Battery Chats: Sam Korus, Analyst at ARK Invest
A convo with Sam Korus ARK Invest on tech investments and battery companies.
A review on mobility SPACs this year and a fantastic and informative convo with Sam Korus, Analyst at ARK Invest. For inquiries, reach out!
The State of SPACs 2021
Special purpose acquisition companies (SPACs) made a splash last year with companies opting for SPACs to raise capital much quicker and easier than through private capital or an IPO. It can be seen as a better path for deep tech & climate tech companies who need big buckets of cash and lots of time, and we saw the SPAC optimism continue through to 2021.
Year to date, we counted 33 company exits via SPACs (focussing only on EV specific sectors including EV manufacturers, batteries, sensors, autonomous vehicles, eVTOLs, FCEVs, infrastructure) of $12.6 billion total SPACs raised, with a total proforma enterprise value of $99.0 billion across these companies.
Compare this with 2020, we saw $5.9 billion in total SPAC size across 23 companies, with a total enterprise value of $37.5 billion (data from Oct 30, 2021).
It’s definitely exciting to see so much capital moving to meaningful companies solving an impactful problem of EV adoption, but scary at the same time since companies are taking advantage of the ‘easier’ financing path, with bad actor companies tempted to misrepresent company prospects in order to get their SPAC.
Good SPAC candidates should have some traction, a proven pipeline, and a big TAM before going public. We note 22 out of 33 companies are pre-revenue which is a high risk, which means a lot of investment dollars could be at risk since the company is still in its early stages despite being public. For more notes on funding in the lifecycle of a startup, read The Climate Capital Stack by Climate Tech VC.
👨🔬 Battery Chats: Sam Korus, ARK Invest
This week we chatted with Sam Korus to understand a little more on the investor’s perspective.
Sam joined ARK Invest in July 2015. As an Analyst for ARK’s Autonomous Technology and Robotics strategy, Sam focuses on automation, robotics, energy storage, alternate energy, and space exploration.
Prior to ARK, Sam was a business development intern at Graphiq, a knowledge graph and visualization company. Prior to Graphiq, Sam worked as a captain for Sail Caribbean. Sam graduated from the University of Pennsylvania where he studied Cognitive Science with a concentration in Computation and Cognition.
Sam has appeared on CNBC, BNN and Cheddar TV, and has been quoted in The Wall Street Journal, CNN Money, the Los Angeles Times, among other publications.
Intercalation: Hi Sam, it’s great to e-meet you! It’ll be great to kick off by learning about the journey that led you to your current work at ARK.
Sam Korus: Great to e-meet you too! I joined ARK in 2015 right after graduating from the University of Pennsylvania where I studied cognitive science with a focus on computation and cognition. When it came time to look for jobs, I knew I wanted it to be technology related, but the three main criteria I was looking for were:
A steep learning curve
A small company where I wouldn’t be a cog in a machine
A company filled with people I want to spend time with and learn from
I told that criteria to my siblings and I was fortunate that my sister flagged a recruiting email ARK sent to her college. I reached out to ARK, went through an in-depth interview process, and the rest is history.
Intercalation: The battery industry has been very vocal on impending raw material shortages for lithium-ion cells. How do you factor these supply chain risks into EV growth projections, and will the supply-demand disconnect be as severe as anticipated?
Sam: We have done a fair amount of modelling on both the supply and demand side for electric vehicle batteries. All of that research is on our adviser website ark-invest.com, which I welcome everyone to check out. There likely shouldn’t be any constraint from a pure raw material perspective. That is, there’s plenty of lithium in the ground. Where a constraint could emerge is in the extraction and processing of the raw materials. Having said that, we have seen several boom/bust cycles dealing with commodities and CEOs like Elon Musk have been signalling to companies that they should ramp production.
Intercalation: What are some of the trends you are paying attention to in the energy storage market? How do you see emerging technologies like solid-state or lithium-sulfur fitting in with the learning rates of conventional lithium-ion across EV and non-EV applications?
Sam: There are so many exciting things happening with energy storage today. That ranges from exciting end use cases like micromobility, eVTOLs/aviation, Bitcoin and energy storage, to the batteries and chemistries themselves like you mentioned. I think an important question to ask with “breakthrough” chemistries is: what does the market look like when that battery gets to scale? The history of lithium-ion batteries is steady incremental improvement. When a solid-state battery gets to scale what is it competing against? Often new technologies gain traction by opening up a new market. Perhaps better energy density batteries open up aviation use cases or VR/AR rather than go head to head with EV batteries right away.
Intercalation: We really enjoyed your seminar on Wright’s law at the Battery Modelling Webinar Series. We’d love to learn more about your approach towards understanding how diverse industries like energy storage, automation, and space exploration will scale into the future.
Sam: Wow, this could be a very long answer. A similarity between all these industries is that there are technologically driven cost declines that are moving us across demand tipping points. In energy storage, it’s the battery cost decline and EVs reaching price parity with gas-powered cars. In automation, it’s robot cost declines and AI making it so small batch manufacturers can automate economically. In space, it’s reusable rockets, satellites, and antennas are all coming down in cost making LEO constellations economic. So broadly speaking the approach is: determine if there are cost declines taking place and if so what is it, evaluate unit economics to determine where a demand tipping point may be, then look at the price elasticity of demand and see what the market could grow to/think about new possible markets.
Intercalation: Finally, what do you do to recharge your personal batteries?
Sam: Working out in the morning energizes me for the day, and then I always get a boost from spending time with family and friends.
Intercalation: Thank you for your time and insights, Sam!
Sam: Thank you! It’s amazing how the battery community has evolved and you’re helping build the community even more.
🌞 As always, thanks for reading!
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