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Neil Maguire of battery developer Imara “is looking for a new career as Imara did not get the funding necessary to move forward.” That’s how the startup’s business development chief — known as @KoolJoules on Twitter — announced the venture’s shuttering to his connections on Twitter […]

Neil Maguire of battery developer Imara “is looking for a new career as Imara did not get the funding necessary to move forward.” That’s how the startup’s business development chief — known as @KoolJoules on Twitter — announced the venture’s shuttering to his connections on Twitter and LinkedIn late Monday. On the official Imara blog, Maguire wrote that after a year’s delay in scaling up operations, “Imara is out of funds and out of time…investors needed to cut their losses.”

Michael Kanellos over at Greentech Media followed up with Maguire, who painted a bleak picture for venture-backed startups that did not make the cut for government grants and which face tough competition from established players. “It certainly did not help that hundred[s] of millions in DOE stimulus funds went to two Korean companies and one French company, Saft,” Maguire told Greentech Media, adding, “Unless something radically changes, the battery business is for big players that want to create billion-dollar business units, not VC-backed startups.”

Founded in 2006, Menlo Park, Calif.-based Imara had been working on small-format batteries for power tools and outdoor equipment, with the goal of eventually producing vehicle batteries after it builds “a solid economic base,” Maguire told Triple Pundit in June. The 38-person startup raised $20 million in venture capital (investors include Battery Ventures and Nth Power) and licensed its technology from SRI International.

About a year ago, Maguire told me that its Series B financing (closed in January of this year) would see Imara through the ramping-up of its production capacity. But with a goal of reaching an annual production capacity of at least 8 million cells by the end of 2009, Maguire said the company planned to seek another $20 million or more during the first half of this year.

Imara initially planned to locate electrode manufacturing facilities in Menlo Park, and contract assembly for small-format batteries in Asia, but the startup also requested stimulus funds from the DOE to build a plant in Portland, Ore., to produce cells for plug-in hybrid vehicle batteries.

Maguire isn’t the only one to note larger companies being favored in the popular battery grants program. The program’s basic goal of getting technology into large-scale production within 2-3 years, and the requirement for awardees to share costs, has effectively tilted the scales away from younger ventures — so too, did the quick turnaround time for applications, Battelle Ventures’ General Partner Kef Kasdin told us this fall. But while Kasdin said she would like to see earlier-stage ventures faring better in later rounds under the program, the government was right to set an early deadline, since “that’s what we all wanted as taxpayers.” The downside, she said, is that some startups didn’t have time to make the strongest case possible. “At the first pass, bigger companies tended to do better. They had the wherewithal to put proposals together.”

As Maguire wrote in his farewell blog post, “In the end…the battery industry is not about producing compelling PowerPoints, it is about the nuts and bolts of equipment design, process control and repeatability and producing a quality product design at high run rates.” That requires capital, and lots of it. So for Imara, the tilting of those scales — and the challenges of raising funds for battery manufacturing in a period when investors were waiting to see what would happen with DOE funds — may have presented one too many hurdles.

By Josie Garthwaite

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