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Latest Battery Startup Shutdown: Firefly Energy

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Here’s the latest sign that the next-generation battery business is just really tough for startups: On Friday and over the weekend local Illinois media reported that Peoria, Illinois-based battery startup Firefly Energy has stopped operating. Specifically The Peoria Journal Star reported on Friday that Firefly Energy had filed for Chapter 7 bankruptcy, and that the city of Peoria and Peoria County plan to follow legal action to recover $6 million in government loans that they gave the startup in 2007 (the Associated Press also reported the story). On Saturday the Peoria Journal Star also reported that while Firefly Energy is clearly not operating anymore, there is some confusion about whether the company has officially filed for bankruptcy yet.

Regardless of the details of the bankruptcy, Firefly Energy, which was developing cutting-edge lead-acid battery technology based on carbon graphite foam for commercial and military electric vehicles, just couldn’t make the economics work. Imara, a startup that had been working on small-format batteries for power tools and outdoor equipment with the goal of eventually producing vehicle batteries, also shut down in December after it did not get the funding necessary to move forward. We’ve reached out to Firefly to get the details of the company’s operations and will update this when we know more.

Like Imara — which had raised $20 million in venture capital from Battery Ventures and Nth Power — Firefly Energy seemed like it had secured a solid amount of early stage funding from high profile investors. In mid-2008 Firefly Energy raised $15 million as part of a Series C round that brought on Khosla Ventures, Infield Capital and Quercus Trust, as well as a $10 million round in November 2006 from Caterpillar, Stark Capital, KB Partners, the Illinois Finance Authority and Tri-County Venture Capital Fund.

The Peoria Journal Star says that Peoria city and county had guaranteed a $6 million loan to Firefly in May 2007 and the Peoria County Administrator and the City Manager said last week in a statement that the city and county might lose their loan in “the worst case.” In addition Firefly Energy also had a $7 million development contract from the U.S. government and a $2 million grant from the U.S. military.

Firefly was spun out of construction and mining equipment maker Caterpillar in 2003 to develop lead-acid battery technology for commercial and military use that the company says are lighter, cheaper, more rugged and more powerful than traditional lead acid batteries. Firefly representative David Reiners told us in 2008 that Firefly was focusing solely on the commercial and military vehicle markets and that Firefly’s battery could one day contribute to potentially “huge diesel fuel savings and cleaner air that next-generation batteries will produce as more states adopt strict anti-truck-engine-idling regulations.”

Firefly Energy said in a release last February that it was pursuing funding from the stimulus package through the U.S. government’s Advanced Technology Vehicles Manufacturing Incentive program, but clearly wasn’t able to tap into those funds in time. The ATVM program has proven to be one of the biggest sources of government funds for auto startups since Secretary Steven Chu took office and made it a priority to disburse the long-delayed program (electric car maker Tesla Motors scored $465 million in loans under the program, and plug-in hybrid car developer Fisker Automotive snagged nearly $528.7 million in loans), but no battery companies have yet received funding under the program.

Firefly also applied for the DOE’s stimulus-funded battery grant program, which would seem to be a better fit for battery developers. But larger, more established firms have won the bulk of awards under that initiative (reflecting the program’s goal of getting technology into large-scale production within two to three years). Firefly responded to its failed application to that program in a letter to the DOE in September, which it then posted on its website, saying there were “serious miscalculations and therefore misinterpretations,” from the DOE reviewer.

Like an exec from Imara said at the time that it was shut down, not being awarded stimulus funding seems to have proved fatal for some of the smaller battery companies.

At the end of the day manufacturing battery technology requires a lot of capital. And in particular significant capital to move a startup through the so-called valley of death — the gap between proving the technology and scaling. Firefly Energy, like many others, just couldn’t make it through that expensive phase. (See How EV Battery Startups Can Cross the Valley of Death, GigaOM Pro, subscription required).

