Qnetic is raising capital through a Simple Agreement for Future Equity (SAFE) with a valuation cap of $20 million and a 20% discount. This is a reasonable valuation cap knowing the high-potential of the technology and the current achievements of the team. This structure allows investors to convert their investment into equity at a future date, typically during the next priced funding round, at a valuation not exceeding the cap. The discount provides an additional incentive by offering shares at a reduced price compared to future investors.

To achieve a 10X return, Qnetic would need to reach a valuation of $200 million at exit, not accounting for dilution. This level of return requires significant growth in both market share and revenue, as well as successful commercialization of its flywheel energy storage technology. Achieving this valuation could be realized through various exit strategies, such as acquisition by a larger energy company or a successful initial public offering (IPO).

In Q3 of 2024, 52 companies in the energy storage sector were acquired for a total announced value of $7.8 billion. Each of these deals average $150 million, but one deal totalled $3.2 billion. The dynamic of the energy storage M&A market shows that there is a real potential for Qnetic to be acquired at a valuation high enough to give investors a great return.

In terms of revenue multiples, Qnetic would need to demonstrate substantial traction and revenue growth to support a higher valuation. Assuming a revenue multiple of 5.0x, the company would need to generate approximately $40 million in annual revenue to justify a $200 million valuation. This would involve capturing a meaningful share of its target market and effectively converting its letters of intent into concrete sales.

While the current valuation cap and discount offer a structured entry point for investors, the potential for high returns is contingent on Qnetic's ability to scale its operations and achieve market penetration. The company's success in navigating technological and regulatory 

challenges will be critical in realizing its growth potential and delivering returns to investors.

While Qnetic is a flywheel and not a battery, it’s unique large-scale is a breakthrough in the flywheel world, and concurrences with grid-scale battery energy storage systems. Therefore, to understand the market potential of Qnetic, investors should look at the grid-scale battery energy storage market, valued at $62.6 billion globally, with a growth rate of 26.4% annually. In the United States, this market is expected to grow at a 32% annual rate.

The increasing integration of renewable energy sources such as solar and wind power, advancements in battery technology, and the rising demand for grid stabilization and energy efficiency drive this growth. Energy storage systems play a critical role in modernizing power infrastructure and enhancing energy security, supporting the transition to a sustainable energy future.

Qnetic's flywheel energy storage system is positioned within this broader market, targeting the challenges of renewable energy intermittency. The system's focus on long-duration energy storage, capable of multiple daily discharges, caters to a niche segment within the larger market. This segment includes applications that require storage solutions lasting between four and twelve hours, which are not adequately served by traditional lithium-ion batteries.

Market trends toward the adoption of sustainable and efficient energy systems could positively impact Qnetic. Government policies and incentives promoting renewable energy and energy storage adoption further enhance growth opportunities. However, the competitive landscape remains a challenge, with numerous technologies vying for market share, including lithium-ion, solid-state, and flow batteries.

Qnetic's ability to differentiate its product through its zero-lithium and zero-degradation attributes may appeal to entities seeking sustainable and durable energy storage solutions. The company's success will depend on its capacity to capture a significant portion of this niche market, leveraging its technological attributes to address the specific needs of renewable energy producers and grid operators.

Qnetic's team is led by co-founders Michael Pratt and Loïc Bastard. Michael Pratt serves as CEO, bringing a background in product design from the medical industry. His expertise in design and development is critical for overseeing the creation and refinement of Qnetic's energy storage systems. Loïc Bastard, the CTO, has extensive experience in numerical analysis and rotating systems, having worked with aerospace rotors and wind turbines. His technical acumen is essential for advancing Qnetic's flywheel technology.

Mathias Mier, Ph.D., is the Director of Quality and Procurement. With two decades of experience in renewable energy, he plays a pivotal role in ensuring the quality and reliability of Qnetic's products. His background supports the company's commitment to delivering sustainable and durable energy storage solutions.

The team's skills align well with Qnetic's objectives of developing a cutting-edge energy storage system. The combination of design, engineering, and quality assurance expertise positions the team to address the technical challenges associated with scaling and commercializing their product. However, as Qnetic moves towards commercialization, expanding the team to include expertise in sales, marketing, and business development could be critical for achieving market penetration and revenue growth.

Qnetic's flywheel energy storage system is uniquely positioned as a superior alternative to lithium-ion batteries and existing flywheel technologies, addressing significant environmental, operational, and scalability challenges.

