The air has gone out of LightSail Energy.

The Berkeley-based startup hoped to revitalize compressed-air energy storage with a more nimble and efficient technology. Its quest "to produce the world’s cleanest and most economical energy storage systems" drew funding from VC royalty including Khosla Ventures, Peter Thiel and Bill Gates.

But after eight years and approximately $80 million raised, it has run out of cash before reaching commercialization. The company went through another round of layoffs and has essentially ceased operations, co-founder and CEO Stephen Crane confirmed to Greentech Media.

"It may come back in some form or another, but at the moment it’s kind of in hibernation while we try to figure out what our future is," Crane said of the company.

That future should be clear by February, he added. 

The company was developing a compressor technology that Crane said operated for hundreds of hours, as well as gas storage tanks that endured "months of field trials." Both technologies, he said, were ready to commercialize, but suffered from insufficient funding.

The company raised more money than most cleantech startups ever see, having come up in the heady days before the venture funding bubble burst. LightSail sported many of the trappings of a Silicon Valley darling, with grand promises and a larger-than-life founder to match. Reports eventually emerged of extravagant spending and aloof leadership.

The company purported to fill a glaring gap in the electrical grid -- cheap, long-duration storage -- with a superior understanding of the laws of thermodynamics. The pitch worked for investors, but failed to translate into physical reality. 

Storage iconoclasts

Most recent growth in the energy storage industry has been in lithium-ion, with a few companies chasing alternatives like flow batteries or thermal storage.

LightSail instead chose to resurrect the concept of compressed-air energy storage, which had languished due its requirement for geologically specific underground caverns to pump full of air. The company's central proposition was that it could perform CAES aboveground in specialized carbon fiber tanks, thus achieving cheap and scalable storage for surplus renewable energy.

There was also an idea early on about using this technology to power cars.

No other company had pulled off the aboveground compression trick, in part because compressing air wastes considerable energy as heat, and putting it in smaller vessels sacrifices the massive scale that helps CAES be competitive underground. Startup SustainX gave it a shot, but gave up in 2015 and switched over to traditional underground storage.

LightSail founder and Chief Scientist Danielle Fong emerged in 2009 with new IP. By spraying the tank with water droplets, she claimed the process would save heat energy and boost efficiency.

Fong, who did not respond to a request for interview, also happened to be a wunderkind who'd dropped out of school to start a Ph.D. at Princeton's plasma physics lab by the age of 17. It was a heady time, in the late 2000s, before cleantech VCs had gotten hung up on all the money they were about to lose.

So Fong and co-founder Crane gathered an eventual total of $80 million from some of the biggest names out there and got started.

Delayed satisfaction

Fong repeatedly insisted, across multiple public platforms, that the technology really worked. But it never got far enough to deploy outside of the studio.

"We would have liked to have gotten a bit further," Crane said.

Eric Wesoff chronicled the company's descent in a May 2016 article, at which point LightSail had gone through two rounds of layoffs that cut a staff of 60 down to 15 or so. 

At GTM's 2015 Energy Storage Summit, Fong explained the company was pivoting to pressurized tank manufacturing to yield short-term profits, which could then tide the company over until the storage product arrived. 

After claiming, in 2014 and 2015, to have sold tanks for compressed gas storage, Fong tweeted in 2016 that the company was shipping its first product.

A source familiar with the situation explained to Wesoff why this business was unlikely to succeed: "The CNG industry is very conservative; any mission-critical CNG or mobile pipeline applications would favor the incumbent with a strong operating history rather than a glamorous upstart from Silicon Valley with no experience, no fleet, no service network, even if they can claim cost advantages."

More recently, the tanks had attracted interest from members of California's burgeoning hydrogen fuel-cell industry, Crane said.

LightSail won three California Energy Commission grants to demonstrate its technology, but withdrew from them without fulfilling the projects.

Along the way, the company spent money on assets like gourmet coffee and kombucha on tap. Sources reported that Fong was "getting paid $225,000 a year when coming to work one day per week on average." She also got a company loan to buy a Tesla Model S.

It's not yet clear whether a new investor will emerge, or if the company will be forced to sell its scraps via bankruptcy.

After years of attempts to reimagine compressed-air storage, all the profits still lie buried deep beneath the earth.