#157 Onshoring Battery Production, Getting to Bankability, Waterless Cathode Materials, & More w/ Virginia Klausmeier (Sylvatex)

Today we speak with Virginia Klausmeier, President & CEO of Sylvatex, a company aiming to commercialize technology that was originally developed by her father. The technology is a waterless method to produce Cathode Active Materials (the chemicals that go into the production of various types of batteries).

We cover a lot of things. The primary topics being Onshoring Battery Production, Getting to Bankability, and How their Technology works.

Enjoy the episode! 🌱🌎

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Topics:
**1:23 Intro
**7:11 Battery Mfg in the US
**9:11 Onshoring Battery Mfg
**9:42 The Opportunity
**15:54 Motivation
**17:12 The Story of Sylvatex
**19:16 Starting a Company
**21:03 Taking the Leap
**24:13 Waterless Cathode Production
**30:51 State of Sylvatex
**42:11 Pilot Funding
**42:41Milestones for Commercialization
**45:05 Getting to Bankability
**47:29 Debt Financing for Modular Manufacturing
**48:25 Navigating the Unknown

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Links:
**Virginia Klausmeier | Sylvatex
**Check out our Sponsor, NextWave Partners
**Follow CleanTechies on LinkedIn
**@Silas & @Somil_Agg on X 

Chapters

• 1:23 Intro
• 7:11 Battery Mfg in the US
• 9:11 Onshoring Battery Mfg
• 9:42 The Opportunity
• 15:54 Motivation
• 17:12 The Story of Sylvatex
• 19:16 Starting a Company
• 21:03 Taking the Leap
• 24:13 Waterless Cathode Production
• 30:51 State of Sylvatex
• 42:11 Pilot Funding
• 42:41 Milestones for Commercialization
• 45:05 Getting to Bankability
• 47:29 Debt Financing for Modular Manufacturing
• 48:25 Navigating the Unknown

Transcript

Silas Mähner (00:00)
All right, welcome. Welcome to the show, Virginia. How are you doing today?

VIrginia Irwin Klausmeier (00:05)
Thanks so much for having me.

Silas Mähner (00:07)
Yeah, we're super glad to have you. So I guess let's just start out by giving us a quick one-liner or two-liner of what is Silvotex doing.

VIrginia Irwin Klausmeier (00:16)
Silvatex is making batteries for electric vehicles and energy storage, lower cost, lower capital, and lower carbon.

Silas Mähner (00:26)
Very good. And that's not specifically manufacturing batteries, right? But we're creating products that go into the battery manufacturing, correct?

VIrginia Irwin Klausmeier (00:33)
Exactly, exactly. There's definitely key products that go into it that are some of the biggest areas for cost reduction. So that's what we're targeting.

Silas Mähner (00:41)
Very good. And so we talked a little bit about this before the show, but I guess generally speaking, let's talk about the problem. Right? So why is it so hard to kind of bring battery manufacturing to the US? I actually, on a side note, I spoke with some candidates recently on this topic, but really want to understand why is it so hard to get battery manufacturing in the US? Can you talk to us about that?

VIrginia Irwin Klausmeier (00:56)
Hmm.

I mean, there's a milder of problems. The first part of it is that Asia, specifically China, has done a great job at being ahead of the curve on battery manufacturing, battery materials, and processing. So they're about decades ahead of the Western world on all of the ways to do it efficiently and effectively. So actually bringing that to the US, one of the things you have as a big problem is you can't just take.

what was designed in Asia, specifically in China, on a cost metric and also from an environmental metric and just bring that and just plop it into anywhere in the US. You don't have the same environmental permitting locations, you don't have the same cost of labor. So generally if you do that, your costs are high, but also it uses too much energy. So that's turning into one of the biggest problems is even if you spec it out and do a paper study, it's pretty high in cost.

your energy utilization is pretty high. So where do you get the grid support? And then there's a pretty substantial amount of usually like water use and waste that comes off that. So these kind of come back to environmental permitting. So that's kind of step one, which is taking the same technology that we haven't built out for this region. The other is infrastructure, which is related to sort of high energy utilization, et cetera.

but then it's workforce. So, you know, I think that generally, I'll just speak to North America, but you know, I think this is very common in Europe too. In Australia, there hasn't been a huge amount of development of workforce for manufacturing, right? And there hasn't been a huge amount of development of workforce specifically in like battery materials or

you know, mining efficiencies and all these areas where, you know, electrochemistry, material science, where you've seen a lot more in Asia specifically, and China's done a really good job.

Somil Aggarwal (03:04)
So the main really issues encompassing all of it include like the cost, you know, environmental permitting. We actually just had a show, um, our most recent record, which has, isn't out yet. Um, talking a lot about permitting in the U S, um, workforce development and infrastructure. I'm curious which one of those is you started felt the most tangible because I think these seem like pretty big problems. How did you start down this path?

VIrginia Irwin Klausmeier (03:16)
Hmm?

Yeah, I think, I mean, cost is the biggest one, right? Is the technology. So you can't, if you can't do something here, even from a permitting standpoint, then you have to work within those, that foundation. But the other one is cost, right? No one's gonna buy at a premium. It's just kind of the general sentiment. I think that that's really well known. So especially in these large commodity markets that are fueling energy for vehicles or for energy storage, that's like the, that's very, you know, the biggest issue. So.

I think for us, we definitely targeted cost and we said, okay, well, if these processes are done in a way that was efficient in that area, where there's abundant low cost energy, abundant cheap waste, and abundant other resources, if we make the process, the processes, or specifically we targeted one portion of the process, more efficient, then we're lowering the cost and we're making it viable into this market.

right? So it's kind of like a double whammy, but we definitely have always focused on how we mitigate cost reduction, but doing it through making it much more efficient and environmentally friendly.