Lithium mining has a devastating ecological footprint. Extracting a single ton of lithium releases up to 15 tons of carbon dioxide into the atmosphere, undermining the goal of reducing emissions through renewable energy. Qnetic sidesteps this issue entirely by using sustainable materials and production methods, avoiding the pollution inherent in lithium-ion battery production.

From a functional perspective, lithium-ion batteries fall short of meeting grid-level renewable energy storage needs. Their capacity to store energy for just four to six hours is insufficient for stabilizing renewable energy supplies. By contrast, Qnetic’s flywheel system is designed for long-duration energy storage, offering consistent performance without degradation, making it more compatible with the intermittent nature of solar and wind power. Each of Qnetic's flywheels will have a 1MWh capacity, a 250kW power output, a duration of 4-12 hours, and an 85% round-trip efficiency, enhancing their suitability for grid-level applications.

Qnetic’s solution also significantly advances the capabilities of flywheel technology itself. Existing flywheel energy storage systems typically power electricity for durations ranging from a few seconds to four hours. Qnetic’s closest competitor, Amber Kinetics, produces flywheels that are about six times smaller and store 62 times less energy. By massively increasing both the size and capacity of its flywheel technology, Qnetic is breaking new ground in scalability and impact.

Cost is another factor where Qnetic excels. Lithium-ion batteries that aim to increase energy storage capacity or longevity are prohibitively expensive, whereas Qnetic delivers a cost-effective solution with a lifespan of up to 30 years. Lithium batteries degrade significantly after about 2,000 charge cycles—typically five years—losing storage capacity and necessitating frequent replacements. This cycle not only escalates costs but also exacerbates environmental harm due to limited recycling capabilities and toxic landfill waste.

Qnetic’s flywheels, on the other hand, maintain consistent performance without requiring costly replacements. They avoid the ecological pitfalls of lithium-ion batteries while massively advancing the potential of flywheel technology, making them an ideal choice for renewable energy integration and grid-level storage.

Qnetic just built its first prototype, demonstrating the viability of its product, and is getting customer interest. The company already secured more than $100 million in letters of intent from potential customers across the USA, Canada, France, and Germany. This demonstrates Qnetic's potential to achieve product-market fit and its ability to compete against lithium-ion battery technologies.

Financially, Qnetic is operating with a monthly burn rate of approximately $60k and has cash reserves of $250k. This financial position provides the company with a limited runway to continue its operations and development activities. The overcome this, Qnetic is currently raising a $4 million VC round in parallel to its Wefunder raise with strong traction. The company can count on the reinvestment of SOSV, an influential VC firm with $1.5 billion under management.

Qnetic has experienced growth in its team size since the last round, indicating a focus on expanding its capabilities and expertise to support its technological and commercial objectives.

The company's progress in filing three patents and the interest shown by potential customers through letters of intent suggest positive traction in its target market. However, converting these letters into actual sales and revenue remains a key challenge and priority for Qnetic as it moves toward commercialization. Still, the company executed on the promises it made during its last Wefunder round, thus bringing trust in its potential to continue its development.

Investing in Qnetic presents several specific risks that potential investors should consider. As a company in the pre-product phase, Qnetic faces adoption risk. Being early to market with its long-duration flywheel energy storage technology, there is uncertainty around customer acceptance and market demand. The company must effectively demonstrate the practicality and efficiency of its solution to gain traction in the competitive energy storage sector. Qnetic’s $100 million worth of Letters of Intend (LOI) mitigate with risk. Still, converting these into actual sales will be critical. The company must navigate potential challenges in fulfilling these commitments, especially as it scales production and enhances its market presence.

The company currently operates with no revenue, emphasizing the financial risk associated with its business model. This absence of revenue highlights the reliance on external funding to sustain operations and progress product development. The company will need to keep successfully raising from equity crowdfunding and institutional investors like Venture Capitalists (VCs) to keep growing until it reaches profitability.

Qnetic’s financial position is further constrained by its runway. With a current cash reserve of $250k and a monthly burn rate of $60k, the company has a limited operational runway. This financial constraint could impact the company’s ability to meet its developmental milestones if additional funding is not secured promptly. The success of its $4 million current VC round will determine its ability to keep developing its next prototype.

