Hydrogen — future or reality?

We have three companies in our portfolio related to hydrogen: ZeroAvia, HyPoint and UVL Robotics. First investment in hydrogen we’ve made in 2014, that time it was not popular among VCs. Before 2020 situation did not change dramatically.

In 2019 we saw 37 deals in the H2 sector, while 2020 brought us 63 deals for a modest $300m. It looks like 2020 was a game changer for H2, there was a tectonic shift in the minds and plans of the world’s leading economies. In 2021 I expect deals for at least $1b.

I’ll show you largest and most interesting recent deals.

Nikola Motor (US) manufacturer of hydrogen and hybrid vehicles has a secondary offering on the Nasdaq in March 2021. $100m offering amount. $5b in valuation. Also, General Motors was in talks to acquire an 11% stake in the company for $2 billion in 2020. Subsequently, the deal was cancelled on in November 2020.

Bayotech (US) manufacturer of hydrogen production systems. The company received $157 million of capital from Newlight Partners, Fortistar, Sun Mountain Capital and Cottonwood Technology Fund in January 2021.

Hype (France) — developer of a hydrogen-powered taxi fleet. Raised a $100m round in 2021. Took over one of the main Parisian cab operators.

Jiangsu Guofu Hydrogen Technology (China) developer of hydrogen energy equipment, storage and transportation technologies. The company’s products include liquefaction and pressure devices and refueling stations that enable manufacturers to use advanced, clean energy sources. A $60m round in 2019/20.

FirstElement Fuel (US) manufacturer of fuel cell and liquid fuel reformer technology, as well as the True Zero H2 charging infrastructure network. The company received $52 million of grant and $48 million Series B of venture financing from Mitsui & Co. and Japan Bank for International Cooperation on in June 2020.

Energy Observer Developments (France) — hydrogen generators — the company raised EUR 20 million of venture funding from Accor Group, Thélem Assurances, Monnoyeur in September 2020.

H2PRO (Israel) a new electrolyzer technology which significantly reduces the cost of hydrogen. The company raised $22 million of Series A2 venture funding in a deal led by IN Ventures, Sumitomo Corporation, and Breakthrough Energy Ventures in March 2021.

ZeroAvia (US) (founded by Val Miftahov, MIPT alumni) from our portfolio — developer of a hydrogen-based powertrain to enable zero-emission aviation. In 4Q 2020 Val closed the $37m round from Amazon, the Bill Gates Foundation, Shell ventures. In 1Q 2021 raised $24 million from British Airways and Horizons Ventures.

H2Energy (Swiss) engineering company: builds hydrogen refueling stations, develops fuel cells for stationary use and for transport on land and water. The company received CHF 40 million of development capital from Trafigura and other undisclosed investors in early 2021.

Separately, I would like to mention our portfolio company HyPoint (US), which develops and manufactures fuel cells for drones, aerotaxis, and passenger vehicles. The team has already raised over $5m and is active on the US market.

Public companies in 2020 supported the bullish trend:

Plug Power (PEM FC) crew 10x and made two acquisitions of United Hydrogen ($51m) and electrolyzer company Giner ELX for (for $52m).

Bloom energy (Solid Oxide Stationary FC) is up 5x for the year.

Ballard Power (PEM FC) grew 4 times.

Worth mentioning is the creation of the H2 venture fund HydrogenOne Capital in the UK of $315m AUM, managed by ex-top managers of Shell and Exxon Mobil.