Battery maker charges up

Battery maker Infinite Power Solutions closed a $13 million Series B to expand its sales and beef up its engineering, collecting cash from a hedge fund, venture funds and strategic investing arms.

Infinite had raised $35.7 million in 2006 to build a thin-film battery manufacturing plant from D.E. Shaw Ventures, Polaris Venture Partners, Core Capital Partners, Applied Ventures and In-Q-Tel. Each of the previous investors participated in the new round along with an undisclosed strategic investor. All of the company’s money has come from the sale of equity, says CEO Ray Johnson.

The manufacturing plant it started building two years ago is now up and running and Infinite says it will begin shipping its batteries to customers this month. Its batteries are ultra-thin and flexible, are easily recharged and do not leak energy as badly as existing products.

“If you look back two years ago, the venture world wouldn’t invest in manufacturing,” says Johnson. “Fortunately, we found people who understood that and embraced it at the time we were building a handful of devices in a pilot production line. To really get this technology commercially available, you have to have a manufacturing capacity to secure customers.”

And customers are only interested in a micro-power source than can scale. Bob Metcalfe, general partner at Polaris Venture Partners, says Infinite’s batteries might possible a wide array of new applications for the 10 billion embedded controllers produced each year that run RFIDs and wireless sensor networks. “Nobody wants to sample devices that you’ve handcrafted,” says Johnson. “Real customers want to see the stuff coming off the new high-volume line because that’s what they’re buying.”

Manufacturing is an important part of the battery business. Financing for production facilities has been difficult to come by. VCs have shied away from writing big checks and banks won’t offer debt until the technology is bullet-proof. Johnson says he is expecting that his next round of financing may come from a very different set of investors. “Fortunately for us, there are a lot of examples such as First Solar and others like them that have paved the way,” Johnson says.

VCs have ploughed more than $600 million into 27 new battery companies in recent years. Many of those investments have targeted lithium-ion innovations, perhaps the most ubiquitous battery type for high-performance devices, such as mobile phones, laptops and electric sports cars. Analysts at Frost & Sullivan put the revenue from sales of just this one type of battery at $5.89 billion in 2007 and predict manufacturers will sell more than twice as many units by 2013.

Infinite has its competitors too. Cleveland-based Thin Battery Technologies has raised $7.5 million from VCs; Israel-based Power Paper has raised $67.7 million; Elk River, Minn.-based Cymbet Corp. has raised $30 million in debt and equity; Orlando, Fla.-based Planar Energy Devices has raised $1.7 million and Espoo, Finland-based Enfucell has raised $4.45 million.

Other startups are working on new chemistries that may have better properties than conventional lithium-ion batteries for certain applications. Nickel-zinc battery maker PowerGenix, raised $30 million from investors in September, for example.

The eight-year-old, San Diego-based company’s Series D investment round came from Bessemer Venture Partners, the Angeleno Group, Advent International, Braemar Energy Ventures, Granite Ventures, OnPoint Technologies and Technology Partners. It has raised $60 million since 2003.

PowerGenix claims its nickel-zinc batteries are less toxic and store more power than nickel-cadmium batteries of the same size. The company is angling to get its batteries into power tools that use nickel-cadmium batteries and hybrid vehicles, which typically use nickel-metal hydride batteries.

Camarillo, Calif.-based ZPower, another zinc-focused battery company, holds 12 patents on rechargeable alkaline zinc batteries and has raised $16.2 million from Intel Capital and OnPoint Technologies.

Swiss company ReVolt Technologies is working on a rechargeable zinc-air battery technology aimed at consumer electronics and mobile telephony. It has raised $27.4 million from Verdane Capital, TVM Capital, Northzone Ventures, Sofinnova Partners, Viking Venture Management and Sinvent. —Alexander Haislip