Cheesecake Energy
SummaryEdit
Cheesecake Energy Ltd (CEL) has developed the world’s most sustainable energy storage technology for local renewable energy networks (microgrids) and electric vehicle (EV) fleet charging. CEL use off-the-shelf industrial hardware in a proprietary system configuration to deliver an energy storage technology 30-40% cheaper than the market-leading alternative, lithium-ion batteries.
CEL’s eTanker is a stationary, medium-long-duration energy storage solution which delivers cheap, reliable, efficient energy storage in a modular, containerised package.
To be the supplier of choice globally for medium-scale medium-duration energy storage systems by 2025.
Seeking to raise £500k-£750k for a 12-month runway, of which £435k is committed including £200k from Imperial.
Investment InterviewEdit
Explain what your venture does.
Cheesecake Energy is developing the world's greenest battery, storing electricity in the form of heat and compressed air at 30-40% lower cost than lithium-ion alternatives.
What stage is your business?
Deploying prototype with launch customer.
Describe your advisers.
Board observer from Nottingham Technology Ventures, informal advisors but looking to formalise.
Give an overview of your startup's financing history.
Having self-funded patent costs and initial development, the company went through a step-change in momentum when work commenced on the £225k Shell GameChanger grant award in mid-2019. The company agreed an investment of £100k from Nottingham University Technology Ventures following a two-month feasibility study for a motorway services installation funded with a £75k grant from Highways England. CEL later secured a £1m extension to that project in Dec 2019 to fund a full technology demonstrator of eTanker.
2020 brought three further grant awards:£70K from the Advanced Propulsion Centre together with support from their automotive industry accelerator; Two Innovate UK grants are underway: the first towards a £325k, 9 month project to demonstrate commercial product features during test installation and the second for £100k to fund further development of the valve actuator, a key enabling invention developed for Cheesecake’s technology that also has significant commercial potential in its own right in automotive market.
On the 26th March 2021, CEL was awarded a further £340k 'Smart' grant from Innovate UK to develop its constant-pressure air store technology. CEL will put £150k of match funding in alongside the grant to complete the £500k project, which will run for 14 months from June 2021.
The total non-dilutive funding secured now stands at just over £2.0m.
Explain the ownership structure of your company.
Ownership of Cheesecake Energy resides 90% with the original founding team, of whom five out of six remain actively involved in the company’s development. All IP is held by CEL as a corporate entity. The remaining shareholding is held by the University of Nottingham.
How many employees do you have?
CEL has 11 employees. Five co-founders are involved in the business day-to-day: Mike Simpson, CEO
- Seamus Garvey, CTO (part-time)
- Paul Codd, CCO
- Bruno Cardenas, thermal storage lead (part-time)
- James Garvey, mechanical design
- Our technical team is further strengthened by four experienced engineers and two graduate engineering interns while our marketing lead adds key expertise on the commercial side. We are seeking to grow the commercial team by two people in the coming year.
Please provide the name of a lawyer, who will represent you for the upcoming investment round.
Lewis Silkin or CMS
How much money are you seeking to raise in the current round?
BDB Pitmans.
Do you have any existing commitments to the current round?
£500k-£750k for a 12-month runway.
Explain why you are raising finance.
The team is now progressing rapidly towards a full-scale eTanker prototype, which is scheduled for completion in Q3 2021. Detailed design and procurement activities are at an advanced stage, with the first items of hardware already received. The team is funded for the prototype build, which is on track to deliver a valuable proof-of-concept. However, the opportunity exists to accelerate development further and bring the system closer to a commercial product. With additional funding, CEL will deliver a complete first-generation system installation with increased power output, higher capacity and intelligent controls, a key step towards the intended final system design. In doing so, Cheesecake Energy will be leveraging substantial grant funding.
The seed investment will also allow us to secure agreements for pilot systems in key applications, enabling us to develop multiple projects simultaneously and accelerating the growth of our customer understanding. The pilot installations will allow us to prove reliability and maintainability, while also helping to build out a network of strategic partners that will facilitate rapid growth and scale-up. The commercial team will be strengthened in order to facilitate the expanded range of relationships with customers and partners.
Please explain the history of your venture.
The journey began back in 2016, as the CEL team came together initially around a body of research into thermal and mechanical energy storage. It was clear to us then that batteries alone would not be enough to solve our energy storage needs in a sustainable way. The alternative we developed was based on years of relevant academic research and we called it ‘GIESCAES’. That acronym became ‘Cheesecake’, reflecting our unique approach to layering thermal and mechanical energy storage to make something greater than the sum of its parts. CEL is on a mission to accelerate the decarbonisation of the supply of energy around the world by making energy storage more affordable.