Somil Aggarwal (04:41)
So when you take a step back and you're understanding the cost structure of it, before we get too deep into it, I want to take a step back and kind of set the scene a little bit. What was this current state of, I guess, state of manufacturing and everything that you were seeing at the time?

VIrginia Irwin Klausmeier (04:48)
Yeah.

I mean, in the US, there was one Panasonic. Right? So I think that like you have, when you have an N of one, it's very obvious, right? So you had Panasonic was the only battery manufacturer that was doing anything relevant to electric vehicles. And so, you know, that's pretty, you talk to a couple of people that work there, and you know, they're the only resources you have in this sort of regionally specific area. And then you have like Tesla, who's...

Somil Aggarwal (05:03)
Wow.

VIrginia Irwin Klausmeier (05:26)
done a pretty good job on being ahead of the curve of a fully electric vehicle and how to build out the supply chain. So I think, you know, that was, it's been limited. I'll just put it that way. And then you kind of look back and look at what did other countries do or sort of what are their problems, or how they're approaching the problem. So Europe was definitely ahead of the curve in how they thought it was going to be.

trying to say, okay, well, we need to really focus on recycling, right? If the whole goal of electrification is to move from a non-renewable resource, like petroleum, to a renewable resource where you're having the metal ion create the electricity, and in theory, that metal can be recycled to constantly be re-upgraded to constantly reuse that, then you need to have better recycling processes.

Silas Mähner (06:11)
Mm-hmm.

VIrginia Irwin Klausmeier (06:17)
and then smarter ways to manufacture from the ground up. So this is kind of the first time, I think ever, where you've had a market this big prior to having the build out that needs to happen to support the marketplace. You know, in North America and in Europe, it's the same, you know, because it all comes down to energy security. And that really was, I think, the touch point for the big shift for the...

Silas Mähner (06:31)
Mm.

Somil Aggarwal (06:44)
Yeah.

VIrginia Irwin Klausmeier (06:45)
you know, energy transition,

energy.

Somil Aggarwal (06:47)
You know, that's super interesting. I mean, I think one of the things that entrepreneurs will have to face within climate is defining an industry, creating an industry, and in your case, maybe on-shoring an industry. So I'm curious, what were the signs that something could happen here from when you started?

VIrginia Irwin Klausmeier (07:00)
Mm-hmm.

Oh, yeah. So I mean, I guess like the immediate focus was we're a California based organization. CEC and California has been pretty aggressive at moving towards electrification, right? So pretty straight on that. And we, when talking to them, sort of, you know, they're definitely focusing on, okay, how do we, with them being like the Energy Commission and folks, you

know, where are you looking at investments all around electrification? So when we looked at sort of

the supply chain of this, you know, it was very, very clear that as soon as EV and energy storage was taken off, like the energy revolution, the volumes of material that was going to be needed was going to be significant. And then you look at the battery specifically, so you have the plus sign, the negative side of the battery and the electrolyte. So there's been a lot of work on the design of the battery pack to make it lower cost, more effective. And that really has got us to a cost curve that's viable, right?

But cathode material makes up 60, maybe even 70% of the cost of the battery at time. So, and that's just the cathode active material. And so we looked at that and we're like, whoa, that's a very obvious point. And then you look at the carbon impact of the battery. So when you look at the carbon impact of a vehicle, the battery is the biggest part of the carbon cycle, and when you look at the actual battery, the carbon life cycle, the battery, you know, battery pack.

Cathode material is about 50% of that. So in a no-brainer, dummy-down version, it's very high cost and a very inefficient process for making this stuff, right? So then when you double-click on that and you look at, okay, well how is it made this inefficiently? Then you see that, yes, of course, you have to mine material. But that only really accounts for half of the carbon associated with cathode material, like the other 50% is from manufacturing.

and I'm speaking a little bit more towards nickel based like NMC material but and you know and so with that you have a huge opportunity to Actually do advanced manufacturing to make known materials. So you're not trying to make a new market to your point You're not trying to convince a new market to do something different because you have a higher performance Widget that can you know, you have to make a whole new battery supply chain. We're saying oh we'll do is make the material You're already buying and dropping into your back

Silas Mähner (09:00)
Mm-hmm.

VIrginia Irwin Klausmeier (09:26)
But if we're successful, we're doing it in a way that massively lowers the cost of that manufacturing so you can influence the cost heavily from an OpEx standpoint. And then you are massively reducing the carbon

footprint as well.

Silas Mähner (09:38)
So maybe just try to summarize this. So in terms of the reason why you saw there's an opportunity, right? There was demand for EVs, which created demand for batteries. And then the immediate solution was, let's try to make these more efficient so that they're a better product for the market. Then they got to mass market in places that were already creating batteries more, like China and other places. And now you're looking to look at that process and see how can we make it more efficient.

inside of the production of these batteries. Is that a good summary of what you just said? Would you agree with

VIrginia Irwin Klausmeier (10:15)
I think a key point that is important is kind of this inflection piece is that we don't have, there's a huge gap in the actual supply and demand [for batteries], right? So there's about an 80% gap in the supply and demand curve for 2030, at least in US and I think in Europe it's pretty similar.

Silas Mähner (10:23)
Mm-hmm. Yeah.

VIrginia Irwin Klausmeier (10:34)
So what that means is there's gonna be huge amounts more manufacturing that's happening. These aren't systems that already exist that you're These are systems that are requiring huge amounts of capital to build up. So the concept is if we're gonna be building it up and the goal is energy security in any region, then you wanna build something that is going to last. We use the word future-proofing, but you wanna build something.