10 Responses to “Latest Battery Startup Shutdown: Firefly Energy”

  1. Firefly Energy was always a cause for concern. They had this wonderful new battery that did everything. It just sounded to good to be true. Their explanation for how they discovered their new technology went something like this; An employee [with no training in chemistry physics or engineering] saw some foam laying around and thought it would be a good idea to incorporate it into a new battery. Well some kind of foam is already used in batteries to seperate the positive and negative plates which is all that it is good for. But according to Firefly the foam would be used as one of the plates thereby reducing weight and better able to retain the charge. Such a claim flies against the laws of physics. Foam cannot retain a charge or conduct electricity. The only thing Firefly could give you was a battery like eveyone elses. Did you get some prototypes so you could at least test their claims? Many knowledgeable persons questioned Firefly’s claims. The opposition questioning Firefly’s veracity was muted in part because the WSJ gave them an award for innovation. To bad the WSJ didn’t bother to investigate the facts. They just took the company at their word. Because of WSJ’s failure to investigate firefly’s pie in the sky claim to battery technology put a lot of people out of a lot of money.
    Fierefly from day one was a scam and the principals of the company should be prosecuted.
    As to your desire to find a better battery for your needs go to a reputable battery company and tell them your needs. Some batterys are better designed for starting motors while others are better suited for running accessories. Some batterys will giver you higher energy but usually at the cost of something else. A battery company representative can help you find a suitable balance. All the best.
    Steve B

  2. We had a few hundred firefly on order and over two thousand pending the evaluation, but could not get delivery before they shut down. We still need a lead acid compatible improvement. Any new suggestions?

  3. Firefly Energy always made claims about their batterys that were to good to be true. Like instant vehicle startups in zero degree weather, twice the energy output of other batterys at half the size, etc. What couldn’t the battery do?
    It did everything. They fooled a lot of investors for a very long time.

  4. I suspected that Firefly early on was just a scam. If you went to their website to see how they discovered their technology it basically said that one of their employees noticed some carbon foam sitting in the corner and decided it might be a good idea to put some carbon foam in a battery. Any one with a questionable mind would say; Is that all?
    Well thats all she wrote. Interestingly another battery company listed on a stock exchange had a very simular story that only a very stupid person could believe but the public bought it, and the company went bankrupt. Personally I wanted to believe that Firefly was legit. It claimed to have a battery that did all sort of wonderful things; twice the energy at half the size, little to no drawdown in energy while starting the vehicle in very cold weather, etc. What couldn’t the battery do? Well if all was true, people would be lining up outside their door fighting one another to buy their battery and they would not need the government funding they greedily took. Once I wrote to them saying that I was in touch with a number of truck fleets that would be interested in their product and could they hire me as a salesmen? Their was no response. A year later I wrote again asking for a job. This time they got back to me. They thanked me for my interest. They said batterys were in production. They said they would sell me a dealership that would give me the right to sell their batterys. Need I say more?
    From their first day Firefly was a scam. They had no product but a fantasy that they sold to investors and customers alike. Hopefully they will be prosecuted.

  5. P. Boulanger

    I think personnally that the Firefly technology was a physical mistake, because instead of thinking electrodes as volumes, they would be tough as surfaces (like A123). In electrochemical processes, most of the ions exchanges happen in the very close interface of the electrodes and the electrolythe. The reactions become weaker as the distance from the opposite electrode increase. Maybe carbon foam has a huge surface and better rigidity, but ion exchanges are not efficient in case of thick electrodes. When I studied the real performances capacity/weight of the first scale-producted batteries, I was not surprised that the promises were not hold. From my technical point of view, I suspected misinformation and financial manipulations…

  6. David

    The real question is who gets the patents? This technology had great promise, I wonder why they kept seeking government funding rather than private venture capital?

  7. A long winded article never touching on the obvious. FireFly energy never made its technological paradigm available to the commons, the public. The financers at FireFly know every shade tree mechanic or small garage would start converting to electric cars. FireFly is going out of business to protect the status quo and not the common American.

  8. waltinseattle

    Firefly should have payed more attention to A123 and spent big on the K street shills instead of(/as well as) the research department.

    Again, its not what you know, but who ……