The Metrics Breakdown
The Batteries Included Fund dashboard, v1.0!
Welcome to our newsletter on electrifying traditionally fossil-fueled stuff. If you were forwarded this post and liked it, please subscribe! We cover:
Investing, especially in energy storage - The Batteries Included Fund,
Electric vehicles, especially small ones - Night Shift Bikes, and
Switching from gas to electric when it makes sense for you - My Next Electric.
In our last post we introduced you to Nicole, who has developed a simple investment dashboard for The Batteries Included Fund. In this post she breaks down the metrics upon which that dashboard’s built.
Before we start, let’s give credit where it’s due, especially for the first two metrics on our board. Lateral innovation with withered tech is something we learned from Nintendo creator, Gunpei Yokoi.
Lateral Innovation…
Lateral innovation can unlock lots of value, fast. Lateral innovators find second and third markets for new value creation with existing products. Tons of investors put money in potential tech that’s not ready yet; they’d get a low score on NASA’s 1 to 9 scale of tech readiness, or TRL. We’re curious about tech’s that is past ready. We call these TRL 10 companies. TRL 10 companies find clever new sources of value in technology that’s already made it to one market and been used for many years.
…with Withered Tech
Withered Tech represents re-use of an existing product, component or subsystem that utilizes engineering from the original design. Yokoi saw something important in preserving and creatively repurposing withered tech; withered tech is proven, and usually easy to find. Yokoi’s gameboy was not ultramodern and novel considering it didn’t have the best graphics or color screen when it was launched, but it utilized important profitable aspects of the “withered tech” like it’s affordability, battery life, and potential for simple, elegant gameplay.
We see similar observations in Freeman Hall’s B2U thesis: What if we thought out of the box car about electric car batteries? How, where might these be better than fancy, new batteries fresh from the factory? How, where can we re-use most of the original design? Where? That’s what good lateral innovators understand ask? Where is an entirely new market for this used but still useful. Hall knew the power grid, and that’s his where for B2U. And it’s working; he’s found a new market and new life for withered EV batteries.
The Trifecta of “Optionality”
Renewable are great. They are cheap and, well, renewable. They won’t run out. But they’re not firm, or stable, or always there. We’re looking for companies who can address this intermittency in creative ways. Batteries are good at that. They can take electricity from lots of sources. They can dish it out quickly or slowly, for anything you need. We want this metric to capture how many options a particular battery has on both sides of the equation: how many ways can you fill them up, and how many (ideally non-correlated) ways can you discharge them.
One of my favorite examples to explain fuel optionality is FluxHybrids. They created a way to modify gas-powered commercial vehicles into plug-in hybrids. FluxHybrid’s drive can reduce fossil fuel use by 40%. It boosts fuel optionality instantly.
On the discharge side, we like battery companies that have non-correlated revenue streams. Let’s take a look at NeoCharge. Neocharge enables customers to participate in demand response programs by adjusting when they charge their cars and use their energy-intense electric clothes dryer. The homeowner with NeoCharge’s Smart Splitter can decide themselves or let the utility decide. Options!
The Iceberg of “Accessory”
The last metric we developed was Accessory. Throughout this series we have spoken about our intermittent future. As more wind and solar is introduced into the energy ecosystem, at certain points of the day existing power plants must ramp up and down quickly to serve as complements to solar, but this wasn’t their original design. We need something to supplement what we would need from existing power plants. Sort of like an add-on, an accessory.
Batteries that can store power to cover the gaps help address the ramping up and down, but this is just the start. High Accessory rating gives insight into how a company can help address the volatility of a world based on renewables+electric machines vs fossil fuels+combustion machines. A product that scores highly as an accessory is a product that can be used as an accessory to an existing renewable resource.
My favorite example for this is the women-led startup Accelerate Wind. Erica Boeing’s team has developed rooftop wind turbines compatible with rooftop solar that can help with supplying up to 25% energy to those buildings. This is an excellent example for Accessory because they designed the turbines in a way that they take advantage of spaces where rooftop solar can’t be installed. It acts as an accessory to rooftop solar, meaning their addressable market is rooftop solar’s market for the most part. This also hints at how easy the initial deployment of the product might look like. Accelerate Wind can approach rooftop solar installation companies which already have amassed large amounts of clients, and then utilize those companies to deploy the accessory product of the wind turbine, potentially providing their customers an additional 25%. It helps us gain confidence through the volatility of transition to renewables, now making the faster adoption of renewables a lot less daunting.
So now that we’ve developed all of these metrics, what does that mean for the dashboard?
For each company My Next Electric has invested in (along with some potential targets) we developed a 20 word description, with highlighted words corresponding to each metric.
We measure each of these metrics on a scale of 1-10. A company’s “Batteries Included” score is the average of each of their metrics. B2U scores a 10 for all metrics.
Here’s a map for B2U:
Here’s our current model for B2U:
Similar breakdowns have been done for all of our current investments as well as some we are keeping an eye on. Curiosity has been a constant theme throughout this process, and we are excited to see how new companies will align with our metrics and help populate our dashboard. Curiosity was not in fact what killed the cat in our case.