What is the first thing you think about when you walk into Whole Foods? It might be, “Wow, the peaches look great and they’re local!” or “What in the world can I make for dinner?” But what many people aren’t thinking about is the refrigeration system that keeps their food fresh. Refrigeration system power everything from grocery stores to hospitals to storage warehouses. As such, they are huge consumers of energy, accounting for 9.1% of commercial electricity consumption in the US today.
Innovation in the refrigeration system could spell huge gains in terms of lowering energy consumption. Axiom Exergy has a pipeline that includes two major supermarket chains (accounting for approximately 7% of the entire US supermarket industry) and multiple electrical utilities. The San Francisco Bay Area startup is changing the refrigeration system, and investors and the media are noticing. Having recently raised $2.5 million with an investment from the CTO of Tesla, the company is poised to change the future of the energy landscape.
Propel(x) recently spoke to CEO Amrit Robbins to get the inside story on how Axiom Exergy is keeping things cool.
Propel(x): In your own words, tell us a bit about Axiom Exergy.
Amrit Robbins: We are in the business of energy storage, and we’re focused on bringing a specific type of energy storage into the market for any facility that uses refrigeration system. Our “Refrigeration Battery” offers a 10x lifecycle cost advantage over other forms of energy storage that are currently available on the market for our specific type of customer. This means supermarkets, who run on very low margins, can avoid peak demand charges in the middle of the day, when energy prices are the highest, and protect their inventory from spoilage during power outages. Utilities can also utilize the asset to reduce strain on the grid.
Rather than storing electricity directly, the Refrigeration Battery stores a useful service: refrigeration. We’re storing cooling for later use while electricity is cheap, and we do that by freezing tanks of salt water. And then we’re able to use those frozen tanks, or that “stored refrigeration”, to provide cooling services during the on-peak hours of the afternoon when it’s hottest outside and when electricity is most expensive. This enables our customers to reduce consumption of electricity during those peak hours of the afternoon when electricity costs go through the roof.
Propel(x): What is the size of your company right now?
Amrit Robbins: Right now we have a team of thirteen people. We’re in a unique position compared to a lot of other energy-related and also hardware companies, in the sense that we have customers lined up out the door who are signing contracts with us and putting money on the table for our products. Now we’re striving to keep up with that demand.
Propel(x): Help us understand the innovation here vis-a-vis the current technology. What is the leap here?
Amrit Robbins: Thermal energy storage–which is what the refrigeration battery is–has been around for decades. The idea of cooling something and storing it for later use has been around since things like air conditioning systems were popularized. We are using that exact same scientific concept, and we’re even borrowing components from the air conditioning industry. But we are adapting it to refrigeration.
In air conditioning you’re using either air as the heat-transfer fluid, or you’re using water or glycol as your heat-transfer fluid. All of the thermal energy storage solutions that have been available on the market for the last three to five decades serve these types of cooling systems. What we’re doing is adapting that old technology to the third class of cooling system that exists today, which is called “direct expansion cooling.” And one of the biggest technologies that fits into those subsets of technology is supermarket refrigeration system. There are also certain types of air conditioning which fit into the direct expansion cooling category as well, which are on our product roadmap over the next 36 months.
Propel(x): Could you talk us through your most current round and tell us about some of the obstacles you’ve faced because of the fact that you are a deep technology company?
Amrit Robbins: Well, I would say we break Propel(x)’s mold a little bit, in the sense that we haven’t developed a new material or scientific concept. When we first started out with Propel(x), we asked, “Do we actually fit the mold of what you’re trying to do?” We’re not a deep technology company. We’re not fabricating any new components at all, or any new materials. Instead, we’re taking old concepts, using 100% off-the-shelf parts, putting these parts together in a new way, and productizing it for a specific industry need.
We’re very much a “built-to-order company,” in that we have designed a tailored solution to help our specific class of customers solve a very real, very painful problem that they face. That’s it. I think the strongest reason that we’ve been able to raise money to date and to gain customer interest is because we are unbelievably focused on solving a very specific and painful problem.
Propel(x): So, why did you decide to fundraise on Propel(x)?
Amrit Robbins: Because we are an energy-related company and we are a hardware-related company. We found that Propel(x) investors are the folks who are a little bit disillusioned with making a quick buck on esoteric software apps. We offer a credible alternative with a real market opportunity, and an environmental and social mission that people can relate to. Rather than improving the state-of-the-art marginally, we are offering a 10x improvement. Additionally, investors who are on Propel(x) have some understanding, or at least some appetite, for getting into businesses that involve hardware. And you know hardware is just fundamentally more expensive and has longer time scales than software generally, from a product development standpoint.
Propel(x): Since you are fresh off this fundraising effort, we always like to ask our entrepreneurs to give tips to fellow entrepreneurs on some of the learnings they had during the fundraising process. Any tips that you would like to share?
Amrit Robbins: The number one tip that I tell every entrepreneur that I speak to is: get third party validation. Basically, whenever you’re talking to any potential customer, stakeholder, supplier, partner, manufacturer, or investor, you should be able to walk into the conversation, make a bunch of claims, and then say, “You don’t have to take my word for it. Here’s third party evidence that everything I’m saying is true.” Tech and product-market fit validation are arguably the most important of all. You can work with national labs or industry partners to get technology validation, and any sort of measurement & verification you can get from third parties is really helpful. Product-market fit validation must come from customer commitments or at least letters of interest. On the fundraising side, you want other investors to be your third party validation, to say, “Look, these guys are worth taking seriously.” That’s what we’ve found to be an incredibly powerful catalyst for getting new investment. So that’s my number one piece of advice. Go out and get third party validation for every aspect of your business. Team, technology, product-market fit, financing, legal–everything. Because investors don’t want to do all of the diligence themselves, and people rightly don’t believe they have the expertise to judge a company in all these various areas compared to experts in each one of these specific fields.
Propel(x): Ten years from now, if Axiom is a huge company and a huge success, how will society be impacted?
Amrit Robbins: The Refrigeration Battery is a form of energy storage, and energy storage has a couple of big impacts. Essentially, we’re able to get energy storage out into the world now because it’s cost effective now and the technology is available now. This is in contrast to other forms of energy storage that are available, minus a few corner-case types of applications. By rolling out energy storage in a really big way, we enable a couple of things to happen: First, we enable the entire electricity grid to operate more efficiently. By having this buffer, utilities can better manage the various assets that are on their grid on the generation side and react to actual consumption of electricity on the demand side. They have more flexibility in terms of dealing with variations on both sides of the equation.
Second, the electricity grids are able to accept higher percentages of renewables. Right now, the electricity grid is very constrained in terms of what percentage of the power gain in the grid can come from intermittent sources, such as solar or wind. And that’s because the grid can only handle a certain amount of fluctuations before it becomes unstable and there are blackouts. And so having that energy storage buffer available unlocks the grid and makes it possible to increase the penetration of renewables energy onto the grid in a really big way.