LightSail Energy, the Silicon Valley cleantech company co-founded by Dartmouth-born Danielle Fong, has shut down, meaning Innovacorp will write off its $2-million investment in the company.
Based in Berkeley, Calif., LightSail was working on an energy storage product that used compressed air infused with water vapour that could drive wind turbines during periods of low wind. The publication Greentech Media said in December that the company, which had raised a total of US$80 million, had run out of money and was shutting down.
Innovacorp, Nova Scotia’s venture capital and innovation agency, had invested in the company’s US$37-million D Round of funding in 2012, joining such tech luminaries as Bill Gates and PayPal co-founder Peter Thiel. As part of the $2-million investment from Innovacorp, LightSail agreed to build a demonstration project in Nova Scotia to test its solution in a northern climate.
That Nova Scotian project, like the rest of the LightSail commercialization plans, failed to materialize.
“Like anything in this space, it was a situation where a technology failed to commercialize, and there are other technologies that have progressed more in the energy storage area,” said Innovacorp vice-president of investment Charles Baxter in an interview. “In this case, lithium ion batteries have progressed more.”
The investment in LightSail was considered an experiment for Innovacorp. It sought to back the company’s facility in Nova Scotia, which was expected to cost a total of $4.7 million. By investing in the California parent company, the organization hoped to develop contacts with Silicon Valley investors, with the hopes that could lead to investments in Nova Scotia companies.
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The genesis of the relationship between LightSail and Innovacorp was Fong, a brilliant scientist who hailed from Nova Scotia and had judged Innovacorp’s CleanTech Open competition in 2011.
Fong, a Dalhousie University alumna, dropped out of a PhD program at Princeton to found LightSail in her early twenties. The company espoused a revolutionary system that would improve the efficiency of compressing air in order to store electricity — a system that would have been especially useful for wind or solar power applications.
The company said its technology solved a classic problem in renewable energy: Wind power works only when the wind is blowing, solar only when the sun shines. That means there is no correlation between periods of strong energy generation and peak electricity demand. By storing electricity, energy providers can moderate the output and rely less on backups from more reliable energy sources, like burning fossil fuels.
Many storage systems rely on compressed air, which can be released during down times to produce electricity. However, the compression process creates heat, a form of energy that is mostly lost. Using water vapour, LightSail planned to recapture that heat and convert it into electricity. The Nova Scotia plant would have assessed how the system could use water vapour in a cold climate during winter.
Asked if Innovacorp would again invest in an offshore company with operations, Baxter said each case is considered individually, but the agency would demand that the Nova Scotian part of the operation be up and running before it considered such a deal again.
He added that each VC investment carries risk, but the technology risks in clean energy products are significant because they often need the plant to be constructed to ensure a product works, and there are always new technologies coming on stream. It differs from an IT investment, in which it is fairly easy to demonstrate efficacy. In life sciences, he said, Innovacorp tends to focus on medical devices, which have a lower threshold of regulatory risk than drug discovery companies.
Disclosure: Innovacorp is a client of Entrevestor.
