FuelGems is offering equity at a $12 million valuation. Notably, FuelGems reduced its valuation from $20 million to $12 million in the middle of its crowdfunding campaign. This is an unusual move that raised questions from investors in the raise page comments. FuelGems management hasn’t yet offered clear reasoning for reducing the valuation, but it seems that someone recognized that a $20 million valuation for a pre-revenue company is unreasonable. But a $12 million valuation isn’t much better. FuelGems is still vastly overvalued given its lack of revenue traction, particularly within a market that may well be declining. Therefore, FuelGems’ price rating is one of its lowest.

FuelGems touts a gigantic market size on its raise page, implying that the company is playing within the multi-trillion-dollar fuel market. But those assertions are wildly optimistic. FuelGems does not offer a fuel alternative, merely a fuel additive. So it’s necessary to view the company through that more specific lens, which isn’t nearly as favorable in terms of market size. The global fuel additives market is projected to reach $7.1 billion by 2026, with an estimated 3.4% compound annual growth rate (CAGR) over the next five years. 

That’s a relatively niche market with a meager CAGR, which isn’t surprising. Demand for gas-powered cars is declining rapidly. Both consumers and automakers are investing in electric vehicles, which are significantly better for the environment. FuelGems argues that cargo ships and airplanes will still require large amounts of gasoline for decades to come. While that’s certainly true, electric cargo ships and airplanes are beginning to gain steam. And it seems that gasoline power will inevitably fall out of favor entirely at some point down the road.

The entire transportation industry grasps that massive carbon emissions will become less acceptable in coming decades. That’s a bad sign for FuelGems. A widespread transition to electric vehicles and other non-gasoline alternatives spells doom for the company, which is already inhabiting a relatively narrow market. That’s why FuelGems’ market rating is very low.

FuelGems is led by founder and CEO Kirill Gichunts, an experienced entrepreneur who previously achieved two exits as a startup co-founder or early employee. After graduating from UC Berkeley, Gichunts spent about 10 years in successive roles in finance and consulting. He founded H2 Energy Renaissance and led the business for seven years. Notably, H2 Energy Renaissance was also a nanotechnology company. Gichunts also has experience in venture capital. 

Gichunts is listed as a FuelGems co-founder, but it’s not clear who else co-founded the company. It could be one of the six PhD scientists on the FuelGems team who have decades of combined experience in nanotechnology and automotive science. The FuelGems scientific team includes Dr. Jacek Jasinski, a widely published nanotechnology scholar who served as a research scientist at Lawrence Berkeley National Laboratory. 

FuelGems’ team is one of its strongest assets. The company is led by a CEO with a great deal of startup management experience. He likely has a large network of venture capitalists, which is a significant advantage in today’s competitive funding environment. FuelGems also boasts several advanced scientists with doctoral degrees and hundreds of publications among them. As a result, the FuelGems’ team rating is one of its highest.

FuelGems makes compelling claims about the revolutionary differentiation of its fuel additive. The FuelGems formulation is apparently 800 times more powerful than standard fuel additives. Requiring only one gram of nanoparticles per one ton of fuel, FuelGems reduces fuel consumption by up to 9% and reduces greenhouse gas emissions by 49.5%. FuelGems also claims its technology is proprietary and patent-protected (though the patent seems to be pending). The nanotechnology component of FuelGems’ product may indeed be novel, but the overall concept of fuel additives is nothing new. Even the best additives are sold in any automotive store or on Amazon, and many car enthusiasts self-administer additives regularly. 

FuelGems seems to be more focused on securing commercial partnerships with refineries and gas stations than it is on consumer sales. As of yet, though, FuelGems doesn’t have any paying customers, and the company doesn’t offer a detailed explanation as to why its target buyers would be interested in purchasing FuelGems’ product. 

FuelGems’ differentiation rating is very high based on the company’s assertive claims of 800% outperformance. However, it’s very difficult to fully measure how FuelGems stacks up to more traditional fuel additives on the market, so prospective investors should keep that context in mind while reviewing the score.

FuelGems is a pre-revenue company. While it supposedly has a sizable pipeline of prospective customers, none of them have made the leap to pay for FuelGems yet. This isn’t particularly worrisome, as FuelGems’ burn rate is relatively low. That fact raises additional questions, though. If FuelGems is devoting significant time and resources toward research and development, it’s concerning that expenses are so low (just $125,000 in 2020).

In other areas of performance, FuelGems seems to be making small steps forward. FuelGems has apparently signed memorandums of understanding with several pilot clients, namely gas station operators and oil and gas companies. The FuelGems nanotechnology and development approach is patent pending. FuelGems has also opened its first manufacturing facility to prepare for the potential of scale when new clients sign on. 

FuelGems is a young business without a great deal of traction to show in its first few years. However, the company has secured a manufacturing facility, begun the process of piloting its additive with clients, and successfully raised capital before. So overall, FuelGems’ performance rating is slightly above average.

FuelGems is a pretty risky investment, mostly given that it has not yet generated revenue. That poses significant financial risk and raises related questions about product and time. Investors would be right to wonder how long it will take FuelGems to begin making money and whether there will be a demand for the fuel additive once it’s launched. In addition, the market has been sluggish, which could make it challenging for FuelGems to navigate. Success is anything but guaranteed at this early stage.

FuelGems makes an argument that traditional gasoline consumption is broken and an efficient nanotechnological additive like FuelGems is the best solution. The tenets of these assertions seem to be true, as gasoline consumption is bad for humans and the environment. The FuelGems additive reduces gasoline consumption and improves vehicle performance. However, it’s just not clear whether FuelGems can deliver on this lofty promise. The company has yet to sign a paying client, and it’s not clear that anyone in the market is interested enough in marginal fuel efficiency to experiment with a brand-new solution. Investors also can’t ignore that the gasoline industry is rapidly declining. The move toward electric vehicles is happening quickly, and FuelGems faces a serious threat from these macro dynamics. All in all, it seems too early to feel confident in FuelGems’ future prospects.

One of the strongest arguments for an investment in FuelGems is the company’s team. FuelGems is led by an experienced entrepreneur, CEO Kirill Gichunts, who has contributed to two startup exits. He previously led another nanotechnology company for more than seven years, so he has significant experience in this industry. Gichunts undoubtedly has a large network in venture capital (he used to work in both traditional finance and venture capital), which reduces the risk that FuelGems will run out of money while scaling manufacturing. Beyond Gichunts, FuelGems benefits from a large team of advanced scientists who seem to be credible experts in this field. 

Plus, FuelGems is apparently developing technology that is revolutionary in the field of fuel additives. It’s difficult to verify these claims at this early stage, but if they are true, FuelGems could make a big splash in the gasoline industry upon launch. The benefits of an efficient, effective fuel additive like FuelGems are clear, so the company could quickly profit from the large budgets of oil and gas companies.

FuelGems is a fuel additive company that has developed a proprietary nanotechnology additive meant to reduce gasoline consumption and greenhouse gas emissions. FuelGems is led by an experienced entrepreneur surrounded by a team of seasoned scientists, and the company has experienced some success thus far. Money has been raised, a manufacturing facility has been secured, and FuelGems could be positioned well for scale. 

However, FuelGems hasn’t generated any revenue yet, so the company’s audacious vision isn’t yet substantiated by any hard data. It’s also a serious concern that the gasoline-powered vehicle industry is in decline, which could rapidly reduce market demand for FuelGems’ product. Therefore, FuelGems has been rated a Neutral Deal. 

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