Speciale Invest continues to support green hydrogen electrolyzer startup, Newtrace, with a follow-on investment in their seed round of $5.6 million.
We at Speciale Invest are happy to continue supporting Newtrace with a follow-on investment in their seed round, announced last week — after we led the pre-seed investment round in June 2022. It is another example of our continued commitment to supporting the Indian climate and deep-tech startups.
We met Rochan and Prasanta, founders of Newtrace, in early 2022 when they came up with an idea to revolutionize the hydrogen economy. They had this crazy idea to 3D print membrane-less electrolyzers to produce green hydrogen. They had a working lab prototype in Dr. Satya Chakrvarthy’s lab at IIT Madras — another climate tech founder from our portfolio.
We were intrigued!
The curiosity led us to learn more about the future of green hydrogen and discover the tremendous potential of what Rochan and Prasanta are proposing. That meeting eventually led to our seed investment in Newtrace, making us India’s first institutional venture capital fund to back a hydrogen technology startup.
We are happy to invest in Newtrace’s seed round with our co-investors — Sequoia Capital, Micelio Fund, and Aavishkar.
Relevance of Green Hydrogen
Hydrogen is a versatile element that can be used as gas or liquid and converted to electricity or fuel. Every year the world consumes more than 90 million metric tons of hydrogen for oil refining, ammonia production, steel manufacturing, chemical and fertilizer production, food processing, metallurgy, and other industries. However, more than 95% of this hydrogen comes from fossil fuels, making it one of the dirtiest industries in the world.
Hydrogen produced using clean sources with zero net CO2 emissions is known as green hydrogen. The most commonly used method to produce green hydrogen is electrolysis of water. The electric current comes from renewable energy sources such as solar or wind.
A major reason for this is the high cost of green hydrogen, which at $5–6/kg of Hydrogen is 3–4x more expensive than grey hydrogen available at $1.5–2/kg. The current technologies rely on Alkaline and PEM electrolyzers for green hydrogen production. The cost of these electrolyzers is significantly high due to the cost of their components — PFSA membrane, use of rare earth elements such as Iridium and Platinum, high precision manufacturing, bipolar plates in their stack, and so on.
For example, a PEM electrolyzer, a prevalent technology for green hydrogen production, has more than 15 components, including expensive membranes, and requires high-precision processes in assembling the electrolyzer.
Newtrace’s Journey
Using first principles, the Newtrace team has designed a green hydrogen electrolyzer from scratch. The electrolyzer uses
- No rare earth metals and no membranes
- Less expensive power conditioning/ water filtration equipment
- 70% fewer components than traditional electrolyzers
This approach has reduced manufacturing costs by more than 30%, enabled by 3D printing, automated manufacturing, and modular stack approach. The resulting electrolyzer has an innovative and optimized system design with massive scaling potential.
In less than a year, they have moved from an experimental setup in an IIT Madras lab to a revenue-generating commercial prototype.
Cloaking the first revenue is one of the most challenging milestones for any startup, even more so for a deeptech startup. Newtrace successfully cracked the first paying customer in less than one year of pre-seed funding. Two large energy utilities have signed up as their early believers, and the pipeline for future customers who see the potential of this scalable hydrogen electrolyzer is very long.
Newtrace is all set for exponential scale-up by bringing the CAPEX costs down and achieving the holy grail of producing green hydrogen at $1–1.5/kg in less than five years. This growth would enable them to become a global competitive hydrogen company from India.
Our Commitment to Climate Impact and India’s Energy Security
At Speciale, Invest, we are committed to investing in technologies that would ensure India’s energy security and commitment to adopting a low-carbon path to development. Our investments in Newtrace and other climate-tech startups, such as the ePlane Company, e-Trnl Energy, Uravu Labs, Ultraviolette, Metastable, etc., stand testimony to our commitment.
We want to highlight the relevance of Newtrace’s hydrogen electrolyzer technology to Indian energy security and global climate impact.
From an Indian energy security perspective, the Government of India has identified green hydrogen as a crucial enabler in growing India as a low-carbon self-reliant economy. RMI has estimated that green hydrogen would meet 20% of India’s total hydrogen demand in 2030 to more than 90% by 2050.
From a climate impact perspective, according to IEA, strong hydrogen demand growth and the adoption of cleaner technologies for its production enable hydrogen and hydrogen-based fuels to avoid up to 60 Gt CO2 emissions in 2021–2050, representing 6% of total cumulative emissions reductions.
Newtrace’s technology paves a path forward that could impact both the above aspects.
Rochan and Prasanta
Rochan and Prasanta are examples of Indian talent returning to build — for and from India. Both have advanced doctorate degrees from Europe and had lucrative options to pursue their skills and passion there. However, they chose to come back to India. They met at the Entrepreneur First and pivoted at least two times before deciding to pursue an opportunity they are both passionate about and involves deep scientific research.
Rochan’s passion for creating commercially viable deep science technologies and Prasanta’s business acumen and storytelling skills to commercialize such technologies make them a perfect deeptech founding team. We are confident that such solid complementary skillsets would make them thrive through thick and thin.
We wish the team all the best and continue our relentless commitment to them.
If you wish to work for Newtrace, you can see opportunities here.
We at Speciale Invest believe in supporting breakthrough technologies that have the potential to solve global problems.
As early-stage investors, we like to get our hands dirty early on and support founders in their zero-to-one journey with patient capital, business development opportunities, and hiring. We enjoy and thrive in the risk that comes with backing deep-tech startups at the pre-product stage and help through product-market fit, early customers, and scale-up.
Climate Tech is a major investment theme across our $40M fund as we look to support the global decarbonization effort. Having invested in Water, Green Hydrogen, and Batteries, we constantly seek stellar founders building solutions for Carbon Capture, HVAC, Motors, Sustainable Materials, Synthetic Biology, and many more.
If you are building something exciting in the deeptech, please email us at info@specialeinvest.com.
To know more about Speciale’s investments in disruptive technologies, please check our portfolio.
