Why We Passed on This Startup (Episode 5)

This is my 35th post of the Tundra Angels’ Angle to date!

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-Matthew

Once upon a time, I met a startup team.

I met David, the CEO of XYZ Company, as I saw him present his pitch on a panel.

David had stellar credentials. He had gone to a top business school and came from the broader industry of XYZ Company.

This person captivated the room when they spoke. Their salesman-ship was very apparent. The kind of CEO that would excel giving a keynote at an industry conference.

In conversation with David afterward, I discovered that XYZ Company was fundraising. So, I scheduled a follow up Zoom call.

The First Zoom Call

The company’s product was a physical product that required a manufacturing process to create.

The company had proven their technology at a lab scale, but they had not yet sold any product to any customers, let alone scaled up their technology.

I asked about the fundraise.

David: “We intend to raise $750,000. The use of funds is operations, hiring a CTO, and commissioning a third party to do a design study for the manufacturing plant.”

I thought to myself, a design study for a manufacturing plant? 

That hit me weirdly.

I recalled the stage of the company - they had proven their tech at lab scale, but not yet sold any product to customers.

I asked the CEO again, “A design study for a manufacturing plant?” 

David: “Yes.”

Leaning on Previous Investment Experience

This is where prior experience matters.

This startup CEO didn’t know I knew something. Tundra Angels had previously invested in two companies that scaled up from the lab to outside the lab - COnovate and Pyran.

In April 2021, Tundra Angels invested in COnovate. COnovate is a battery technology company led by CEO, Dr. Carol Hirschmugl. COnovate has developed a new compound called COphite, a compound that can replace or blend with graphite, the typical anode end of a battery. COphite has been proven to give a battery highly superior performance advantages. Also, COnovate’s material can be made from natural feedstocks, and importantly, is a drop-in replacement to the existing battery supply chain with no reconfiguration necessary.