Fire sale: Imara’s battery patents and trade secrets

Menlo Park, Calif.-based Imara is looking for buyers of its patents and technology, after abruptly shutting its doors yesterday.

The company made rechargeable lithium-ion batteries that used nickel manganese cobalt chemistry.

The company’s Vice President of Business Development Neil Maguire told the Cleantech Group today it came down to difficulty raising funding, rather than the technology being faulty. In fact, potential customers trying the company’s batteries were seeing 20 percent improvement over Imara’s competitors, Maguire said.

The company had been trying to secure contracts with original equipment manufacturers to incorporate its high-power, high-energy rechargeable batteries into power tools and outdoor equipment (see Imara launches li-ion battery production). The company had long-term ambitions of going after the energy storage and electric vehicle markets.

Imara was in the process of trying to scale up and validate its operations in bulk, and that took about a year longer than expected, between trials runs, adding engineers and equipment, Maguire said.

“And all that time, you are burning money,” he said.

The company’s former CEO Jeff Depew exited the company about six weeks ago. When reached by the Cleantech Group, he declined to comment on the company's closure.

The venture-backed company was seeking about $25 million to $30 million in additional funding from investors, but didn’t have customers or a product at that point in time, Maguire said. And its investors including Battery Ventures and Nth Power—which could not be reached for comment—needed to cut their losses, Maguire said.

Imara had raised a little more than $19 million in two rounds when it emerged from stealth in 2008 (see Battery maker Imara emerges from stealth and Funds flow to light and solar).

As the company was trying to scale up, Maguire said U.S. Department of Energy grants and government funding were going to some of the more established players in the battery industry, including France's Saft, which is partnering with Johnson Controls; the Dow Kokam consortium which includes Dow Chemical, South Korea-based Kokam's U.S. affiliate Kokam America and others; South Korea’s LG Chem; and Watertown, Mass.-based A123Systems.

“They excluded companies that were right at that threshold,” Maguire said, adding that it was also a turnoff for investors that Imara didn't receive DOE support.

He also noted some of the recipients are foreign battery developers. 

Depew had said his company wasn't eligible for U.S. government stimulus funding for advanced batteries because it didn't have existing contracts with auto manufacturers, however it was hoping to secure funds from the DOE. 

Imara’s facilities have been shuttered with work half in progress, Maguire said, describing it as a “pretty ugly scene” (see a blog posted by the company: A Day that will live in Infamy - Dec 7th 2009).

The 38-employee company, previously known as Lion Cells, had exclusively licensed lithium-ion battery technology developed at the Stanford Research Institute (SRI) as part of the Partnership for the Next Generation Vehicle initiative. That technology will divert back to SRI, Maguire said.

Silicon Valley Bank has taken possession of the company’s five to eight other patents and technology that are in process, Maguire said. The company’s research and development team is “working to package those up” for potential buyers. Those patents are related to its scientists who have the “know how, the trade secret-type stuff,” he said.  

But Maguire doesn’t anticipate interested buyers will be coming from Japanese battery giants like Sony and Sanyo. Instead, he suggested potential buyers might be Siemens, General Electric or Intel, companies that could need a jump start to get into the battery business.

“If you start from scratch, it’s going to take you a long time to do it,” he said.

Maguire spoke of the lessons he’s learned from the process: “It’s not about the buzz or the compelling pitch. It’s about understanding manufacturing processes and controlling the variations and getting high run rates or high volume production. If you get into the battery industry, you need to have expertise there manufacturing at scale.”