Silas Mähner (10:40)
Yeah, yeah, yeah.

VIrginia Irwin Klausmeier (11:00)
that is future-proof, so it's designed now to be most effective and is viable, so you're not wasting all this capital. So you actually have this built-in infrastructure that's best in class.

Silas Mähner (11:10)
, got it. So my... Yeah.

VIrginia Irwin Klausmeier (11:13)
So it's a little bit, you are right, but I just wanted to emphasize the, I don't think we've ever been in a position where there's such a big market that is known and you have to build it out.

Silas Mähner (11:24)
Yeah. Well, I guess that's the question I want to ask is because it seems relatively recent that this idea of bringing things back, near-shoring or on-shoring has come about because of various global conflicts and you can kind of speculate exactly why, partially maybe COVID and the lack of shipping abilities then. But in your mind, when or understanding the space, when did the

major shift come that people said, you know what?

We're not going to ship batteries across the seas. We're going to build them locally. When did that really happen? Or was it just bound to happen regardless of the other circumstances?

VIrginia Irwin Klausmeier (11:59)
COVID, like it was binary. So like, you know, you can look at our grant applications at NSF, who was our first like early funder of this work. They're like, convince us this matters. And we're like, okay, there's a battery. People care about them because if this is gonna happen someday, right? And then you just had to, you could just cut out the story. So then, you know, with COVID, you know, I think that it was very clear that there was a lot of vulnerabilities in the supply chains. And then you had that.

coupled with people caring about environment. So you had kind of like a bipartisan, like wind storm that happened in probably, all over the world. And then with that came, customers, customer poll for a better future, which then forced the OEM industry to actually pave the pathway to a net zero future, right? Versus just doing the bare minimum to meet emissions mandates with.

ICE vehicles and also Andor, you know, which there's tons of scandals of actually like falsifying, meaning those things, right? So that's like, it was definitely pushing the brim, right? So something had to give. So I think that for me, that was that was it. But that was it. But it was also for me personally coupled with

Silas Mähner (13:05)
Hmm.

Okay.

VIrginia Irwin Klausmeier (13:16)
some other

Silas Mähner (13:18)
Yeah. So, okay, that's interesting. So generally speaking, the demand probably would have gotten to this point at some point. If there was a massive demand in the US, eventually people would have onshore just to make it more efficient for their supply chain issues. But it really was kicked into high gear. Everybody said, all right, we can't have this happening again if we have another global pandemic. We need to sort this. So that would be the big point, right?

VIrginia Irwin Klausmeier (13:18)
personal growth and I'll do growth.

Yeah, I think it's I mean, I think that the other component that I really think about specifically North America is the kind of bipartisan effect is, you know, we all want jobs want better middle class. How do we make that happen? What's the industries we're going to invest in? And that's the same discussion that the EU is having right now. And then everyone lands with well, the auto industry was our foundation founding father of how we all made money, you know, and that was a lot of the foundation. So, you know, I think that

Silas Mähner (13:54)
Mm-hmm.

VIrginia Irwin Klausmeier (14:10)
There's a lot of examples of where the US gave away manufacturing and I, you know, you know, other folks are, I'm sure talked about this, but solar, you know, all semiconductor manufacturing, right? Like all that stuff has been. So I think that this was where we could actually, you know, get it, potentially get ahead and start securing a position.

Somil Aggarwal (14:33)
Definitely. And I think that's the perfect segue. Now, let's take all of this context and let's find out, how did you come across starting the idea of silvotex? What is the story of it?



VIrginia Irwin Klausmeier (14:47)
Like the story on, well, it was like how far back.

Somil Aggarwal (14:52)
Yeah, how far? Let's start from the beginning. Let's go from how it started.

VIrginia Irwin Klausmeier (14:55)
So I started the company with a very strong ambition to massively reduce carbon emissions. And this was, I'd say like early mid 2010s. But I think that was coupled with some elements that are probably important. One, my late father was a brilliant chemist, double PhDMD. So that sort of started the foundation and I was initially trying to commercialize some work he had developed prior to passing away. So that was like,

That was like the impetus where we are today. And I think that this has not been, if you, anyone that knows me, this has not been sort of, I went to do my PhD and I founded the company out of that process of a founder story. This has been, I had this really big problem that my father set off to solve, was transportation emissions. And I started the company with that, and then we shifted and we pivoted to

the battery industry because that is the biggest bottleneck in how to curb emissions for transportation and energy. So that's definitely where we are today.

Somil Aggarwal (16:05)
So you had this unique start where you end up in a situation where perhaps it's out of homage, perhaps it's out of the opportunity and shared interest in the thing that you were developing that your father worked on. You now have access to this research. And I think it might be unique situation for you, but a lot of climate technologies will come out of commercialization of PhD science, of university science, of different labs. So I think it's actually a fairly, in some ways there's a lot of commonalities. How did you go from?

VIrginia Irwin Klausmeier (16:26)
Thank you.

Somil Aggarwal (16:34)
Now, okay, like there's this brilliant people thinking these brilliant things. I want to make this something that I can take to market. How did you start with the idea of I'm going to make a company out

of this?

VIrginia Irwin Klausmeier (16:42)
Yeah, yeah. I think the, I mean, for me, if I distill it down, it was like, comes down to a little bit of disappointment, was, you know, I realized, I was at a stage in my life and career where I just realized, I think there was this concept earlier on that other people are solving these problems, right? It's kind of like the older I got and the more access I got to kind of executive functioning or higher up in like these organizations and insights, I realized actually people, like, there's a lot of people asleep behind the steering wheel.

