S&S #4: The Charge Toward Sustainable Energy

Exploring the developments of Germany's Suena and the broader seed landscape from late December 2023

Happy Friday, Everyone! 

I hope everyone’s year is off to a good start, and that you’ve been able to keep your New Year’s resolutions thus far. 

A big thank you to the four new subscribers since last week, and a massive shoutout to Alyssa,  The Director of Sustainability at Aether Fuels, for the reshare of S&S #3

If you like this week’s edition as much as Alyssa did last week’s, please consider sharing.

If you’re reading this and have not yet subscribed, feel free to tap the button below to get weekly insights into the seed ecosystem from yours truly. 

Alright. Let’s get to it. 

Our Companies of the Week 

In this edition, we’re looking at a couple of weeks of funding to make up for the slow end-of-year activity. From December 18th to December 30th, 73 companies raised a seed round in North America or Europe. Of those, 52 disclosed their round size, and 21 did not. Of the disclosed rounds, we witnessed an average round size of $2.31M and a median round size of $1.51M. 

Out of the batch, our cash cows are: 

  • Heranova Lifesciences: A biotech company entirely focused on women's health. Focusing on conditions like endometriosis and bacterial vaginosis, they’re creating innovative diagnostics, drugs, and devices through their proprietary research as well as outside partnerships. They raised $13.5M from Pivotal BioVenture Partners and Sinovation Ventures on December 28th. 

  • BotBuilt: Based in North Carolina, BotBuilt is revolutionizing construction with robotic systems. They transform digital construction plans into precise physical components, enhancing the efficiency, safety, and sustainability of the building process. Imagine having a robot assemble and deliver the entire foundation of your house. That’s what they do. They raised $12.4M from YCombinator and Ambassador Supply on December 28th. 

  • Fiat Republic: Catering to crypto companies, FR offers a Banking-as-a-Service platform that streamlines fiat transactions in the Web3 economy by integrating banking services like local IBANs and real-time FX into a single API, facilitating smoother financial operations in the crypto space. They raised $7M from Kraken Ventures and Fabric Ventures on December 19th. 

  • Sentante: Sentante is a surgical tech company that has built the first fully robotic system for endovascular interventions. Their technology allows for remote control of instruments, increasing the safety and accessibility of treatments and reducing occupational hazards for medical staff. They raised $6.5M from Practica Capital and EIC Fund on December 21st. 

  • Web3Mine: Web3mine focuses on building a community-owned internet infrastructure. They're addressing Web2 challenges like data localization and vendor lock-in, aiming to democratize the creation and capture of value in decentralized networks with their open-access compute network. They raised $6M from 1kx and Protocol Labs on December 20th.

In addition to these big raisers, I want to highlight some of my favorite companies from the end of 2023. 

Odyssey has created a pixel streaming platform, a plugin that allows users and businesses to integrate experiences they’ve built in Unreal Engine into their websites and consumer-facing apps. Take a second and imagine you’re looking for an apartment on Zillow. Instead of scrolling through pictures, wondering how each room connects and what it might look like furnished, Odyssey’s software will allow you to do a virtual walkthrough, populating it with digital furniture, appliances, and decor to see what it might look like IRL. Pretty cool. 

Vitt is offering businesses access to money market funds, allowing their clients to pull in (on average) up to 4.95% more in interest YoY. The funds are managed by Goldman Sachs and are FDIC insured, and present businesses looking for alternative savings products to benefit from a historically safe, but lucrative investment. For a solid picture, during the 2008 financial crisis, only one money market fund lost money, and that loss was 3%. In addition to the general security and upside, Vitt allows users to withdraw cash immediately for no fees or penalties, giving businesses an easy way to earn capital on their cash while also giving them the freedom to use it when needed. 

Retik is a DeFi FinTech that has developed, among other standard crypto products, a DeFi debit card for users to transact with crypto anywhere. In addition to this, they have solutions spanning crypto payment gateways, P2P lending, and a standard DeFi wallet. 

Helin is an edge computing platform combining AI with a company’s locally managed data infrastructure, allowing companies to collect remote industrial process data, deploy and manage edge platforms and applications, and secure their IoT devices across the globe. 

And finally, Grass

Now, this one was tough for me. I wanted to feature Grass, but ultimately chose not to, as they’re very young and are operating in a market that is relatively unproven and new. That said, they’re cool, and I encourage everyone reading to take a close look at them. 

