Oscilla Power

Oscilla Power

Early Stage

Wave energy converter that has 16 granted patents and grant funding from the U.S. Department of Energy.

Wave energy converter that has 16 granted patents and grant funding from the U.S. Department of Energy.

Overview

Raised to Date: Raised: $461,955

Total Commitments ($USD)

Platform

Microventures

Start Date

12/23/2020

Close Date

03/28/2021

Min. Goal
$50,000
Max. Goal
$674,505
Min. Investment

$100

Security Type

Convertible Note

Series

Seed

SEC Filing Type

RegCF    Open SEC Filing

Valuation Cap

$13,000,000

Discount

20%

Rolling Commitments ($USD)

Status
Funded
Reporting Date

04/06/2021

Days Remaining
Funded
% of Min. Goal
Funded
% of Max. Goal
Funded
Likelihood of Max
Funded
Avg. Daily Raise

$4,863

# of Investors

826

Momentum
Funded
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Year Founded

2009

Industry

Energy, Power, & Natural Resources

Tech Sector

Cleantech

Distribution Model

B2B

Margin

Medium

Capital Intensity

High

Location

Seattle, Washington

Business Type

High Growth

Oscilla Power, with a valuation cap of $135 million, is raising funds on MicroVentures. The company is developing energy conversion equipment to harness the power of ocean waves. The Triton, the company’s flagship wave energy converter, has undergone years of concept development, product validation, and laboratory and small-scale ocean trials to test its viability. Balky Nair, Ph.D. and Rahul Shendure founded the company in 2009. The crowdfunding campaign has a minimum raise of $50,000 and a maximum raise of $139,505. Oscilla Power closed a crowdfunding round with MicroVentures in November 2020 totaling $395,495. The company is opening another round aiming to raise a maximum amount of $139,505 to complete a major milestone, namely completion of construction of its first commercial-scale product –Triton C system which is targeted for deployment in Hawaii in Q1 2021.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$1,459,100

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-86,485

$-444,635

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$145,279

$290

Accounts Receivable

$290

$85,167

Total Assets

$396,648

$488,402

Short-Term Debt

$229,194

$831,186

Long-Term Debt

$831,472

$1,503,080

Total Liabilities

$1,060,666

$2,334,266

Financials as of: 12/23/2020
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Oscilla Power 08/28/2022 StartEngine $20,021,965 $628,420 Equity - Common Funded RegCF
Oscilla Power 03/28/2021 Microventures $13,000,000 $461,955 Convertible Note Funded RegCF
Oscilla Power 11/15/2020 Microventures $13,000,000 $365,700 Convertible Note Funded RegCF
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Synopsis

In July 2020, KingsCrowd rated the wave energy company Oscilla Power as a Deal to Watch. Now the company is raising again, and it’s still a promising opportunity. Simply put, Oscilla is an early-stage company that’s dedicated to monetizing the power of the ocean. It is presently in the process of designing and building devices that will float on the open sea. These craft will lower a large ring into the depths of the ocean using tendon-like appendages. When waves push up against the craft, it exerts kinetic energy against the ring below and causes drivetrains (one per tendon) to produce power. This power is then sent via a submarine cable to the power grid where it can be used.

The design and development of a project like this is costly to say the least. In all, the company has received more than $16 million in grant funding. This amount is in addition to $3.59 million in securities-based funding Oscilla has raised. The most recent grant proceeds the company landed was $1.1 million in August 2020 from the Department of Energy. In November, the company netted $395,495 in a crowd raise. Even with all of these proceeds, Oscilla is just now trying to complete the construction of its Triton-C System. The Triton-C is a 100kW version of the device. It is also working on the design and prototyping of a 1/6th scale version of the device. The full-sized version of that one will be capable of generating about 1MW of output.

If everything goes according to plan, Oscilla hopes to take its 100kW version to market by 2022. By 2024, it hopes to begin sales for its utility-scale 1MW device. Though the investment needed to get from here to there will likely be significant, the company has potential if its technology takes off. For each 1MW of capacity sold, Oscilla plans to charge customers about $2.5 million. Management has not disclosed plans for other sources of revenue. But opportunities ranging from the leasing of these devices to providing parts and services for them could be lucrative for it.

Oscilla Power’s current Microventures raise has been rated a Deal to Watch by the KingsCrowd investment team.

Next Section: Price

Price

In order to complete the development of its Triton-C System and test it this year for the US Navy in Hawaii, Oscilla is seeking to raise more capital through a convertible note. The terms of the convertible note call for it to convert subject to a valuation cap of $13 million, which is the same as last year’s raise. It’s also subject to a 20% discount upon conversion. For a company with no revenue, this valuation is quite lofty. Thus, Oscilla’s price score is below average.

Next Section: Market

Market

Solar, wind, and hydroelectric are three major forms of alternative energy that have been at the forefront of the clean energy space. What is clear, though, is that no single fuel source will be the replacement for fossil fuel. That leaves plenty of opportunities for companies like Oscilla to come into play. There’s no reason why the forces generated from the ocean’s powerful waves shouldn’t play a vital role in reducing greenhouse gas emissions.

