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PowerbyProxi pulling plans for $40m IPO?

UPDATE / July 25: PowerbyProxi's CEO is playing his cards close to his chest over a report his company has abandoned plans for an IPO as the market cools on tech listings.

"All I can say is we continue to work with our current shareholders and potential investors both here and offshore on our next round of funding," Greg Cross told NBR ONLINE earlier today.

"We have a major CE [consumer electronics] product launch at the end next week which is a big milestone for us so we are head down bum up at the moment."

Last month, Mr Cross told NBR his company wants to raise $30 million to $40 million later this year.

He said an NZX listing was on the table, but added that private equity players in the US, China or Twaiwan were also being considered as fresh sources of capital (see below).

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PowerbyProxi: Key points

  • PowerbyProxi technology lets gadgets wireless recharge by sitting them on a power mat, or dumping them in a recharging bowl
  • Also develops wireless power delivery technology for industrial gear
  • The Auckland-based company wants to raise $30m to $40m later this year
  • Previous funding rounds have included Samsung ($US4m), US industrial conglomerate TE Connectivity ($US5 million)
  • Wants to double workforce from 50 to150 over next 12 months and open R&D offices in Taipei and Austin, Texas
  • Product development and licensing pacts include deals with Samsung in consumer electronics space, Texas Instruments in chips
  • Claims market leadership in and key patents in resonant charging technology that lets gadgets wirelessly recharge at a practical speed
  • Recently demo'd a new charging pad that's ready and working, meaning Samsung could release product within 12 months
  • CEO Greg Cross sees near future where power plugs are overtaken by wireless charging, just as wi-fi has eclipsed plug-in ethernet today, creating a $US15 billion market

PowerybyProxi wants another $40m, NZX on table

June 16: PowerbyProxi chairman CEO Greg Cross tells NBR his company is looking to raise $30 million to $40 million later this year.

Mr Cross says he would like to bring more Kiwi investors onboard, and that an NZX listing is on the table — but so are other options including tapping Silicon Valley VCs, or private equity players in Taiwan or China where the PowerbyProxi exec says he has developed strong contacts.

If it goes ahead, the capital raising will build a boom 2013 for PowerbyProxi that included a $US4 million investment from Samsung's venture capital arm for a 12.47% stake (implying a total private equity value around $US32 million).

It wasn't just cash that Samsung brought to the table. The deal included Samsung Ventures America senior investment manager Michael Pachos join PowerbyProxi's board, and a licensing pact that could see Samsung product incorporating PowerbyProxi technology as early as next year.

Earlier this month, PowerbyProxi demonstrated a wireless charging pad at the giant Computex trade how in Taipei. Wireless charging pads are nothing new. Nokia (now owned by Microsoft) included one as an option for its flagship Lumia series in  2012. However, Mr Cross says like other consumer wireless charging technology so far, that was based on relatively low-powered 3.5 watt inductive technology that lead to a very slow charge (as NBR found). His company's new wireless charging mat uses resonant charging technology, which he says allows for higher power (up to 7 watts; most smartphones require 5 watts), and spacial freedom — meaning you don't have to carefully place your phone on a charging mat; you can just biff it anywhere (as NBR found with a quick play) or dunk it into a charging bowl.

He showed NBR a 15w mat that could charge a Samsung smartphone and phablet at once (see photo top right).

ABOVE: PowerbyProxi's industrial wireless power technology demo'd at the company's Auckland office (with a quick commentary by CEO Greg Cross). An early customer was the NZ subsidiary of US agricultural machinery giant John Deere  The technology is also being trialed by wind turbine makers.

PowerbyProxi's edge
While a number of companies are developing bowls and mats, Mr Cross says PowerbyProxi is the only one to have demo'd a working prototype. While it's up to Samsung when it delivers commercial product, it's all ready to go he says. First-generation product will likely require a transmitter to be clipped to a product; ultimately PowerbyProxi technology will be built into gadgets trom Samsung and others.

Last year saw a strategic partnership with chip maker Texas Instruments, too, which will potentially see PowerbyProxi's technology ultimately appear in technology from a broad range of consumer electronics brands. 