The global push for renewable energy has created a booming demand for efficient storage solutions, and Qnetic’s flywheel technology stands out with zero-lithium, zero-degradation features, making it both sustainable and cost-effective over time. Unlike lithium-ion batteries, which degrade quickly and use harmful metals, Qnetic’s rotors last 30 years, offering a lower total cost of ownership.

With an impressive 85% energy efficiency and the ability to store energy for up to 12 hours, Qnetic's technology addresses the critical issue of renewable energy intermittency. The company has secured $100 million in letters of intent and filed three patents, signaling strong potential for market acceptance.

The experienced leadership team, favorable investment terms at only $20 million, and a product performing better than lithium-ion batteries demonstrate Qnetic's growth potential. The company is raising a $4 million VC round in parallel to its Wefunder raise, including SOSV, a $1.5 billion investment fund which also backed the startup in its previous round.

Qnetic could face challenges while building its new prototype. Expanding flywheel technology beyond current limits introduces significant technical risks. Additionally, as an early-stage company with no revenue, Qnetic may face difficulty convincing customers to adopt its unproven solution.

The company’s financial situation is also concerning. With a $60k monthly burn rate and only $250k in cash reserves, Qnetic has a limited runway, making it highly dependent on external funding. If it fails to raise sufficient capital, it could struggle to sustain operations or complete product development. A slowdown in the deployment of solar and wind farms could further dampen demand for Qnetic’s energy storage solution.

Overall, these risks—funding gaps, technology challenges, and uncertain market demand—could impede Qnetic’s growth and make it a less attractive investment opportunity.

Qnetic is an early-stage company focused on developing a flywheel energy storage system aimed at addressing the intermittency of renewable energy sources. Its primary customers are businesses in the renewable energy sector, including solar and wind power producers and grid operators seeking efficient and sustainable storage solutions.

The company is raising capital through a SAFE with a $20 million valuation cap and a 20% discount. Despite having no revenue, Qnetic successfully secured an impressive $100 million in letters of intent, indicating market interest. The company operates with a monthly burn rate of $60k and cash reserves of $250k, highlighting a need for additional funding to extend its operational runway. The emphasis on scaling its technology and achieving commercialization is crucial for future valuation growth.

The grid-scale battery energy storage market, valued at $62.6 billion globally, and growing at 26.4% annually, presents significant opportunities. Qnetic's differentiation lies in its zero-lithium, zero-degradation flywheel system, targeting a niche within the market for long-duration storage solutions. Its competitive edge is in addressing specific needs unmet by traditional lithium-ion batteries.

From a bullish perspective, Qnetic benefits from strong market drivers such as the push for renewable energy and grid modernization. Its unique product attributes align with sustainability trends, offering the potential for capturing a niche market segment. Conversely, the bearish outlook highlights financial risks, competitive pressures, and the challenge of achieving market validation and revenue generation.

Overall, Qnetic presents a balanced investment opportunity. The company's innovative approach in a growing market is promising, but it faces significant execution risks. Investors should weigh the potential for substantial returns against the challenges of early-stage commercialization and market adoption.

There’s nothing more thrilling than discovering a promising early-stage company and witnessing its journey to success firsthand.

When Qnetic first raised on Wefunder in 2023, we rated it a Neutral Deal. The concept was compelling: a 22-foot-tall flywheel offering a superior energy storage solution to lithium-ion batteries and a clear edge over existing flywheels on the market. However, the risks were high—it was still in the research phase, and the road ahead was uncertain. When we spoke to Michael, the founder, he outlined an ambitious plan: build a prototype and start engaging potential customers.

Fast forward to today, and Qnetic has not only delivered on that plan but exceeded expectations. The company built its prototype and secured $100 million in letters of intent (LOIs) from seven customers across three countries. It also attracted a $500,000 investment from SOSV, a leading institutional investor managing $1.5 billion in assets.

Qnetic is now positioned to be a high-growth company with the potential to deliver exceptional returns.

Its product isn’t just innovative—it’s cost-effective over the long term compared to lithium-ion batteries. Being able to help customers save money is the key to success in fast-growing the green energy market. The LOIs prove demand and validate its ability to achieve product-market. The team has shown strong execution capabilities, and the current valuation presents a rare opportunity to invest early.

Qnetic stands out as one of the most exciting hardware companies raising capital online today. By investing in Qnetic, you’re placing yourself at the forefront of green innovation. That’s why Kingscrowd Capital invested $10,000 in this round.