OTC News Archive

Austin battery company raises $5.8 million in a first round of venture capital

ActaCell accepts some money from Google.org as it prepares to commercialize lithium-ion tecnology

By Dan Zehr
Austin American-Statesman
July 23, 2008

A small battery company spun out of the University of Texas and nurtured by the Austin Technology Incubator has raised $5.8 million in a first round of venture capital, including a grant from the philanthropic arm of Google Inc.

ActaCell Inc., which was formed to commercialize some of UT’s lithium-ion battery research, plans to announce the funding today. It will use the money to hire key technical talent and move its technology from the research lab to the early production stages, chief executive Bill Ott said in an interview.

Houston-based DFJ Mercury led the investment. It and two other venture capital funds, Applied Ventures and Good Energies, agreed to an initial $1 million commitment earlier this year. The trio was joined in the full round by Google.org, which is funded by profits produced by the Web search and Internet advertising giant.

Google.org invested in ActaCell through its RechargeIT program, which it launched to support products and programs that will help reduce carbon-dioxide emissions and stabilize the electrical grid. ActaCell joins a half-dozen groups that have received funding from RechargeIT.

Ott declined to say how much each individual group invested.

He also declined to comment on specifics about the company’s battery technology, saying he hoped to provide more details early next year. He said ActaCell is focused on the types of high-power lithium-ion batteries typically used in cordless power tools and various types of electricity-powered vehicles, including plug-in hybrids.

“If we were to go after those markets… there are three things they would be concerned about: cost, high-power capability and safety,” Ott said. “That’s clearly what we want to do. Anybody who goes after that market would have to do that.”

Lithium-ion can deliver more performance than other types of batteries, but some of the chemical compounds can be unstable. A spate of computer-battery fires prompted the recall of millions of Sony Corp. batteries in 2006. But compounds developed at the University of Texas show the promise of strong performance in a more stable chemical makeup.

Austin-based Valence Technology Inc. and A123 Systems Inc. in Massachusetts already sell battery systems based on those compounds. The companies have designed them to be used in anything from electric tools to electric vehicles. Former Valence CEO James Akridge will serve on ActaCell’s board.

Regardless of the specific chemistry it uses, ActaCell will be jumping into the middle of increasingly frenetic market for the large, rechargeable, lithium-ion batteries. The rising popularity of hybrid-electric vehicles—sped up by U.S. efforts to wean itself from a reliance on foreign oil—has only heightened the sense of urgency for these battery developers.

“It’s going to be a big market,” Ott said, “so there’s potentially room for a couple different technologies.”

Virtually all of those technologies have their roots in research conducted by University of Texas professors John Goodenough and Arumugam Manthiram, two of the world’s foremost experts on lithium-ion batteries. ActaCell was formed to commercialize some of Manthiram’s findings and was formed as a company at the Austin Technology Incubator.

ActaCell’s exclusive license is not related to prior lithium-ion technologies that came out of UT research and have been the source of several lawsuits. Hydro-Québec, a Canadian utility that licensed some of UT’s battery technologies, has filed patent-infringement lawsuits against several companies, including A123, Valence and Japanese telecommunications giant NTT Corp. All three companies have disputed the charges.

The NTT case was scheduled to go to trial this week in state District Court in Travis County but has been delayed.

[ Statesman ]