According to one source we found, the global market for wave power was valued at about $3.24 billion in 2018. With an annualized growth rate of 23.5%, the industry should expand to about $17.54 billion by 2027. This growth rate also means that the market should be worth about $6.11 billion this year. A second source pegged the market at $4 billion in 2019, with an annualized growth rate of 23.5% taking it to $21.65 billion by 2027. This places the market in 2021 at about $6.10 billion. A third source, meanwhile, pegged the market at $11.01 billion this year, with an annualized growth rate of 17.84% taking it to $15.29 billion by 2023. This small size weakens the value proposition of the firm. But this is somewhat balanced by the robust growth rate that the wave power industry has. As a result, Oscilla Power’s market score is middle-of-the-road.

Next Section: Team

Team

At present, there are three people leading Oscilla. The first of these is Balky Nair, one of Oscilla’s two co-founders. Nair also serves as the business’ President and CTO. He holds a PhD in Materials Science and served in the past as President of HiFunda. While there, he focused on taking early-stage technologies in the energy space and finding ways to reduce their risk profile. The end goal here was to prepare them for commercialization. Before that, he served as the President and CEO of EmiSense. That firm operates as an emissions reductions company. The technological nature of the company was certainly different than Oscilla’s is. But the target of aiming for a cleaner environment at least puts it in the same wheelhouse.

The other co-founder of the firm, as well as its Board Chair, is Rahul Shendure. He previously served as an Advisor for Beyond Meat. Shendure also served as the co-founder and CEO of Bellwether Bio and worked as the VP of Product Marketing for Amyris. Bellwether Bio focused on developing cell-free DNA-based diagnostic technologies. It was later acquired. Amyris was a biotechnology company as well. Shendure is also presently the CEO of a new construction materials spinout.  None of these really relate to what Oscilla is focused on today. But the high level that Shendure played at these firms illustrates his excellence, and the successful exit of Bellwether Bio is encouraging. 

The last key person working on Oscilla is Tim Mundon. Mundon holds a PhD in Wave Engineering. He is also an Affiliate Assistant Professor in the Mechanical Engineering Department of the University of Washington. Previously, he was employed as a Senior Engineer at Kleinschmidt Associates. Kleinschmidt focuses on hydropower, which is incredibly relevant to what Oscilla is working on today.

The strength of this core team is reflected in Oscilla’s above average team score.

Next Section: Differentiators

Differentiators

Differentiation is a tough point of discussion for a firm like Oscilla. On one hand, the company has no fewer than 16 patents protecting its technologies. In addition, the vast majority of the funding it has received over the years has come from the US government. This shows that the company has support on that side. On the other hand, there are other players in the wave energy market. Firms like Ocean Power Technologies and AW-Energy are just a couple of the nine different players we found in the industry. Each participant has its own answer to the question of how to generate energy from wave technology — meaning they are all differentiated from each other. Given the young nature of wave energy and the market’s strong growth, it’s likely that multiple players will succeed in securing a niche for themselves.

Oscilla Power’s many patents provide it with strong defensibility in its chosen wave energy strategy. Additionally, it takes a high level of capital and significant time commitment to develop the technology for wave energy generation. Oscilla has already made those commitments, and the promise of its technology is shown by the multiple grants it has received. Due to all these factors, the differentiators score for Oscilla Power is very strong.

Next Section: Performance

Performance

Performance is a tricky topic for Oscilla Power. On the positive side, the company has managed to raise a lot of money over the years. It has managed to deploy this capital and successfully build (or come close to completing) large-scale prototypes and systems surrounding its technologies. Having said that, the firm has been lacking on the financial side of the equation. Financials have not been provided for 2020 yet, but the firm is currently still pre-revenue. In 2018, the business generated a loss of $444,635, and in 2019 this loss was $86,485. Because Oscilla is finalizing the development of its product and has no revenue at this time, the company’s performance score is its lowest across all five metrics.

Next Section: Other

Bearish Outlook

Some positive changes have come about for Oscilla Power since we initially rated it last year. Even so, there are still plenty of bearish considerations for investors to ponder. The valuation, for starters, seems lofty. The market is small for the business, and its performance over time has been less than ideal. It will likely be a couple of more years before real revenue opportunities come its way. During that time, investors will need to rely on the generosity of the government — in the form of grants — in order to avoid what could be costly dilution. And that generosity is never guaranteed.

Next Section: Bullish Outlook

Bullish Outlook

This is not to say that there aren’t any bullish aspects for investors to consider. The industry, while small, is growing rapidly and will almost certainly fare well as the world moves away from fossil fuels. Oscilla Power is making progress on its way to a full-scale device, and management looks to be fairly strong. The patents and how they play into the differentiation of the company are a huge selling point. There’s also the fact that the company’s successful track record of locking down grants is indicative of more grants down the road.

Next Section: Executive Summary

Executive Summary

Taking all of these facts into consideration, it appears as though Oscilla is an interesting company that could benefit from a paradigm shift in energy generation. The company has developed a unique device for wave energy capture with 16 secured patents. The wave energy market is small, but it is growing at a rapid pace. The main concerns for investors at this time are Oscilla’s high valuation and its lack of financial performance. If the company can succeed in monetizing its solution soon, it could secure a solid market niche for itself. Thus, Oscilla Power is a Deal to Watch.

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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Oscilla Power on Microventures
Platform: Microventures
Security Type: Convertible Note
Valuation: $13,000,000

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