily replicate the company’s tech. Thus, EnergyX earned a high differentiators score. 

Next Section: Performance

Performance

When it comes to performance, EnergyX has some good points and some bad ones. On the bad side, you have the fact that in 2019 the company generated nothing in the way of sales. During this time, it generated a net loss of $786,027 and a net cash outflow of $665,061. You also have the fact that management does not expect real commercialization to occur until late 2022 or early 2023. On the other hand, the technology is under development and the intellectual property looks secure. This has allowed the firm to plan for between two and four pilot tests in 2021. This is made possible through its partnership with four of the top 10 lithium producers in the world, plus an unnamed energy major. Due to this early traction, EnergyX’s performance score is above average. 

Next Section: Other

Bearish Outlook

Right now, there are some bearish things for prospective investors in EnergyX to consider. For instance, it will still be some time before the firm can successfully generate revenue. That’s an issue because it will likely mean subsequent capital raises and possible dilution. Throw in the high valuation and the increased likelihood of that resulting in a potential down round in the future, and there’s plenty of risk for investors. The team is also not as qualified as it could be, and the true market potential, while offering strong growth, is on the small end of the equation.

Next Section: Bullish Outlook

Bullish Outlook

Even with the bearish considerations, there are some bullish ones that investors should keep in mind. For instance, the intellectual property and differentiation of the firm is an obvious strong point. The fact that the business has pilot tests planned and arrangements with major lithium producers is excellent. The relationship with Dr. Goodenough and the company’s goal of tackling battery technology is attractive as well. 

Next Section: Executive Summary

Executive Summary

Putting all of this data together, it’s clear that EnergyX is an intriguing firm. There are plenty of risky attributes that investors need to weigh. The high price, small market potential, and inexperienced founding team bring risk to the company. But these appear to be more or less balanced by the bullish considerations — the clear advantages of the tech, upcoming pilot programs, and the exclusive licensing held by EnergyX. All in all, these considerations are what makes EnergyX a Neutral Deal.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com 

Analysis written by Daniel Jones.

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EnergyX on NetCapital
Platform: Netcapital
Security Type: Equity - Common
Valuation: $54,114,620
Price per Share: $4.90

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