And I didn't, you know, I think that like, for me that led to disappointment. And I, it was like one day I just realized, man, this isn't, the world is not going to change the level it needs to, unless we, meaning I, probably need to get more aggressive. Right? So I think that was a really big pivot point. And then, and then it was sort of coupled with, I have this potential magic wand that I've been gifted. If I don't even try to make,

to make the world a better place with this, like, you know, with this privileged position, then how will I ever be able to sleep at night or, you know, potentially, like, feel good about myself on my deathbed?

Silas Mähner (17:52)
Yeah. Sometimes people think it sounds dark, but I think it's very interesting to think about our impact. This is more philosophical than this podcast is for, but I want to talk about you kind of going from that desire to make things happen and then, did you have any particular roadblocks to making it happen, to actually starting and raising money and getting commercialization going? Whether those were roadblocks of...

VIrginia Irwin Klausmeier (17:55)
Not a joke.

Silas Mähner (18:21)
the difficulties around fundraising or maybe mental roadblocks. We're like, I don't know. Is this really for me? You talked a little bit about it, but I think that leap from not being a founder to being a founder is like a pretty big leap, especially the first time. So I

just want to understand that.

VIrginia Irwin Klausmeier (18:34)
Mm-hmm.

Well, it's super funny the way that you talk about that, because I actually didn't have, like, I only saw roadblocks, I didn't see any light at the end of the road, you know, besides just, you know, so I think that that's why, like, it came down to fear, like, as I distilled it in my mind, like, why wouldn't I do this? It was like, fear and faith, right? So, in all purposes, like, my father, and my experience of the world thus far was, you know, and he was a pretty important component, but.

he had kind of failed on the business side, right? He was super smart, but he had failed, right? So I hadn't had, I was one of those privileged people that had all these examples of success in front of me. I was really good at athletics and other things like that, so I had personally felt like what it was like to win and different things, so I was very, I had a lot of internal drive and motivation, but yeah, I only saw roadblocks. I didn't see, so I think that was...

That was where it was like literally a leap of faith was, you know, and that came from probably seeing, sadly like death, right? Was this concept of we are a finite, like we have life as finite, you have a short amount of time, what's the impact you wanna make and really looking at that and dissecting it. And then the other side of it, so that's faith, the other side of it was fear, was like, okay, what's the, like, what are my fears? And...

really trying to work through my fears. Fear of failure is the biggest one. Again, I wanna be successful. I wanna have a life that really creates impact and change. It's not a small bar that I fear not being able to meet up against. Not even the bar that I could think of now. Right? So this is for, now my bar is way higher. I want everyone to change. A lot of things change, a lot.

But for me that was, yeah, fear and in my ability. So I put myself, before I started the company, I was like, okay, what is something that's really, really hard that I'm very scared of? And I had learned about an Iron Man. I saw somebody that had a tattoo of, what is it, 102.3? 100, something like that, on their arm. And I learned about an Iron Man race. And once I heard that, I was like, oh man, if I can do an Iron Man.

then I could start this company and probably not fail. If you can put the logic together on those two, that's like a whole psych class. But so I did that. I was like, okay, well, I will quit my job if I can do this Ironman in nine months. And if I can do that while traveling internationally for my job and figuring out how to do that, then I will put my job that's like highly paid, really nice pathway to go to this like.

Somil Aggarwal (21:02)
Oh, definitely. I definitely think that's true.

Silas Mähner (21:05)
Yeah.

VIrginia Irwin Klausmeier (21:26)
unknown and try to like jump off this cliff and build a plane while I'm falling.

Silas Mähner (21:30)
I love it. I really appreciate you walking us through that. Thanks for the insights

VIrginia Irwin Klausmeier (21:39)
totally.

Somil Aggarwal (21:41)
I think the, and I appreciate the realness of how it started because I think some people like to come across this as, okay, you know, the story is that there was an opportunity right now, this is how I fundraised, this is how I go about it. If I treated something more serendipitous, it may not seem as legitimate. So I appreciate you embracing a lot of those parts of the story as well, which is, it doesn't all happen in a vacuum, it's not just one big success story of how I got this going, right? And I think that's something that

especially with climate, people are getting more comfortable with explaining that like, hey, there's a real climate concern. And sometimes it just is that, you know, one of my other favorite other publications in climate, climate papa, it really was him having the birth of his child, right? To really take that and fit is and sometimes it's nothing more. So it's not something we get to hear every show. Yeah.

VIrginia Irwin Klausmeier (22:30)
birth and death man are very important. I mean, I think that like that was like, you know, my, my impetus started with death, right? But then since then, I've had two children and it's sort of like, it re-upped me, right? My conversations, like, yeah, they were like different segments of, like one was during COVID and one was just before that. So it definitely, um, but it re-ups

Somil Aggarwal (22:38)
Yeah.

Oh. Yeah.

Yeah, and one thing I love to do is also shine more light on the brilliance of the technology itself. So, in a very, very high level, what really is the unlock of a waterless sort of cathode active material within these batteries? And what did you have to change along the way? Of course, there's a lot of science behind it, but what were the, at a very high level, what was the major unlock that made this happen?



VIrginia Irwin Klausmeier (23:19)
Yeah, so I think I'm gonna start a little bit with the end product is cathode material, right? So we're making the high performing cathode materials that go into electric vehicles. Our goal is to make kind of all chemistry, so it'd be chemistry agnostic. And that was really important. When we looked at the system that was broken, it was broken by a couple different ways, right? So this is specifically cathode, making cathode active material. It was broken in that it...

it used a huge amount of energy. It was a multi-step process, and it had to use highly pure, mined and refined material. So there are sort of two pieces of that we really drilled onto. One was opening up the inputs that could be used from either less mined or broader stream of inputs. So working with oxides and hydroxides, you don't have a sulfur molecule that ends up being the big waste component that is like a really big problem with scaling an industry.