Grass is building a new passive income stream that anyone with a wifi connection can access. Everyone with an internet connection has a certain amount of bandwidth per month to use, and nearly 0% of retail users ever hit that max. Grass is a network for selling that bandwidth to corporations and institutions. By signing up, you allow Grass to sell your unused bandwidth to companies that need it to bolster their operations (right now, the predominant customers are AI Labs that need a metric sh*t ton of bandwidth to train and run their AI models). Right now, the reward points you earn grant you a stake in their network, but direct cashout options have yet to be released (although they’re working on implementing this capability in the future). 

Anyways, if you want to sign up to see what it’s all about, follow this link.

CALL BACKKKKKKKKKS

Well, well, well…

Last week we talked about trends I’ve been seeing, and this past batch gave us a couple more points of validation that I want to call out. 

In S&S #3, I talked in depth about Metafuels and their usage of green hydrogen as a catalyst to create their sustainable aviation fuel. Well, on Dec 22, a company called Naco Technologies raised $1.3M to help propel the green hydrogen market forward. 

Currently, catalytic processes that strip clean hydrogen from water are very dependent on noble materials like platinum. This has several drawbacks, including the (likely) skyrocketing price of these materials as demand increases. 

Naco has created specialized nano-coatings and new materials that replace the need for platinum and other expensive noble materials, improving the performance of hydrogen systems and drastically reducing future costs on both the production and consumption side. 

I see a trend forming….

I also mentioned two companies, Helicity Space and HyImpulse, two companies that raised rounds days apart working to build novel space propulsion technologies.

Not long after, on December 22nd, Ohm Space raised $1.3M (that is NOT a typo. Naco and Ohm Space raised identical amounts of money) for their electric propulsion systems built for satellites. 

Their first product release, the STAR Water, uses low-pressure water propellant, removing the hazard of chemical propulsion systems while providing a better thrust-to-power ratio than other electric propulsion competitors. The underlying tech is powered by a patented, ultra-compact electric heater made possible by way of 3D printing.

Buckle up! Lots of info incoming. 

Last week, we talked about achieving sustainability and releasing from our dependence on fossil fuels through innovative approaches to fuel creation. 

This week, we’re looking at sustainability from another POV — moving away from carbon capture, reuse, and fuel creation, and turning our attention to energy grids, storage, and usage of battery systems. 

On December 21st, Germany-based Suena raised $3.3M in seed funding to help owners of battery storage systems pull in more profit, with the ultimate goal of helping drive the renewable energy market forward. 

Before we dive in, as always, let’s take a step back and set the scene…

Why Battery Storage Systems are Important 

Batteries, and battery storage systems, are critical components to transitioning to a more sustainable energy system. 

There are many reasons for this, and someone could write 10 pages dedicated just to painting a detailed picture, but we’ll do a quick summarization of the key points so that you can finish this article before lunch. 

Intermittency of Renewable Energy Sources 

Solar and wind power plants are fantastic at producing energy. Unfortunately, the wind isn’t always blowing, and the sun doesn’t always shine (To my friends in unique positions in Canada, Greenland, Finland, Norway, Sweden, Russia, Alaska, and Iceland, I’m generalizing, don’t come after me). 

Batteries can be used to store excess energy when production is high and release it when production is low, ensuring a consistent energy supply.

 Batteries can be used to store excess energy when production is high and release it when production is low, ensuring a consistent energy supply. 

Grid Stability and Reliability 

Batteries play a dual role in stabilizing the grid by smoothing energy demand fluctuations and providing backup power during outages, ensuring continuous electricity supply and resilience of the grid.

Decentralized Energy 

Through battery storage, households and businesses can use and manage locally generated energy, like that produced by rooftop solar panels. By storing and using local energy, transmission losses associated with long-distance energy transport are minimized. 

Facilitation of Renewable Energy Integration  

Going back to renewable energy, battery storage systems can be used to integrate higher proportions of renewable energy back into the grid by smoothing out supply. As this tech improves, there could be less reliance on fossil fuels for energy generation, especially during times of peak demand. 

Battery Storage as an Industry 

According to Markets and Markets, the global Battery Energy Storage Market is estimated to have been worth $5.4B in 2023, and is projected to reach $17.5B by 2028. This growth will be driven by several factors, including: 

  • Cost and performance improvements of lithium-ion batteries and solid-state technologies

  • Modernization of global energy grids and systems 

  • Global movement towards renewable energy sources 

  • Financial incentives for renewable energy usage

  • Wholesale electricity markets being opened to batteries 

Before we move on, let’s key in on that last point. 

