Battery VC Investment Gets Supercharged

Battery VC Investment Gets Supercharged

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Lately, it seems like battery startups are powering up with giant funding rounds at an unusually rapid pace.

In roughly the past month alone, we’ve seen three financings of more than $1 billion:

  • Verkor, a French startup focused on low-carbon battery manufacturing, raised $2.1 billion in debt and equity financing this month, including a $900 million Series C. The company plans to open its first gigafactory in 2025.
  • Redwood Materials, the Nevada-based battery recycling startup founded by former Tesla CTO JB Straubel, picked up $1 billion in Series D funding, bringing total debt and equity financing to over $3.8 billion. The company also acquired Redux Recycling, a German battery recycler, last week.
  • Northvolt, a maker of lithium-ion batteries with a focus on lower carbon footprint production processes, raised a $1.2 billion convertible note in late August. The investment comes as the Stockholm-headquartered company is in the midst of expanding manufacturing operations in Poland.

In addition to these mega-financings, overall battery-related venture investment is holding strong as well. For 2023, global funding is on track to exceed both 2022 and 2021 levels, per Crunchbase data.

A similar pattern is playing out in the U.S. as well, where battery funding so far this year is still only a bit below the peak hit in 2021.

EVs, supply chains and grid storage

Given that global venture investment is down sharply this year, it’s unusual to see any sector even coming close to 2022 and 2021 numbers. To be on track to exceed them is quite exceptional.

Of course, these are exceptional times, and in many respects not in a good way. Coming off the warmest August on record, projections for global climate change over the next decades, sans big changes in our carbon-spewing ways, look increasingly dire.

Against this alarming backdrop, one thing most people would agree upon is that better battery technology and production techniques would help. Looking at recently funded rounds, it appears investors pursuing this goal have coalesced around three primary themes: more sustainable battery production, scaled-up EV battery manufacturing, and improved grid storage for renewable energy.

For a sense of where the money is going, we aggregated a list of 32 of the more prominent companies across these battery-related themes that have raised funding this year:

Recharge, reuse, recycle

The sustainable production angle is evident in recent investments around battery recycling. On this front, we’ve seen several sizable financings in recent months.

In the U.S., in addition to Redwood Materials, Ascend Elements, a Massachusetts-based manufacturer of sustainable battery materials using elements from discarded lithium-ion batteries, secured a $460 million Series D round this month.

Meanwhile, a couple weeks earlier, China-based Zhejiang Tianneng New Material, a startup focused on reuse and recycling of lithium-ion batteries, picked up $137 million in fresh funding.

Deals are getting done in large part to create an EV supply chain that’s less reliant on mining of scarce minerals, said Peter Relan, a seed investor who recently launched a climate-tech incubator.

“One of the issues in the green energy transition is that scaling supply chains becomes very important,” Relan told Crunchbase News. “And if you feel there is a scalability issue in the rare earth (elements) that go into these batteries, suddenly battery recycling becomes very important too.”

Power to the grid

Investors are also seeking out developers of batteries that could provide storage — particularly for the grid — for energy produced using wind and solar.

Among the most heavily funded along these lines is Michigan-based Our Next Energy, a developer of energy storage for electric vehicles and the grid. The company has picked up $390 million in funding to date, including a $300 million February Series B. More recently, Stabl Energy, a German startup offering energy storage subscriptions, snagged $16 million in an August venture financing.

Electric vehicles

The rise of electric vehicles continues to be a main driver behind battery investments. Mass adoption, of course, can occur only when the supply of batteries is sufficient to cost-effectively meet demand.

It’s no coincidence that some of the largest funding recipients — including Verkor and Northvolt — count automakers among their backers. Without a reliable source of batteries, they won’t be rolling out EVs.

Given that in much of the world two-wheeled transport is the norm, we’re also seeing some innovation around electric bikes and motorcycles. India’s Battery Smart, an EV battery-swapping network that provides lithium-ion batteries for electric two- and three-wheelers, raised $33 million in July. In a similar vein, Jakarta-based Swap snapped up a $7 million seed round this spring for e-motorcycle battery swapping stations.

No one said this would be cheap

Given how much it will probably cost to develop the battery manufacturing capacity and supply chains to enable a broad transition to EVs and renewable power sources, the billions invested in battery tech startups this year might look like trifling sums.

Compared to several years ago, however, it’s clear investment is on the rise. Now it’s up to the current crop of funded companies to prove to investors they’ve got what it takes to keep on scaling.

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Illustration: Dom Guzman

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