Battery startup Our Next Energy Inc. raised $300 million in its series B funding round, the company said Wednesday.
The investments valued the Michigan company at $1.2 billion.
The company intends to use the funds for building the second phase of a $1.6 billion battery cell factory slated for completion in 2024, company founder and CEO Mujeeb Ijaz told Automotive News.
Coupled with $220 million in grants from the state of Michigan, the company, known as ONE, now has received more than $500 million to fund the Van Buren Township, Mich., battery cell factory. Workers completed construction of the factory’s exterior in December 2022.
The company’s long-term approach relies on developing batteries not dependent on hard-to-source rare earth elements and uses lithium iron phosphate chemistry. That technical strategy attracted investors despite a high interest-rate environment, said Ijaz, a veteran of Ford Motor Co. and A123 Systems.
To date, ONE has signed 10 customer agreements for its products, totaling 36-gigawatt hours over the next five years, he said. In December 2021, ONE retrofitted a Tesla Model S with one of its batteries for a test run. The Tesla achieved a 752-mile range. In comparison, the EV with the longest range in production is the Lucid Air at 520 miles.
Venture capital firm Fifth Wall, primarily known for its real estate investments, led ONE’s series B round, along with mutual fund company Franklin Templeton.
“We believe ONE’s next-generation mobility and stationary storage applications are a game-changer and are set to transform the $100 billion-plus battery market,” said Peter Gajdos, partner and co-head of Fifth Wall’s climate technology investment team. “We’re thrilled to be a part of the company’s category-defining growth.”
The company focused on raising capital from investors looking for growth from and equity in the startup, Ijaz said.
“We are transitioning from a startup funded by venture capital to a manufacturer fueled by growth capital,” Ijaz said. “That’s important in this environment where urgent demand for U.S.-based cell manufacturing is on the rise, supported by the Inflation Reduction Act, in a true public-private partnership.”
Series A investors Temasek, Riverstone Holdings and Coatue also participated in the series B funding round, along with AI Capital Partners, Alpha Intelligence Capital’s U.S.-based fund and Sente Ventures, in conjunction with TR.PE of Istanbul, Turkey.
In January 2022, ONE borrowed $62.5 million in the form of a convertible note as a part of its series B funding round. This short-term debt was converted into ONE equity for BMW i Ventures, Assembly Ventures, Breakthrough Energy Ventures, Coatue, Flex and Volta Energy Technologies.
Collectively, the firms invested in ONE’s series B round will have roughly a 30-percent equity stake in the company, Ijaz said.
Franklin Templeton’s investment in ONE’s series B round includes the appointment of managing director Richard Piliero to ONE’s board of directors.
As for a forthcoming series C funding round, Ijaz said he’s already at work raising capital.
“I can’t tell you anything other than that it will be larger than this round,” Ijaz said.