by Carolyn Murphy
[Posted on January 3, 2008 - 11:11 AM]
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DiggBoston-Power Inc., a maker of next-generation lithium-ion batteries, has closed a $45 million Series C funding round led by Oak Investment Partners aimed at helping take its laptop battery packs to market.
The company has raised more than $68 million since launching in 2005.
Westborough, Mass.-based Boston-Power's existing backers, Venrock Associates and Granite Global Ventures of Menlo Park, Calif., as well as Gabriel Venture Partners of Redwood Shores, Calif., joined Westport, Conn.-based Oak in the financing.
The news comes nearly a year after Boston-Power unveiled a $15.6 million Series B round alongside its next-generation notebook battery pack, which came just months after massive recalls by Dell Inc., Apple Inc. and others, thought to be the largest ever in consumer electronics.
Thursday's oversubscribed up round should carry Boston-Power through to profitability, founder and chief executive Christina Lampe-Onnerud said, although she would not offer a timeline. The latest round will go primarily toward funding the manufacturing of the company's Sonata battery technology, which targets notebooks initially but could be used for hybrid electric vehicles and other consumer electronic devices down the road.
"We basically have met the major milestone of proving mass production," Lampe-Onnerud said, and with the capital, the startup is poised to launch into larger-scale production and mass sales.
Along with its funding news, Boston-Power unveiled a manufacturing deal with China's GP Batteries International Ltd., which it calls the leading battery manufacturer in Asia outside Japan.
This is the startup's second deal with a manufacturer in China to make its batteries and complements its smaller factory with HYB Battery Co. Ltd. The company plans to ramp up manufacturing capacity from 200,000 to 300,000 batteries per month in 2007 to 1 million per month by year's end.
Lampe-Onnerud said the mobile power segment overall is a $5 billion to $10 billion market, with the laptop battery pack segment commanding between $2 billion and $3 billion.
Increasing market demand, greater consumer need and safety concerns about laptop batteries are all driving forces. According to research from IDC, the third quarter of 2007 experienced 37% growth worldwide in portable PC shipments, the fastest rate in more than 10 years, exceeding growth in desktop PC sales by 33%.
But with the considerable market opportunity come product challenges and competition. Concerns around lithium-ion batteries stem from safety, how quickly they charge and how long they last. Boston-Power maintains its batteries can charge to 80% capacity in 30 minutes, compared with the two- to three-hour industry standard, and that it can last the life of a notebook, about three years.
Further, Lampe-Onnerund said, the company's battery has the Nordic Ecolabel environmentally friendly certification and is the only lithium-ion notebook battery to carry the distinction. It also packs internal safety triggers that shut down the battery if it senses overheating, for example.
According to data compiled by research boutique Gerson Lehrman Group, Sanyo Electric Co. Ltd. controls the greatest lithium-ion market share with 21%, followed by Sony Corp.'s 13% and China's BYD Co. Ltd. with 11%.
Boston-Power has worked with Hewlett-Packard Co. for more than two years and hopes the company will begin shipping laptops with its battery pack in 2008, sooner rather than later.
It's not the only startup focusing on next-generation lithium-ion batteries. A123 Systems Inc. of Watertown, Mass., raised $70 million in 2007 alone and $132 million in all since 2002 for its batteries for use in hybrid electric vehicles from backers like General Electric Co. of Fairfield, Conn., and Sequoia Capital of Menlo Park, Calif., among others.
Having another well-funded peer demonstrates "how much momentum is needed," for generating power, Lampe-Onnerud said.
In connection with the Series C round, Oak managing partner Bandel Carano joined Boston-Power's board of directors, while GGV managing partner Scott Bonham filled a seat vacated by fellow managing partner Thomas Ng.
For advice on the round, Boston-Power turned to David Feinberg's Feinberg Law Group LLC of Wellesley, Mass.
