To propel Airthium through an extended product development phase, the startup is offering a SAFE with no discount. For this raise, the company’s valuation cap comes in at $17 million. Given that the company’s product doesn’t exist yet, this is just far too early a stage for the company to have such a high cap. Modest levels of revenue also don’t justify the amount. Thus, Airthium’s price score is middle of the road.

There is something of a weakness in Airthium’s offering when it comes to the market. Though everyone obviously needs energy in today’s world, it’s not clear what portions of the market Airthium intends to target with its battery. Airthium anticipates that in the next three decades utility companies will spend $50 billion a year in building up energy storage capacity. This is an unverified prediction. What we have is an estimate that the global battery energy storage system market was valued at $2.2 billion in 2019 and is expected to grow at a CAGR of 21.05% to reach $6.9 billion by 2025. 

This isn’t a huge market size for an ambitious startup whose product’s chief draw is its low cost over other products. However, utilities gradually move towards renewables due to regulatory changes and incentives, the market is likely to grow still faster. However, Airthium is currently betting on a market that is quite small. As a result, the company’s market score is one of its lowest.

Airthium’s leadership team brings encouraging credentials and experience. CEO/CTO and co-founder Andrei Klochko in particular comes across as young, but has the expertise where it counts. After picking up a Master of Engineering in Physics at École Polytechnique in France, he became a Ph.D. student and completed postdoctoral work with applications in engine ignition and plasma actuators. École, also known simply as the “X,” is one of the most prestigious and selective schools in France. Klochko’s long period of study there is a potential indicator of future success for Airthium.

Klochko’s partner is co-founder Franck Lahaye. Lahaye has a Master’s degree in Entrepreneurship from ICN Business School. He has spent a number of years working in sales and marketing roles for various businesses, before spending eight years working with Intelsat and Meteor Trading, which designs and operates satellites.

On the engineering side, Simon Garnotel and Houssam Houssein work as the company’s multiphysics simulation engineers, with their hands deep in development on the airthium prototype. Garnotel has a Ph.D. in Applied Mathematics and has expertise in fluid-structure interaction. Houssein has a Master’s degree in Engineering at École Centrale and is a PhD student at Sorbonne.

Overall, this team brings a strong technical foundation, as well as sales and marketing experience. Due to this encouraging mix of skills, Airthium’s team score is above average.

Airthium’s product is technically in development, but its design enables it to operate on a superior level to existing lithium ion batteries. It relies on a proprietary “Stirling engine” to turn energy into renewable ammonia for long-term “seasonal” energy storage (to account for variations in weather over the course of a year). Molten salt — a kind of lava made of sodium and potassium nitrate salts — is used to store energy overnight. Three quarters of these conversions are made through the Stirling engine. At least theoretically, the battery can effectively store energy for long periods of time and be sold significantly cheaper and smaller than existing lithium-ion batteries.

Although Airthium faces pre-existing competition, the advantages of its new design for energy storage put its product far ahead of what is currently available. Therefore, Airthium’s differentiators score is its highest across all five metrics.

As with many well-oriented startups, Airthium has gone through Y Combinator’s startup program. It has raised more than $500,000 dollars in pre-seed financing and is working off an average burn rate of $40,000 per month. Given the company’s current resources, that’s several years of runway. Most of its advancements have come on the technical side. However, it has begun taking in revenue through a Japanese company using Airthium’s numerical simulation software. The company took in $169,548 last year, up from $115,090 the year before. In terms of liabilities, it has accrued almost $75,000 in short-term debt and $491,538 in long-term debt.

For a company in the pre-product stage, Airthium seems to be hitting all the numbers well enough. Consequently, the performance score for the company is above average.

The main risks with Airthium are all tied into the same overall problem — primarily, that despite being in operation for five years, Airthium is still a ways off from offering a viable product. While the tech is patent-eligible and distinct from other offerings on the market, it has not yet been actually patented, which means it could face defensibility issues. Once patents are filed and the product is prototyped, Airthium will be significantly ahead of the competition — assuming a major competitor doesn’t arise in this space in the meantime. However, it won’t be offering an actual product until 2023, which means that investors will likely need to wait for several years after that before seeing significant returns on their investment. While Airthium has positioned itself in France to operate long-term without significant revenue, there is always the chance that the company could run out of funds during its long development phase.

Even for a startup, three years to a product is a long time to wait, especially for a company with such a high valuation. Investors seeking to own a piece of Airthium will need to be extremely patient, and that patience may not pay off. This is always the risk with pre-product tech startups, that development will face significant roadblocks, competition will emerge with significant innovations over the company product, or just that development will take too long and the company will run out of runway. While Airthium has great potential to corner a market that is rapidly growing and has a socially-conscious mission, it still has to fully prove its product.

Despite what many coal and oil executives have to say, renewable energy is the world’s future, and wind and solar are going to be a huge part of that one way or another. In fact, solar has been dubbed the cheapest source of electricity in history, depending on what part of the world you’re in. But all of that energy intake is meaningless if it can’t be made dependable through storage. At the moment, Airthium looks to be capable of doing that better than anything currently on the market.

It will take time for development to complete, and even Airthium’s estimates are projecting into the next thirty years. Should the startup turn its promising technology specs into a viable product, it will be able to catch the rising tide of renewable energy investment to some degree and play an essential part in turning the global energy sector fully renewable. Investors can be a part of that and could see substantial returns on their investment in the very long term.

In a world increasingly turning to wind and solar to replace fossil fuels like oil and coal, energy storage is the next technological frontier. Airthium is developing a battery to replace traditional lithium-ion offerings, one that will be a hundred times cheaper and fifteen times smaller than those batteries. It is safe, stores energy efficiently for long periods of time, and does so through technology that can be patented (but hasn’t yet).

Airthium’s CEO is a postdoctoral student from one of France’s elite universities, and between him and other subject-matter experts in the company, the technical side of Airthium looks to be well-covered. Even so, the product is still in development and is expected to be so for the next couple of years at least. The company has a relatively high valuation, and its business plan is less clear than we would like. Still, we see a product that is cheaper and more effective than the competition, exactly what is needed to corner a rapidly growing market. For these reasons, Airthium has been rated a Deal to Watch.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Benjamin Potts.