Giving up on raising a new round of capital, lithium-ion battery maker Imara has officially shut down. As giants like Panasonic and Samsung move into making electric and hybrid vehicle batteries, and even "successful" startups like A123Systems have a hard time turning a profit, Imara could be the first of many young battery companies to bite the dust.
Based in Menlo Park, Calif., the company faced steep odds. Not only was it young, founded only in 2006, compared to the likes of Johnson Controls-Saft (which has been in the automotive business since 1885) and others, but it was solidly domestic. Competing against much cheaper manufacturers in Asia is almost impossible, even with stimulus funds from the U.S. Department of Energy.
That's exactly how far Imara made it before it ran out of steam. With manufacturing lines up and running, it was several months away from seeing some real revenue, the company says. But with too few prospective clients and capital intensive needs during a rough economic patch, it started to lose investor interest.
Previously, it had been backed with $19.1 million from Battery Ventures and Nth Power. It was looking for one more $20 million round, but eight months went by without signing on new or existing investors. Especially earlier this year, before the economy started to rebound, venture capitalists were particularly skittish about cleantech. The sector requires too much risk without near-term exits, many said. It looks like Imara fell victim to this mindset.
Its closure may foreshadow similar fates for other struggling battery makers, particularly in the U.S. Even though it made a stunning public debut in September, A123Systems has yet to break into the black, causing many in the industry to speculate whether companies focused solely on advanced batteries really have what it takes to be successful. How will smaller players like Valence Technology, PowerGenix, ZPower and Altair Nano fare in this environment?
Especially now that titans Panasonic and Sanyo have joined forces -- with Panasonic already landing a contract to supply batteries to electric vehicle media darling Tesla Motors -- it looks like startups in the space will have an even more difficult time surviving, much less thriving.