So how do we design that out of the process from the upfront that ultimately will make a much more streamlined input side from the mining and refining and also not have that inherent waste. The other was being able to incorporate more effectively recycled materials. So being able to have a process where you could combine all the metals in one step, typically like in existing manufacturing, some multi-step process, and then you add the lithium. So

you know, when you're recycling material, that means you have to extract everything out into highly pure materials, again, that you spend all this energy making. So for us, you know, we can combine that just directly. And then the third piece was making it in an environment or a way that was gonna not require water. So our kind of unlock was allowing for a natural-based material that we incorporate with all of

the metals, the nickel, lithium, et cetera, and it allows it to combine together to make it more homogeneous, so all that means is mixed well. And then that allows the process to be more simplified. So we used, you know, we look back from all of industrial manufacturing and we use just basic industrial manufacturing tendencies, which is a more homogeneous material, makes the process much more efficient.

Silas Mähner (25:23)
Mm-hmm.

VIrginia Irwin Klausmeier (25:44)
So that was our step one was brought in the range of inputs to make it more a more simple process and then and then we gave ourselves the extra hurdle of Using off-the-shelf engineering equipment because a lot of advanced manufacturing Designs use new equipment which is peppered with problems mostly like, you know later like as a business model You might have to be an equipment vendor you have separate from like supply and problems with that then you also have like variability in each level of scaling and so we really wanted to

Silas Mähner (26:00)
Yeah.

VIrginia Irwin Klausmeier (26:13)
stay focused on how do we get to bankability and stay in our lane and only focus, not look at how to make new equipment, all those things, just use the equipment that's currently available, but then make a streamlined process that's best in class from a point of low cost and has no waste, uses a variety of inputs, and is also flexible from a chemistry side.

Silas Mähner (26:31)
Yeah. Okay. Guys, so that's a lot. I'm going to try to get this right, okay? Let's see. So generally speaking, you were thinking about the fact that there's inputs, and you're trying to make these inputs more sustainable. So what you did to do that is you widened the raw materials that can be going in and the process of making them. Those are the two things you changed.

VIrginia Irwin Klausmeier (26:37)
Yep, sorry.

Silas Mähner (26:59)
Okay, got it. So you did those two things. Now, how does this fit into the battery chain? For some people, you know, are familiar, explain to them like I'm five, right? Like you take X, do X with it, and then you sell it to this person who then does this with it. What does that look like?

VIrginia Irwin Klausmeier (26:59)
You're hired. Correct.

Yeah, so just to give some touch points for the battery supply chain and for most things, you have the input materials. So these are the metals that are mined and refined or recycled, right? And then we use those and then we bring them together to make this end powder that is the plus sign of the battery pack. It's called cathode active material. We then send, we sell that.

or that gets sold to the cell manufacturer who makes the electrode and then they make the whole battery cell and then they sell that directly to the end OEM or the end vendor. So that's kind of the general sentiment what you and then we can talk more about the dynamics of the pull and the different things but

Silas Mähner (27:55)
Perfect.

Yeah, that makes sense. So I guess then, I mean, there's probably so many things. I'm always very fascinated by technology. So I could ask questions for days about sourcing everything. But Soma, do you have any particular things that you want to jump in terms of the technology to understand or have we covered it pretty well?

VIrginia Irwin Klausmeier (28:11)
Peace.

Somil Aggarwal (28:20)
I mean, I think that's super, super helpful. I'm wondering when you made this material, what was the part of the supply chain that you went to market with? Like, how did you essentially get this out there?



VIrginia Irwin Klausmeier (28:30)
So one of the key things that I think is super important, just kind of like backtracking, is that when industry focused on moving to electrification, they had a net zero goal, right? And just to kind of ground you, it's 100% impossible to get to the net zero goal with existing manufacturing of cathode material. So either way, separate from all the things we talked about at the beginning of the podcast, something has to change. Like you have to change the manufacturing process. So...

For us, that's been the key element. We've gone directly to the EV OEMs and said, okay, you have this EV future pathway and you are making EVs now and you're using these materials and the batteries. How are you counting your carbon and how are you counting your costs? And then how are you gonna do that in North America? And do, the next piece was.

Silas Mähner (29:21)
Yeah.

VIrginia Irwin Klausmeier (29:25)
Do you want to do that lower cost with lower capital, with lower carbon? Yes. Yeah.

Silas Mähner (29:28)
Okay. Yeah, of course. So I want to clarify then, so how is it more environmental friendly? You said that you use less water, use no water. I want to make sure I understand this correctly. Obviously, there's some IP you can't share, but just generally speaking, how do you make it with less water? Because that's the main efficiency, right? Less water and less energy.

VIrginia Irwin Klausmeier (29:44)
Yep.

Well, actually the main efficiency is cutting out a lot of steps. So, I was thinking this multi-step process that when you think about water and when you think about it in manufacturing, it's actually tankage, right? So, if you're taking a tankage where it's like 90% water and you're putting 10% materials in it that then are combining, then you're using a whole bunch of wasted space, right? And so, we actually took that all out of the equation. So, it kind of came together with if you don't use water,

Silas Mähner (29:54)
Ah, okay.

Hmm.

Mm.

VIrginia Irwin Klausmeier (30:21)
and if you use oxide materials, then you can lower the footprint substantially. I'm sure you're familiar with dry electrode manufacturing, and that's exact same kind of thought process. With dry electrode manufacturing, you're not using the solvents and all that volume, so your footprint is way smaller, and your capex install is like a fraction. And we're doing the same thing, but for cathode manufacturing.

