A future in fuel cells

BASF venture capital, the investment arm of the German chemical giant, may not be the only firm pouring money into energy management, but it has been one of the more active. Dave Keating reports.

This week BASF Venture Capital announced an investment in another fuel cell company, based in California and focusing specifically on portable devices.

Ultracell Corporation develops and manufactures micro fuel cell systems for portable devices like satellite phones, radios and laptop computers. The company has raised $10.4 million in its series C financing round, of which BASF Venture Capital provided $3 million. Founded in 2002, its fuel cell system uses a new micro reformed methanol system that can yield twice the power of lithium batteries of the same size. For example, a laptop powered by an UltraCell fuel cell can run two to three times longer than a laptop powered by a conventional battery.

UltraCell’s 40-oz methanol fuel cell for notebooks

The investment is consistent with BASF Venture’s pointed strategy of going after energy management. According to BASF Venture CTO Josef Wünsch, the firm is looking for investments in the same five growth clusters that its parent company, BASF Future Business GmbH, is developing new technologies in. Based in Ludwigshafen, Germany, BASF Future Business is the world’s largest chemical company and has a portfolio including chemicals, plastics, performance products, crude oil, natural gas and fine chemicals.

Energy storage and conversion is just one of the five areas the company has identified for development. The others are raw material change, nanotechnology, white (industrial) biotechnology and plant biotechnology. A total of about €850 million has been earmarked for these research activities for the period between 2006 and 2008. €90 million of that will be spent on energy management.

Wünsch says both BASF and the BASF Venture portfolio companies can benefit from a relationship where technology and knowledge is shared.

“We can bring in some tremendous value,” he says. “BASF can provide technology expertise, or joint development agreements. BASF would be interested in exclusivity agreements, with work on a certain topic, for instance.”

However Wünsch is quick to add that the BASF ventures still remain independent of the larger company.

“We do not share confidential items of the company with our colleagues in BASF,” he says. “We try to protect our investment.”

Fuel cells have been a hot topic among investors lately, with the global market expected to grow from €1 billion in 2010 to €21.5 billion in 2020 according to Keith Gillard, principal at BASG Venture Capital America. BASF Future Business recently acquired Frankfurt-based PEMEAS – a local supplier of fuel cell components. Ultracell is a major customer of PEMEAS.