Why we invested in Customcells
When we first learned about Customcells, we knew we were looking at what could be a transformative idea.
At ABACON we have been working and investing in the clean energy transition for many decades now. We cannot overstate the potential of clean, cheap, and abundant energy for a prosperous society and planet. In recent years, we have been thinking heavily about application-specific energy storage as the missing link. Today, the challenges (supply chains, decoupling initiatives, skyrocketing costs of raw material, net zero objectives, etc.) as well as the ever-increasing requirements combine into a perfect tailwind to make that happen.
To date, most batteries used in new applications have been derivatives of existing cells. But the growing and maturing markets today offer a solid platform to engineer entirely new systems for existing and novel applications. With market segments reaching a critical scale, the development of specific chemistries and cell formats becomes viable. Examples are sustainable electric aviation (VTOL and CTOL), commercial vehicles, stationary energy storage systems, but also medical devices/implants.
But while we saw a clear “why now” for application-specific batteries, we also knew that it was a difficult market to build a business. Large companies such as CATL, LG EnergySolutions, BYD, SK but also Northvolt, and automakers themselves, were already investing heavily in mass-scale production for the EV market. On the other hand, dozens of small startups are inventing novel chemistries, designs, and approaches for and beyond the Li-ion technology. But OEMs struggle to have the expertise to select the right partners with the ever-increasing complexity/selection or couldn’t afford the hundreds of millions to design, develop, certify, and manage the production ramp-up of specific cells or it would simply take too long with the big players. In short: We hadn’t found a company that could make application-specific high-performance batteries more widely accessible — until Customcells.
Customcells develops and certifies customized Li-ion battery technologies and supports OEMs in transferring these technologies from the laboratory to scaled production. Since its foundation in 2012, Customcells has built up outstanding expertise along the entire value chain. The capabilities span from novel anodes (e.g. partnering with Group14’s breakthrough silicon-based anode) and electrolytes (e.g. solid and semi-solid) to cell designs (covering form factors such as prismatic, cylindrical, and pouch but also very specific requirements) to various chemistries and its derivates (NMC, NCA, LFP, Sodium-Ion, etc.) to novel approaches for performance and lifetime improvement (e.g. pre-lithiation) as well as production technologies. Especially the latter is not to underestimate in terms of complexity and competitive moat. More than 50% of the IP of battery manufacturers lie in the production; with up to 50,000 (!) parameters to adjust and about 5,000 that have a direct impact on the performance, safety, and life expectancy of the batteries. Based on this expertise, Customcells has been able to build up a very strong reputation and business in two of the fastest-growing segments of electromobility: automotive and aerospace.
In other words, Customcells is exactly what we’d been hoping to find: a solution for any OEM that needs next-generation batteries cells that are tailor-made to meet the specific needs and that they could actually afford; a partner that handles all the complexity and supports end-to-end encompassing material composition, development, certification, and scale-up of the production including the training of people.
As we got to know Torge, Leopold, and Dirk, our early convictions grew stronger. The founders, Torge and Leo, met at the prestigious Fraunhofer Institute for Silicon Technology (ISIT), and between them have decades of battery experience in both research and industry. Together they have managed to build Customcells as a profitable company with a very strong reputation. In May 2022, the experienced manager and entrepreneur Dr. Dirk Abendroth joined as CEO. Dirk combines the expertise needed to lead Customcells’ next stages of development. Most recently, he was CTO at Lukasz Gadowski’s technology holding company Team Global (a major investor in eVTOL companies such as Autoflight, Archer, and Volocopter). Previously, Dirk held positions as CTO at Continental, VP of Autonomous Driving & Powertrain at BYTON, and 12 years at BMW co-heading the BMW i3 and i8 series. Thus, he combines experience from automotive OEMs and suppliers as well as the future of aviation, but also the rare combination of building startups and being on the board of a Fortune 500 corporation.
We’ve already seen how Customcells delights and enables customers such as Porsche, Lilium, and many more.
- With Porsche, they formed the groundbreaking Joint Venture named Cellforce Group. Together with partners such as Group14, they enable the premium brand to be among the leaders in the global competition for the best-performing battery cell.
- Lilium, positioned to be a global leader in regional electric air mobility, is partnering with Customcells to develop, certify and produce high-performance silicon-anode batteries for their 7-Seater Lilium Jet.
There couldn’t be better proof points that the approach, expertise, and business model of Customcells work.
Talking about business models, we see a lot of similarities with the asset-light business model of ARM — the world’s leading semiconductor intellectual property (IP) supplier. Customcells develops and licenses technology that will be at the heart of many of the devices sold and installed each year, from implants to automobiles to drones and planes to grid-scale storages. The CAPEX financing for the factories will be done via the OEMs and/or 3rd party investors while Customcells earns royalties. Only in selected areas, Customcells will build the production capacities themselves.
On behalf of ABACON CAPITAL, we are thrilled to partner with Torge, Leopold, Dirk, and their team, to co-lead this Series A round, and to support them as they continue that growth and explore even more exciting applications. We believe this is a historic moment of opportunity for specialized batteries to decarbonize mobility/transport — we think Customcells will become a leader in the global battery landscape and we hope someday, devices everywhere are energized by a custom cell of Customcells.
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