Silas Mähner (30:27)
Hmm

Okay, got it. And your long-term goal with the company generally is to do a lot of these different technologies and make them more efficient, skip the steps, reduce the energy usage and water usage, et cetera, not just for what you're doing

VIrginia Irwin Klausmeier (31:06)
Good question. I mean, right now, if we can solve this problem for even a sliver of the marketplace, we make a substantial amount of, I mean, like billions of dollars in revenue, and it's a substantial change in the carbon footprint. So I think we're definitely very focused on this industry, just to like, you know, and different parts of this industry because we see it as one of the biggest growing ones. And whenever we've looked at other industries, it's like a drop in the bucket in this, you know, compared to the futures of.

Silas Mähner (31:21)
one thing. Yeah.

VIrginia Irwin Klausmeier (31:36)
kind of cathode material production. But back to your point, you are correct that we could take a lot of the knowledge that we have advanced in the manufacturing process and apply it to other areas that are probably like looking at metals and other materials and combining them in a much more effective way. So like catalysts and those things, like a lot of different processes probably within the different market.

Silas Mähner (32:01)
OK, got it. And then the model will be to produce these materials and then sell them? Are they going to be produced on site at the battery OEMs where they're making it? Is that the objective, or just to produce it and then ship it where it needs to

VIrginia Irwin Klausmeier (32:18)
Good question. I mean, a little bit of exactly where it's going to be produced at commercial scale is going to be dependent on how the marketplace starts to really pan out. The piece that we offer is having at least like a 50% cost reduction in CapEx, which means that you have more optionality of being able to place it and where we use way less energy and no water, right? So that means that in the first time ever, you have the concept where you could potentially coordinate with upstream.

So that means like coordinate with recycling or feedstock producers and then upgrade it to higher value cathode material and then send it to a battery cell manufacturer. So that's one option. The other option, of course, it's more efficient to be close to either your end customer or your raw material provider. So those are kind of, to your point, the primaries. The other option is to vertically integrate with the cell manufacturing.

Silas Mähner (33:11)
OK, interesting. That's quite fascinating. I guess I didn't think about that. Just to clarify, because it's lower cost, it could be built closer to the inputs and the outputs or either or, basically. So that's interesting.

VIrginia Irwin Klausmeier (33:26)
Well, I would say lower cost and even what I'm hearing now is it's mostly just the energy because the energy draw is one of the biggest problems. So like you can't have an energy intensive cathode manufacturing next to one of the most energy intensive cell manufacturing sites. There's not enough load, right? So your major like you're going to have this you're already going to have this distributed network because it's going to be around energy, right? Which is why you're having a bunch of utilities getting involved in the supply chain and a bunch of government getting involved in like how we're going to fuel this and make it efficiently.

Silas Mähner (33:38)
Yeah, okay, that's a good point.

VIrginia Irwin Klausmeier (33:56)
So I think that that's one of the, you know, what I'm seeing is like people like met with the Canadians and different folks and they're like, okay, but really how much energy do you use? Because we're really excited to use low energy. I'm like, and then they, you know, and they're like, because then that means you can sit next to all of the battery manufacturers can be here. And I was because I like, we only have this much grid to give you a very small amount. So that's what's exciting is it allows you to unlock. And then the water utilization too is a big problem. So that's usually a real long step.

Silas Mähner (34:15)
Okay. Yeah.

Yes.

VIrginia Irwin Klausmeier (34:25)
where you can do things. So we kind of take all that out of the equation. So it gives us a lot more optionality to maximize off of carbon footprint and cost efficiency.

Silas Mähner (34:33)
Okay, got it. And then just to clarify, we'll go through this really quickly. Where is the company today in terms of development? Do you have a pilot project going? What is the general status now? I'm assuming, I know you guys have raised money, so just kind of tell us the general state of the company today.

VIrginia Irwin Klausmeier (34:51)
Yeah, completely. So we're at this beautiful state where we found wonderful product market fit. We have significant focus on key materials that are supplying that market. We have two different, typically cathode manufacturing hasn't been flexible. So we have two different proof points with core materials that show the breadth of the flexibility. And we have a pilot, as you mentioned, where we're making hundreds of grams and moving to...

kilograms over the next year and supplying to customer samples. So that's one of the big one. So we're starting to do a significant amount of customer sampling and working with the end market on validation. And then the sky's the limit on the next step.

Somil Aggarwal (35:36)
When it comes to communicating the success of the pilot, what are you tracking? Is it basically fulfillment? Or, you know, what's the structure around that basically saying that this is working?

VIrginia Irwin Klausmeier (35:45)
Yeah, so you have, I mean, the good news is that the end materials, usually you have like a pretty tight specification with like, you know, any OEM. They're like, hey, if you're making NMC, you know, whatever, stoichiometry, this is like, like we come, we look at the specs, you have a pretty good target range. So that's like, you know, an end spec of a material. Can you make the material that we that we want in this design in general? And then you look at, OK, well.

can we be using equipment that is off the shelf and standardized and is like a mini replication of something that's gonna be the next big size? So we've actually done a huge amount of effort this last year to figure out what pilot scale looks like to support the commercial demo that allows us to go from that very low cost commercial demonstration to an actual fully commercial capability that can be financed in multiple different ways.

Somil Aggarwal (36:32)
Mm-hmm.

Yeah.

VIrginia Irwin Klausmeier (36:44)
Right. So it was, it was working through that, like process backwards to your point. And so that means the pilot is a mini replica of mostly using, you know, processing types of equipment that can be scaled up efficiently for commercialization.

Somil Aggarwal (36:44)
Very cool.