2013 also saw a $US5 million investment from TE Connectivity (formerly Tyco), a $12 billion player in the industrial equipment space which Mr Cross describes as a "hot, wet and dirty" environment where cable-free power can be more efficient, and safer.

And Phil McCaw's Movac put another $4 million into PowerbyProxi; the Kiwi venture capital outfit is the largest shareholder with a 21.45% stake. Other investers include NBR Rich Lister and John Holdsworth (via Evander Management vehicle, which holds a 12% stake) and The Icehouse with a 1% slither.

PowerbyProxi has also secured a co-development deal with an un-named major battery maker.

Mr Cross says this will lead to rechargeable batteries with PowerbyProxi technology in their tips that never need to be taken out of a device like a Furby or TV remote. Instead the device can just be dunked in a recharge bowl.

PowerbyProxi was spun out of Auckland University's commercialisation arm, Uniservices in 2007.

Uniservices still holds a 2.5% stake and receives royalties from PowerbyProxi. And the university still plays the key role of developing long term technology under contract to PowerbyProxi, while the company itself focuses on short to medium term development, Mr Cross says.

What's next?
Although his company's (undisclosed) revenue is modest today, Mr Cross says wireless recharging will become a $US15 billion industry as early as 2019. 

He sees us on course for a plug-free future where wireless power will become persuasive, drawing a parallel with the speed that wi-fi replaced ethernet cables for home and office internet.

Long term, he sees wireless recharging technology built into cars, planes, office furniture and almost anything. Go into a meeting in the 2020s and the surface of the boardroom table will include wireless recharging technology. 

PowerbyProxi's business will be divided 50:50 between consumer and industrial, the CEO says.

Such a potentially large industry has attracted many contenders. Mr Cross maintains his company's portfolio of 126 patents makes it the market leader.

"But don't take my word for it" he says, pointing to the investments from Samsung and TE Connectivity, and the licensing deal with Texas Instruments, as sharp-end evidence his company is setting the pace.

The Samsung investment was the Korean company's first in wireless charging; Texas Instruments is the world's largest maker of embedded microprocessors.

Hiring squeeze
Through Texas Instruments, PowerbyProxi has also become a key player on the standards-setting World Power Consortium (WPC), he says.

How would the company spend another $40 million in capital?

In part, staff. PowerbyProxi has around 50 staff in its Auckland office, 80% not born in NZ by the CEO's estimate.

Mr Cross says he wants to hire 100 more over the next 12 months.

The ICT skills shortage means he has no hope of hiring all 100 locally he says; in any case he wants broader reach.

A likely scenario will see around a third of the new recruits placed in NZ; a third in a new R&D office in Austin, Texas (Texas being cheaper than Silicon Valley and home to key partner Texas Instruments); and a third in Taipei (to be close to the world hub of high tech manufacturing).

As with any startup, success is not assured, as NextWindow's empty office on the ground floor of PowerbyProxi's College Hill, Auckland office attests.

If it does IPO, then investors will be keen to discover key metrics like cash burn and R&D outlay, among others.

But with major industry players putting their money where their month is to back it, PowerbyProxi looks in with a shot.

ckeall@nbr.co.nz


ABOVE: A PowerbyProxi promo clip on the future of wireless charging.

More by Chris Keall

Comments and questions
6

Will be interesting to see a prospectus if one is produced.

One thing to note is a lot of these multi-nationals will back two or three technologies at the same time, but the real positive is that power by proxy is in the game and that is about as good as it gets at this stage, so well done to the team.

As PT notes they may well be backing 2-3 similar technologies, but excellent work by these guys to get the attention, and actual commitment, of TI and Samsung.

MOVAC actually owns a total of 34.36% (13.11% + 21.45%) through it's 2nd and 3rd funds.

The Companies Office shows Movac with 21.45% and a nominee company with shareholdings from various individuals, including Movac's Phil McCaw on 13.11%

yes, and each of those individuals are the original MOVAC investors

Exciting to have a new technology seeking global growth velocity.
Go well.