Friday, October 3, 2008

Promethean Power pulls in its first funding round

By Efrain Viscarolasaga

After a trip to India and a change in its business model, the runner up of 2007’s MIT $100K business plan competition, Promethean Power Inc., has landed its first round of funding.

California-based Quercus Trust led the round. While the amount of the funding was not revealed, last June executives told Mass High Tech that the company was searching for $1.3 million over the next three years.

In 2007, Promethean won $10,000 as runner-up in MIT’s annual business plan competition based on a nonprofit model and a solar energy technology that would provide household heating, cooling and electricity for homes in developing countries. With the winnings, founders Sorin Grama and Sam White embarked on a trip to India to further evaluate their market.

“We saw that a lack of refrigeration was a problem,” said co-founder White. “If you can’t store things like milk, you have to rush it to a processing plant in the nearest city, which means extra travel, sometimes two trips a day.”

Within that dynamic, White and Grama found not only a pressing problem their technology could solve, but a customer base — processing companies — that could support a for-profit business, two elements critical to raising the funding they needed.

White said the search for funding was a long road, and while the company’s basic goal of helping to bring useful power to developing areas is somewhat altruistic, convincing venture capitalists that it was a viable business wasn’t easy.

“It’s a hard sell when going out to VCs. It’s an unknown market and one that seems to have not much of an upside,” said White. “But the way we see it, these farms are starting with nothing and have as much potential as any farm in the world. They just don’t have electricity.”

Promethean’s technology uses thermoelectric chips that can create heat on one side and run cold enough to create ice on the other. The system is powered by solar energy, and the plan is to create ice during the day that can keep a product cold during the night or when the sun is not shining. White recognizes some challenges in the system, and backup diesel generators will still be part of the system for long periods of low sunlight.

But the new funding will help the company get trial units installed in India over the next six months. The initial target is dairy processors, which will put units at the farms with which they work. According to White, Promethean has several “letters of intent” from Indian dairy processors to install units.

Quercus Trust is a stealthy investment fund that has been particularly active in clean technology over the past year. The firm has made at least 10 clean tech investments this year, including dropping $1 million into Fall River’s Ocean Renewable Power Co. LLC, leading a $4.5 million round for Maynard-based hydrogen technology developer Nanoptek Corp., and backing an $18 million recapitalization of Danbury, Conn.-based Electro Energy Inc., a maker of advanced battery technologies.