And I want to talk through the resources that you pulled together to get to this piloting stage. The reason is that this, the point where you're at is a point that many climate companies are at, I think is equally complex for everyone. So what was your fundraising history like in terms of getting capital and resources together? And also what's the structure of the pilot? Pilot structures are very different. So to whatever you can discuss, if you were thinking about equity, if you're thinking about cash, what does your fundraising history look like up until now?

VIrginia Irwin Klausmeier (37:06)
Yeah.

Yeah, so the way that I've really cared about kind of like public private money to finance, you know, early stage, but probably ongoing in the space, mostly because I think that there's a duty on supplying sort of government resource. So we've done, we've done a lot with working with government institutions on financing and supporting, supporting our early stage. So we have been

a few grants on the early side. And then we have coupled that early on. I actually had our early investors were more high-end individuals that were self-made. So it was like, it was using them as mentors as well as capital. So it's the best way to get capital is like someone who's smart, who knows how to solve your problems that have been there before and they have money. So take their money, then they're more willing to take your calls. And so.

And they're very helpful. You know, they were very helpful on just kind of getting us to the focus point, right? What is really the focus that you need to get to? When you know that you're focusing on a product market solution set that's really going to be the impact that you're looking for and is big enough and yada yada, right? So that's, you know, that's really where we got our first capital. And then for a series day, we definitely brought in a bit more institutional investors that were, they had a lot of knowledge and are pretty good investors in the...

energy storage space. So, you know, I think that was wanting to get our grip a little bit more connected to parties that know business in the sector and just have a pulse to the ground. And now the bet, you know, the next step is really going to be looking at investors who know how to build stuff and actually look at how to build stuff that is going to be at a in a way. So how do you build a business at an early stage where you're not raising so much capital that you can create a lot of.

Optionality in exit

opportunities or scaling capabilities I'm happy to digest that more if you

Silas Mähner (39:21)
Yeah, this is helpful. So no, I think that's good. So generally speaking, to kind of summarize, you did utilize grant funding to get to where you are now. And some investors at the beginning, obviously. But the next stage is now that you have product market fit, you have probably some LOIs, people very interested, you're doing some stuff. You are now or either now, I don't know if you can talk about it now or have already raised, very soon probably, the money to go for a pilot. And

I guess my big question is, what are the milestones usually to get to the next thing? I don't know exactly if you've already raised the money for the pilot, but to get from that pilot to the commercial phase is a huge, huge leap. Can you talk about the milestones of what has to happen in order to get there? And also I'd like to know what type of investors will come in at that process.

VIrginia Irwin Klausmeier (40:12)
So, and this is quite honestly what we spent all last year figuring out, right? So first off, you say, okay, what does commercialization look like? Okay, for us, it's modular. So you have a line size that gets figured out. For us, it's somewhere between 10 to 15 KT. And then that just gets build, repeat, build, repeat. And that's actually how it looks at large scale, is you have multiple lines. Right now, the rate limiting step, of course, with that line and the multiple line scale is because of all the waste.

that we don't have that rate land-on-mains gap. So technically we'd go from one line to having a huge production site if you like. And then you can finance those in a different way. So all of that, the goal is to say, okay, how do you finance that first line? And then there is buckets of capital for that, which LPO and other funds are very good examples. And then you go from that to say, okay, well, if you know that scale of around that line,

you know, typically they want to see like 10 to 100 X, maybe of like a commercial demonstration. And especially bruising off the shelf engineering equipment, we minimize a lot of that risk, right? So then we had to look, we actually went backwards and worked with equipment vendors and sort of more engineering firms to evaluate what is the equipment we need at commercial scale. And then how do we make that the minis replica possible that we could do for what, you know, commercial demonstration. And the commercial demonstration is around, you know,

squiggle 1kT and that is going to be a bankable asset. So that's the, you know, I think a different way that you ask a question is like, or the way that I posed the question to us and our team early last year was how do we get to bankability? How do we get to bankability with the least amount of capital possible, right? Because the concept is everything pre-that, either you have to have some government funding, you know, or it's all equity.

Right? And there's been, I know you guys are very familiar with a huge amount of, you know, these very expensive first of a kind plans or getting to bankability in a way that's cost efficient, I think is like where people are trying to figure it out. So we did a really good job getting ahead of that last year. And we were early in our capital raising, right? So then we backed into that and said, okay, well then we know that that's our target. Then what do we need to make sure that we have confirmed?

engineering specs for a facility that's going to work for that commercial demonstration, and that's the pilot.

Silas Mähner (42:40)
So this I don't know the answer to. I've never actually asked anybody this is how, if you're building, if your manufacturing process is something that's gonna be a modular, so you can just like say you want 10 or you want 100, whatever you want, is that an asset where you don't actually need to raise equity to go do this, or you don't just do purchase orders, you can actually just raise a debt facility? Okay, okay, got it.

VIrginia Irwin Klausmeier (42:45)
See you.

Correct. Yeah. Yep. That is, I mean, that is like private equity debt model. Like we already have like millions of people swimming after us to finance those assets. It's very exciting. I mean, they're smart because the margin potential on them is astronomical and the sky's the limit for the end product. So it's exactly what private equity or debt financing would want to run out of.

Silas Mähner (43:06)
Yeah.

And that's because this is despite the fact that you will be producing the end products. You're not licensing the IP and the technology. You're not just selling the equipment and the IP. You're actually producing the end materials,

VIrginia Irwin Klausmeier (43:41)
So short answer is yes. As far as we can see is the commercial demo. We will produce a commercial demo. After you prove out and validate and completely validate the techno economic assessments and the margins, you mitigate all of the technical risks. So that's thinkability. So after commercial demo, sky is the limit. Right, because then I can do licensing and say, hey man, this is confirmed. I want like a lot more. If you do it early on prior to proof points.