What the heck is the wholesale electricity market? 

Thanks for asking 

The energy wholesale market encapsulates the bulk purchase and sale of all energy products, including electricity, steam, and natural gas by energy producers, retailers, financial intermediaries, traders, and large consumers. 

This market works like any other market - through auctions that determine the price of various energy sources based on demand.

Essentially, through the wholesale market, utility company A buys the right to use the energy produced by power plant B at a certain time and then distributes and sells that energy to end users through the grid. 

The market enables the buying and selling of power between generators and resellers, controlling prices and resulting in a less expensive, more reliable, and cleaner power grid. 

But, it wasn’t always like this. 

A History Lesson

Every market has a beginning. Just like Tulip Mania paved the way for crypto rug pulls (IYKYK), energy markets had to get their start somewhere, and this story has a clear-cut and defined beginning, middle, and end. 

Beginning

Around 2 million years ago, our ancestors figured out how to create and harness fire. 

From that point on, fire was the basis for several energy related breakthroughs, but the industry’s largest step came in 1879 when Edison perfected years of multiple people’s work on the electric lightbulb. 

After Edison and Nikola Tesla’s early breakthroughs in electricity generation and distribution, early power plants were developed to provide urban areas with central power. This electricity could only be distributed over very short distances due to technical constraints, so localized grids became the earliest version of what we are used to today. 

Middle 

In the mid 20th century, technology progressed to a point that allowed for larger, more interconnected grids that resulted in the development and rise of major utility companies like Duke Energy, ConEd, Southern Company, PG&E, E.ON, TEPCO, EDF, and Enel (all of which are still market leaders). 

In the 70s, an oil crisis spurred by an embargo from the Organization of Arab Petroleum Exporting Countries resulted in a massive oil shortage in the US and other countries, causing oil prices to quadruple, and illuminating the issues that arise from dependence on a select few suppliers or sources of energy.

Governments moved quickly to diversify energy dependence while regulating and controlling the prices of sources. In the US, the Public Utility Regulatory Policies Act of 1978 was developed to break down monopolies, protect payers, promote conservation of energy, and encourage the use of renewable sources, laying the foundation for future deregulation. 

This ultimately led to the full deregulation of the markets in the 90s, meaning there was a clear separation of energy generation from energy transmission and distribution. 

End 

Ultimately, this culminated in the emergence of wholesale energy markets, in which large volumes of electricity are bought and sold to be distributed to consumers. As a participant in this market, utility companies buy electricity at wholesale, market-determined prices, and resell it to consumers through the grid.

There are other participants as well, though, who use the market like any savvy trader might… to profit.

Independent power producers or storage system operators can profit from the market by buying electricity and storing it while prices are low (during non-peak periods), and reselling it back to the grid while prices are high. This is where Suena comes in.

Suena 

So, we’ve established two key points thus far:

Battery Storage Systems = good for driving sustainable energy and deregulation forward

Wholesale Energy markets = good opportunity for owners of storage systems to profit

It's reasonable to assume that a company assisting storage system owners in managing and profiting from their systems would not only benefit its clients but also motivate others to engage in the evolving energy market.

That’s the bet Suena is making.

If you’re a Suena customer, their Autopilot software manages your battery storage system from end to end. They’ve built algorithms to predict energy prices and decide when the best time to buy and sell electricity is, handling all of the decision-making and trading to maximize profits for users.

Essentially, an algorithmic energy trading bot.

The service is tailored for grid-scale assets and incorporates AI-based market modeling and prediction, price forecasting, and digital twin technologies to enhance and optimize the performance of battery systems. Here’s an overview of all of their offerings and services:

Stand-Alone Storage System Management 

Stand-alone energy storage systems are batteries that operate independently from energy-generating sources. They solely receive and supply energy to and from the grid.

The profitability of these systems depends on several factors, including the cost of the system, where it’s located, the cost of the services it’s providing, and the amount of energy it’s expected to produce.

Suena considers everything, scanning the relevant markets for each battery system and leveraging its AI to pinpoint the most profitable trading approach for each unique system.