Please explain the longer term, future vision for the Company
Our vision is to be the supplier of choice globally for medium-scale medium-duration energy storage systems by 2025.
Explain the core technologies and/or service propositions of your venture.
Cheesecake Energy Ltd (CEL) has developed the world’s most sustainable energy storage technology for local renewable energy networks (microgrids) and electric vehicle (EV) fleet charging. We use off-the-shelf industrial hardware in a proprietary system configuration to deliver an energy storage technology 30-40% cheaper than the market-leading alternative, lithium-ion batteries.
CEL’s eTanker is a stationary, medium-long-duration energy storage solution which delivers cheap, reliable, efficient energy storage in a modular, containerised package.
The technology stores energy in the form of heat and pressurised air, adapting ex-service truck engines with our patented modifications to become zero-emission electrical power-conversion machines for putting energy into storage and recovering it from storage. Our proprietary system architecture unlocks low-cost performance in a compact footprint that represents a step change in compressed air energy storage capabilities.
The system is safe, straightforward to operate, has a lifetime of up to 25 years and can deliver turnaround efficiencies of 65 - 70%.
eTanker can discharge at full power for up to 20 hours and can be deployed flexibly as power and energy are scaled separately from one another. The system is portable and requires nothing more than firm flat land at a prospective site. The system can be cycled over 10,000 times and charged and discharged from 100% to 0% and back, without suffering any significant degradation.
Does your commercial strategy rely on intellectual property assets?
The company’s deep engineering technology is based on a decade of research, though all IP is wholly owned by the company. This academic knowledge base is further built on with 5 years of dedicated R&D know-how and ~£10m R&D investment to bring the final product to fruition. This gestation period from concept to mature manufactured product is a significant barrier to those that would follow in CEL’s footsteps.
There are currently nine patent applications covering various aspects of the CEL IP and related matters. Collectively, these patents cover how to: (a) exploit externally-captured low-grade heat, (b) connect simultaneously to AC and DC networks negating the need for inverters, (c) make constant-pressure gas storage 3-5% more efficient, (d) make internal combustion engines 17% more efficient with a novel approach to controlling valve timings and (e) receive and deliver pressurised gases into containers at high efficiency.
The existing patent portfolio provides broad coverage protecting the Cheesecake platform, ranging from proprietary core components to improvements necessary to enable commercial efficiency. Substantial further IP will emerge as the development proceeds, particularly as product extensions and process enhancements are considered. There is further potential for licensing IP to partners for development in other sectors, with the compressed gas storage technologies being highly applicable to hydrogen and bio-methane applications and the fully controllable variable-valve-timing technology already receiving interest from major suppliers in the automotive sector.
What commercial progress have you made?
Founded in 2016, the company received £1.3m in research contracts in 2019 and 2020 from Shell and Highways England, to design and build a prototype eTanker system, due for completion in Q3 2021. This demonstrator system will be deployed in Q4 2021 in the company’s first customer pilot project, charging an electric vehicle fleet using renewable energy for Nottinghamshire County Council, and reducing the Council’s grid connection costs. CEL is quickly establishing itself within the East Midlands energy ecosystem and beyond — having secured initial interest in piloting the technology from a range of organisations including local authorities, renewables developers, electric bus depots and industrial manufacturers. Specialist mining project financiers NRG Capital Partners and Engie Fabricom, the industrial services arm of energy giant Engie, have expressed interest in exploring opportunities to offer eTanker systems to their global client base. We are in conversations with Engie Fabricom regarding a pilot installation at its manufacturing site.[1]
RisksEdit
As with any investment, investing in Cheesecake Energy carries a level of risk. Overall, based on the key risks highlighted below, the degree of risk associated with an investment in Cheesecake Energy is higher than in a company that's trading on a public market.
Early-stage investmentEdit
Cheesecake Energy is at one of the earliest stages of the business lifecycle, and the failure rate of companies at that stage is usually much higher than those at a later stage. As of 2022, 57% of companies that are incorporated in the United Kingdom fail within the first five years of the companies incorporation, according to the Office for National Statistics. [2]
Illiquid investmentEdit
The number of transactions in shares of private companies is usually significantly lower than in public companies, typically resulting in it taking longer to sell shares in private companies at a price that is at least equal to the price that the shares were bought at. Accordingly, the Cheesecake Energy investment opportunity is considered to be higher risk than more liquid companies.
References and notesEdit