Faraday Grid, the much-hyped Scottish transformer technology startup, has run out of money and been put under the control of insolvency administrators in the U.K.
The administrators were appointed on August 8. A press note from Grant Thornton, the appointed administrator, said 45 employees have been laid off.
The U.K.'s administration process shares similarities with Chapter 11 bankruptcy in the U.S., allowing a company a chance to reorganize and potentially reemerge as a viable business or sell off its assets.
Faraday was aiming to develop flow control devices which could maintain target voltage, frequency and power factors, potentially replacing electricity transformers in the grid.
In January of this year, then-CEO Andrew Scobie told GTM that under certain conditions the company’s Faraday Exchanger product would be able help grids adjust to renewable energy penetrations of up to 90 percent.
Scobie said the company would be looking to raise several hundred million dollars this summer, to see it through to an anticipated initial public offering within the next three or so years.
But now things have taken a very different turn.
“The company had previously received investment to fund its research and ultimately, the further development of its Faraday Grid architecture," the administrators wrote. “However, it became apparent that significant further funding would be required to enable its research and development to progress through to its next stage. Unfortunately, the directors were unable to secure the necessary level of investment.”
A spokesperson for Grant Thornton declined to give further details at this stage.
Collapse comes after CEO ouster
The collapse of the company follows a boardroom reshuffle in June that saw the outspoken Scobie being replaced by Paul Ezekiel, the chairman and chief investment officer of Amp, an early strategic investor in Faraday Grid.
It is unclear why or how Scobie left the company. His LinkedIn profile still lists him as a founder. However, there are abundant signs that Faraday Grid may have overreached in its growth efforts.
The company pulled in GBP £25 million (USD $32.5 million) in backing from Adam Neumann, the co-founder of WeWork, in January, and immediately set off on a major shopping spree.
By April it had announced unnamed acquisitions in the Czech Republic, thought to be an energy storage system cabinet maker called Fita Energy Solutions, plus two subsidiaries of the Taiwanese manufacturing giant Foxconn.
Faraday Grid was planning to merge these operations into a single innovation center with a team of roughly 100 experts spanning data science, artificial intelligence, software, power electronics, mechanical, electrical, control systems marketing, and business development. Faraday Grid also opened an innovation center in Washington, D.C. to accompany an existing facility at its headquarters in Edinburgh, U.K.
These operational moves were followed by a series of senior hires. In April, Faraday Grid appointed a new chief financial officer, former UBS investment banker Mark Corben.
The following month, ex-eBay executive Kris Beyens joined as chief operating officer, and former Schneider Electric group engineering manager Jan Juhasz came on board as vice president of engineering in the U.K.
A final senior appointment before Scobie left the company was Nathan Fagre, who joined as general counsel in May after having occupied similar roles in global consumer products and oil and gas companies.
As it built its senior team, Faraday Grid looked to expand its sphere of influence within the energy sector. Already a member of the Power Networks Demonstration Centre at the University of Strathclyde in Glasgow, which had tested Faraday Grid’s technology, in May it became a founding premier member of an open-source energy innovation initiative called LF Energy.
And in June Faraday Grid announced it had become an innovation supporter for the United Nations’ World Energy Council. All of this was on the back of a business that up until the end remained big on promises but light on details.
In public demonstrations of the product, the workings of the device were shrouded in secrecy. Only one company, the British utility U.K. Power Networks, is thought to have actually tested to the Faraday Exchanger under real-world conditions.
U.K. Power Networks was known to be testing the Exchanger in an off-grid setting as of earlier this year, with a view to deploying it in a range of grid settings from spring onward. No further details have been released since January this year, however.