Since these systems solely charge from the grid and incur costs for it, it's crucial to find the cheapest charging rates and the best prices for selling energy back to the grid. That's exactly what Suena is there for, making sure you get the best deal possible

Co-Located Storage System Management 

Unlike stand-alone systems, co-located battery storage systems are paired with other energy sources, oftentimes wind or solar, to store the energy produced. This stored energy can then be sold into the grid. 

If you haven’t already figured it out, the potential for profits here is far greater than with a stand-alone system. 

By charging the batteries using a linked renewable source, co-located system operators can remove the cost of charging from the grid. 

Still, these systems must decide when to charge, when to store, and when to output power based on the market dynamics. Suena’s market forecasting abilities come into play here, helping to optimize trade timing. 

In addition, Suena’s Autopilot optimizes the usage of battery systems for what’s called “self-consumption”, or the usage of stored energy to power the wind or solar plant’s operations when power is not being produced, which reduces the need to buy electricity from the grid. 

So, effectively, Suena balances three things: 

  • When to charge 

  • When to sell and distribute  

  • When to self-consume 

All to maximize profits for their users. 

Arbitrage 

Getting a little bit more advanced, trading revenues for system operators can be increased further by trading products between markets, or in the same market several times, such that the battery does not have to be physically used for profits to be made. 

When energy is purchased from the grid, it's essentially buying the right to use that energy at a designated time. This means that the transaction is not just for the energy itself but for its usage at specified times throughout the day.

There are both Day-Ahead markets, for purchasing energy to be used the next day at an agreed-upon price, and Intraday markets, for purchasing energy to be used on the same day at a specified time. 

Fluctuations in prices present an opportunity to buy and sell rights to energy without the energy ever being used. Suena’s algorithms do this automatically. 

Ancillary Services 

As the time for electricity delivery nears, grid operators have the task of aligning energy supply with demand to maintain a stable grid frequency, typically around 50Hz. This involves adjusting power generation and consumption on the fly. Battery systems play a key role here; they can both supply electricity to the grid and absorb any surplus, helping to keep the grid frequency steady. This balancing act is known as providing ancillary services.

Besides engaging in wholesale markets, operators of battery storage systems can also enter bids to provide these ancillary services.

Suena bids to participate in these services based on the opportunity cost for each time slice.

In other words, it weighs the profit of the ancillary services against the profit of participating in the wholesale market and chooses the more profitable option. 

This strategy - participating in both sides of the market - has been proven to be more profitable in the long run. 

Recap and Analysis

So, Suena has it all handled, from point A to Z. 

Their focus, as relayed in all of their press releases, is truly on the adoption of sustainable solutions to foster energy independence. 

They envision a world powered entirely by renewable energy sources and are doing their part in bringing that to fruition by creating a system that provides an opportunity for renewable energy plant operators to be much more profitable than before. 

Their clients include InnoEnergy, Tagenergy, Prokon, ABO Wind, Orsted, FBS Systems, Encavis, EnBW, Flex Pwr, and Maxsolar, and they currently operating in two countries, participating in five wholesale markets and four ancillary service markets. 

Their recent seed round is primarily going to be used to further introduce their Autopilot software across Europe, extending its functionality and reaching new markets while expanding their team internationally. It should go without saying that their investors, including Santander InnoEnergy Climate Fund and Energie360 are confident in their ability to do so. 

That said, challenges are present in all growth stories, and this is no different. 

  • Regulatory dynamics differ significantly in wholesale markets from region to region, and navigating this landscape can be challenging. Suena will likely have to modify their software per country in order to stay compliant. 

  • Oftentimes, AI adoption in industries where mishaps can result in drastic ramifications, like energy, can be slower than in those where the consequences of outages or mistakes are lower. Suena must ensure and prove that its systems are trustworthy before reaching mass adoption. 

  • Different markets and regions have different energy infrastructures. Like the regulatory dynamics, Suena will have to adjust per region to address this. 

  • Integrating new software into existing, long-standing infrastructures is a marathon and will not happen overnight. 

  • Global events are always a risk to startups in the energy market, as one large geopolitical event can drastically alter the market structure. If one of these events happens before Suena scales, it could very well mean the death of the company. 

  • Balancing social responsibility and profitability is a tightrope walk, and Suena needs to ensure it sticks to its mission to maintain credibility within the renewable energy space that they’re targeting. 

Navigating these issues will be key to growth and adoption for Suena. 

We’ll see how it plays out, but at the very least, it’s an incredibly interesting solution, and I’m excited to see where it goes.

See you next week!

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