Silas Mähner (43:44)
Yeah.

Yeah.

VIrginia Irwin Klausmeier (44:09)
of scaling up, you know, it's sort of the cycle that you see parties like 24M and a bunch of other organizations that kind of have gotten into where they've licensed technology prior to scaling it or proving it at a commercial scale. So well, you don't, you know, there's a lot of, you know, there's a lot of things that you, it's still in a development element, right? You still have things to figure out. So

Silas Mähner (44:19)
Disaster.

VIrginia Irwin Klausmeier (44:31)
We've tried to be very thoughtful to, again, this is all coming from a place like, yes, we want to make a bunch of money, but for me, it doesn't matter unless we're scaling something that's effectively can scale. And also if it actually reduces the cost and actually reduces the carbon to the level it needs to. Because, so none of it matters. So we're trying really good to be smart about not just satisfying what kind of...

Silas Mähner (44:46)
Yeah.

VIrginia Irwin Klausmeier (44:57)
investors need us to tell them at that stage, but actually getting conviction ourselves at each stage of the game to Make sure we're walking into the marketplace with the best solution possible

Silas Mähner (45:05)
Got it. So the reason I was asking that was mainly because I was... I know it's not technically a pure commodity you're producing, but I wasn't sure that debt would ever finance something that's a commodity-based market. If it was an equipment sales, that makes sense, right? I understand. I just wanted to make that clarification.

VIrginia Irwin Klausmeier (45:24)
Yeah, we're not an equipment, I mean, so we're not like, we're, cathode material is, I think, is gonna is, and it's probably gonna continue to probably be labeled as more of like a specialty or high value chemical space. So, you know, versus a commodity market, I think that, you know, over time, it will shift to that. But definitely with the inputs, you know, you have that broader issue.

Silas Mähner (45:47)
Yeah, got it. All right. We're definitely over time here. I want to just get this thing pretty quickly to finish this off here. Obviously, building this kind of company is difficult. There's a lot of unknowns, especially for somebody like yourself who didn't necessarily head down this path kind of early on with your education journey. You weren't specifically trying to do this. How do you as a founder navigate the unknown? If there's any particular tactics you have on how to not get overwhelmed by the things you don't know and understand,

VIrginia Irwin Klausmeier (45:53)
Thanks for watching!

Silas Mähner (46:14)
Where do I need to be looking to know what I don't know, et cetera? Just talk us through that process as quickly as you can, but still give us the insights.

VIrginia Irwin Klausmeier (46:23)
Yeah, I mean, navigating the unknowns, or the first is really qualifying what is not known and what we need to know. So I think that we've been very good. I don't wanna do anything, literally spend any time on something someone else has solved. So that goes from setting up the company to, how do you set up a company most efficiently? How do you set up HR? How do you do review processes? All those fundamentals. We're not gonna spend the time to do that in a brand new way. That's gonna be best.

We're going to take, you scour the world on what's going to be best in class, what's already there, and then you implement. I think that that's been really good for us to then clear out and create the white space and say, what is the thing that we're uniquely focusing on that is really important? If it's something that someone else can do, then work with them. Some parts of it, just trying to chip away at that constantly. You kind of go, when you start a company, you go big.

because you have so many things you have to do. And then you get like a laundry list of all these elements. And like literally you just put them in buckets of what is known things that I can hand off or other like can be solvable. And then you get really, really clear at the unknown and the way that I've like what's really unknown and really where the white spaces that you're solving for. And the white space concept for me has been really valuable because if you think about, you know, artists and.

a lot of different areas where you go to silence your mind to invoke creative capability. It is having white space. And for us, that is getting really clear on just the very targeted area that no one's looking. So no large organizations looking at that we are gonna chip away at and do best in class.

Somil Aggarwal (48:15)
I think that's like one of, it basically emulates that sort of approach where you could get distracted on the sides, but it really is just about your core product at the end of the day. So focus on that and that alone and everything you should do should focus on that. That's kind of what I heard from what you were saying, especially because... Yeah. Yes.

VIrginia Irwin Klausmeier (48:30)
Yeah, I mean, it is like a constant iteration, like what is the core product? What is the core thing you're good at? Because you might have people that can help or things that are invented along the way that can support that core product in some component. So I think that that's really, yeah, that's really, really valuable for us on mapping in the unknowns. And then the other standpoint that I've had that's been super useful is just realizing that, yeah, no one's ever.

done it before, right? So you can get advice on, you know, figure out where advice is useful. So on a lot of areas, it's super useful and it's very tactical and just, you know, solve those problems with known positive approachable ways. But for, you know, when it comes to actually how to do this one thing, like there's very, you know, there's probably like maybe one or two or three people who've thought about it and not thought about it for days, but take find those few people.

Somil Aggarwal (48:58)
Right.

VIrginia Irwin Klausmeier (49:27)
who have thought about it and get them in a room and pay them to be your advisors and, you know, and work with them because that's the, that's really where the key magic happens.

Somil Aggarwal (49:30)
Right.

Amazing. Well, we really appreciate this. I know, like Sadist mentioned, we're pretty much over time, but again, really appreciate you sharing the story with us. I think it got a lot more complex than we even thought it would, and I think that just shows that you're tackling a really big problem. So, before we shut off, we'd just love to ask, where can the audience find you?

VIrginia Irwin Klausmeier (49:55)
silvetext.com. I'm also on LinkedIn Virginia Erwin Krausmeier and my team is all over LinkedIn. That's kind of our one little place that we go.

Silas Mähner (50:03)
Nice.

Somil Aggarwal (50:06)
Amazing. Well, thanks so much for coming on.

VIrginia Irwin Klausmeier (50:08)
Thanks so much for having me.