StorEn is conducting a Regulation A+ offering. Shares are priced at just $6 apiece, but the pre-money valuation for the firm is $40.4 million. That’s awfully high for a business with marginal revenue. StorEn will need to see significant success in order for investors to see decent returns at that valuation.

The global battery market is significant in size. According to one source, it was worth $108.4 billion in 2019. This shows how much upside potential StorEn has, but the actual space the firm is playing in is much smaller at this time. One source we found pegged the market at $230.2 million in 2018. By this year, it should be worth $537.9 million, and with an annualized growth rate of 32.7%, it should climb to $946.3 million by 2023. A second source echoes this sentiment, with a forecast for the industry to expand from $218.7 million in 2018 to $1.9 billion by 2026. This works out to an annualized growth rate of 31.1%. 

Not all forecasts see the market staying this small though. One source we looked up does believe that in 2020 the market was worth just $234.9 million. However, its forecast is for the industry to grow to $4.8 billion by 2027. That works out to an annualized growth rate of 53.9%. In this case, the source estimates that China will be a huge driver of growth for the industry. This would make sense given the country’s size and gradual transition away from fossil fuels. However, it is important to note that much of this market growth depends on vanadium batteries gaining popularity and growing in use. A market with high growth potential within a developing technology will naturally attract many competitors. And those competitors may not always be directly adjacent — zinc-bromine batteries are also being proposed as a long-term energy storage solution, much like vanadium batteries. StorEn will need to stay ahead of other companies in order to secure a healthy market share for itself. 

The team at StorEn really centers around two key individuals. The first of these is Carlo Brovero, StorEn’s founder, CEO, and Director. Prior to starting the business, Brovero worked for iVis Technologies Spa. There, he was employed as an International Sales and Marketing Director. While there, he grew the company’s sales territories. He did this both directly and indirectly, the latter through distributors. Some experience in sales and marketing is definitely important for any executive to have. Prior to his time at iVis, Brovero was a Director at Accretive International. And before that, he was a Director of Corporate Finance at Market Capital. His experience there — working on multiple M&A and IPO transactions — is probably the most relevant for the purpose of his role today. Understanding those niche issues will go a long way toward helping Brovero to structure future transactions in a way that benefits existing shareholders.

The other key individual on the StorEn team is Angelo D’Anzi. He is presently the co-founder of the firm, as well as its CTO and Director. In the past, D’Anzi served as the co-founder and CTO of Arco FC, a fuel cell manufacturer that was ultimately sold off. Before that, he served as the founder and CEO of Proxhima Srl, a vanadium redox battery company. And prior to his role there, he was the CEO of Selmar Srl. There, he worked on engineering-to-order services. Customers included companies in the energy and composite materials spaces. All of these roles are highly relevant to StorEn’s existing business model and it’s likely that D’Anzi is a nearly irreplaceable part of the business.

StorEn is a difficult company to place when it comes to differentiation. Broadly speaking, there’s not much that’s special about it. One list we found of redox flow energy storage system companies included 52 players on it. That list is likely non-exhaustive. Players in the US that focus on this market include UniEnergy Technologies, Vionx, and Invinity Energy Systems. StorEn’s patents certainly do provide some degree of protection and, therefore, differentiation. But it would be a mistake to say that its competitors lack patents as well. Perhaps the greatest differentiator for StorEn is its emphasis on residential and telecom tower backup clients. This is a step removed from the grid-scale projects the majority of the industry is focused on.

Performance is a tricky thing. On one hand, StorEn’s performance has been exceptional. The company’s patents, for instance, are a sign of great traction. The firm also boasts an exclusive 20-year supply agreement with Multicom for all of the vanadium that comes from two of its Australian mines. One of Multicom’s subsidiaries, Freedom Energy, has agreed to assemble batteries in Australia. It will also engage in distribution in the Asia/Pacific region on behalf of StorEn. Given the upside posed by China, this could be a very lucrative deal in the long run. Multicom has also placed an order for $500,000 worth of batteries, which is also a great sign of traction.

Up to this point, though, there have been other areas where the company has lacked. Revenue in both 2018 and 2019 was $0. The firm lost $640,813 in 2018 and saw a similar loss of $620,848 in 2019. Its operating cash outflows during this period worsened from $496,686 to $588,775. In the first six months of 2020, management recorded revenue of $100,000 for the sale of one vanadium battery unit. But it remains to be seen whether StorEn can ramp up sales enough to approach profitability.

On the bearish side of things, there are a lot of factors for investors to take into consideration. For starters, the company’s valuation looks lofty. This is especially true when you consider the low amount of sales and the low value of its purchase order from Multicom. The patents do add value, but it’s difficult to see if it’s enough to justify the price management is asking for. Differentiation is a tough spot for the firm since there are plenty of other players in the space. Add in the risks associated with zinc-bromine and the continued and growing market of lithium, and the business is facing competition from all sides. While the broader battery market is large, the flow battery segment of it is still very small. This limits the firm’s near-term upside.

While there are bearish issues regarding the business, there are bullish ones too. For instance, while the market for the company is small, it does appear to be growing rapidly. StorEn also has some very encouraging early traction — particularly in its relationship with Multicom. Despite net losses and cash outflows, as of the end of the first half of its 2020 fiscal year, the company only had gross debt of $160,586 on its books, with $100,000 of that being convertible too. For a company that’s operating in manufacturing expensive technology, that is a low amount of debt. Management also seems to be qualified for their posts, primarily D’Anzi. Throw in its patents and trademarks — as well as the clear advantage that vanadium has over lithium — and there’s plenty for investors to find exciting about this prospect.

Taking all things together, it’s clear that StorEn is an interesting firm with attractive upside potential. If its technology is as good as management says it is, the business could see tremendous growth in the years ahead. Some risks most certainly do exist, and investors should weigh those clearly before they invest. But even taking those into consideration, StorEn Technologies exhibits strengths that clearly make it a Deal to Watch.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Daniel Jones.