Phononic's Solid-State Thermal Cooling Technology Wins $44.5M in VC

Phononic’s Solid-State Thermal Cooling Technology Wins $44.5M in VC

Semiconductor-based cooling aiming to replace the millions of refrigerator compressors now in use

Eric Wesoff December 17, 2014

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Falling squarely in the energy efficiency sector, Phononic, a developer of solid-state thermal management technology, just raised $44.5 million in in a Round D led by Eastwood Capital and the Wellcome Trust, along with WLR China Energy Infrastructure Fund, Tsing Capital, Venrock, Oak Investment Partners and Rex Health Ventures. The startup has raised more than $85 million in venture funding to date.

The 75-employee Phononic develops thermoelectrics -- materials that can convert a temperature gradient to a voltage or vice versa. The technology is a brilliant pursuit, but no one has brought it to mass markets economically or at scale just yet. Traditional thermoelectrics use materials such as bismuth telluride or silicon germanium, and more recently, silicon nanowires.

The near-term applications for Phononic's science are high-end refrigeration for labs and medical facilities, as well as cooling for fiber optics and data servers that are "necessary to continue Moore's law," according to the company. Phononic is looking to develop thermal management technology for consumer devices, and, more strikingly, to replace cheap, ubiquitous and century-old incumbent compressor technology.

CEO Anthony Atti told us this morning that the investment thesis around Phononic is that "semiconductors have revolutionized IT and LEDs, but have not had that same impact on cooling and heating." He notes that Phononic's thermoelectric technology is in the realm of Peltier cooling technology, but addresses three major shortcomings of that technology: efficiency, ability to scale, and ease of integration.

Atti said that Phononic is not just a device company; it will develop a system and go as far as developing a supply chain to support the new product. He suggested that when going against an entrenched incumbent, a startup can't just develop a component and then walk away. He added, "The extent to which we deliver a total solution is up to the market."

Atti claims that the compound semiconductor material used in his firm's thermoelectrics can be manufactured using high-volume, standard semiconductor tools and equipment.

Bruce Sohn, the former president of First Solar, is on the board at Phononic. When we spoke with him this morning, he told us that he had been working with the firm for four years and believes the startup is doing something "revolutionary that can do to compressors what the [integrated circuit] did to the vacuum tube."

Other companies developing thermoelectric technologies for cooling or capturing waste heat include the following:

Alphabet Energy is commercializing thermoelectric waste-heat harvesting technology developed at Lawrence Berkeley National Laboratory and has raised more than $30 million from Encana, a developer of natural gas and other energy sources, TPG Biotech, Claremont Creek Ventures, and the CalCEF Clean Energy Angel Fund.
GMZ Energy, spun out of MIT with funding from KPCB, BP Alternative Energy, and Mitsui Ventures, is working on a bismuth-telluride thermovoltaic device that converts solar heat directly into power via the Seebeck effect. In the Seebeck effect, a sharp temperature gradient can result in an electric charge.
MTPV describes its product as a thermophotovoltaic. MTPV uses a silicon-based MEMS emitter which takes heat and transfers radiation to a germanium-based photovoltaic device, according to an article in Semiconductor Manufacturing and Design. The company just raised $11.2 million led by Northwater Capital Management’s Intellectual Property Fund, along with Total Energy Ventures, SABIC, the Saudi Basic Industries Corporation, and follow-on investments from Spinnaker Capital, Ensys Capital, the Clean Energy Venture Group and other existing shareholders.
Silicium, funded by Khosla Ventures, is investigating high ZT thermoelectrics. The firm's website claims, "Silicium is developing silicon thermoelectrics that enable substantially increased battery longevity for wearable electronics. By using body heat, Silicium technology can help power an entire spectrum of wearable devices...using off-the-shelf silicon wafers."
Recycled Energy Development (RED) and Ormat have retrofitted factories to capture waste heat, not using thermoelectrics, but by adding CHP or cogeneration.