Startup Series: Swift Solar

Apr 1

This week's guest is Joel Jean, Co-Founder & CEO of Swift Solar.

Before joining Swift, Joel served as Executive Director of the Tata-MIT GridEdge Solar research program, which focuses on scale-up of new solar photovoltaic technologies for India and other developing countries. He developed ultra-lightweight, flexible solar cells that the 2017 Katerva Award recognized, and he was named a Forbes 30 Under 30 Fellow in Energy.

Swift Solar is designing and manufacturing lightweight solar panels and cheaper, more efficient systems than existing products. The company is working on a new kind of technology called Perovskites. Perovskite uses a crystal structure that allows you to tune the material. Swift Solar is tuning Perovskite panels to absorb different parts of the solar spectrum. The team stacks two Perovskites on top of each other; the top panel absorbs blue and high-energy light, while the bottom panel absorbs red and near-infrared light. Swift Solar's goal is to optimize different parts of the solar spectrum to make a more efficient solar cell. The company was founded in 2017 by leading perovskite scientists from Stanford, MIT, Cambridge, Oxford, and the National Renewable Energy Laboratory.

In this episode, Joel explains how the Perovskite technology works and where it fits in the renewable energy and solar landscapes. We deep dive into Swift Solar's incorporation, the research behind the technology, and the company's progress to date. Joel also touches on funding in the solar energy space, why LPs are hesitant to invest in it, and how the sector has evolved since the early 2000s. Joel is a great guest with a wealth of knowledge on solar and Perovskite technology. This is a fantastic episode for those looking to double click on new solar technologies.

Enjoy the show!

You can find me on Twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.

Episode recorded February 12th, 2021.

In Today's episode, we cover:

An overview of Swift Solar and what the company is trying to achieve
How Swift Solar transitioned from research into a business
An overview perovskite, where it fits in the solar landscape, and how it’s different than other dominant materials
How the solar landscape fits in the broader renewables and clean energy transition
Sources of capital for businesses like Swift Solar

Jason Jacobs: Hey, everyone. Jason here. I am the My Climate Journey Show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey, or MCJ as we call it, membership option. Membership came to be because there were a bunch o' people that were, uh, listenin' to the show that weren't just looking for education, but they were longing for a peer group as well. So we set up a Slack Community for those people that's now mushroomed into more than 1,300 members. There is an application to become a member. It's not an exclusive thing.
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Hello, everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change, and try to figure out how people like you and I can help.
Today's guest is Joel Jean, CEO and co-founder of Swift Solar. Swift Solar was founded in 2017 by leading perovskite scientists from Stanford, MIT, Cambridge, Oxford, and the National Renewable Energy Laboratory. They believe that solar energy has vast untapped potential to reduce inequity and protect planetary health in the face of global climate change, and they also believe that today's solar technology is good, but not good enough. They believe that what we build today should serve humanity forever, and together they're working to make that happen.
Now, perovskite was new to me, but I've been hearing a lot about it and wanted to understand it better, understand where it fits in the solar landscape, understand where the solar landscape fits in the broader renewables and clean energy transition, and also, of course, Swift Solar's lean, their progress to date, what's coming next, their long-vision, and if they're wildly successful, what they've achieved.
Well, friends, that's exactly what we cover in this episode, so without further ado, Joel, welcome to the show.
Joel Jean: [laughs] Thanks, Jason. It's great to be here.
Jason Jacobs: Well, I'm psyched to have you. I have to say, it's a little intimidating because this is a subject that I am ill-equipped to talk about, but, obviously, solar is important and to the extent that perovskites can be disruptive and help solar evolve and play a more meaningful role faster, that feels important.
And I've gotten to know you a bit, and you're a smart guy, who I know is climate-motivated, and so, hey, let's take 45 minutes or an hour and talk about Swift Solar.
Joel Jean: That sounds awesome.
Jason Jacobs: So thanks for agreeing to come on the show. The way we typically start is just kind of take things from the top. So maybe just talk about Swift Solar and what it is that the company is trying to do.
Joel Jean: I think I have to start with climate action. I think that that maybe makes a lotta sense given your audience. I mean, I think there's a lot of perception here that perhaps in this community, and at large, that solar's kind of solved. There's a lot of discussion about how we have cheap solar, we have cheap wind, batteries are getting solved. Maybe these technologies are solved so we should instead put all of our efforts into Ag and cement and steel and aviation.
I mean, I think that's- a lot of that is very true. I mean, I can't deny that solar's come a long way, and it's at a really good place for climate, and I think that's a great thing. So even though that it is the dominant narrative and it- it's not great for [inaudible 00:04:29] [laughs] or things like fundraising, I think it's great for the world.
And I think the flip side of that is that if we don't think that climate's gonna be solved in the next, to say, 10 years, and that's one example, or if we do rely on solar to solve most of the climate problem, let's say, like, 20 to 50% of electrification or de-carbonization in the power system, power sector, I do think it's worth continuing to work on better and better solar. A new solar technology with better fundamentals I think still has a lot of potential to contribute to climate here.
So that's just kind of a perspective here where, even if silicon is good enough for today, if you're looking at all these low-carbon pathways and integrative assessment models and power-system models, they're all relying on solar by mid-century for 20, 30, 40% of electricity, and I think it'd be a big mistake to stop innovating, because if you're talkin' about even the possibility of reducing the cost of solar by, say, 10, 20, 30%, which is possible with more efficient PV and new module formats, that's... A cent or two per kilowatt hours isn't a lot, but at these scales, it's- you're talkin' about hundreds of billions of dollars a year in value.
So I guess that's kinda like the high-level picture of why I think solar still matters for climate, even if it's not on the critical path right now.
Jason Jacobs: And I know we still have to get to Swift Solar and what you're doing, but just one kinda follow-on question there is... I mean, you say it's on a good path and that that narrative is true, but that it would be better to keep innovating. What is it about where it is today that will hold it back from getting to where it needs to go? Or, I guess said another way, what could be changed about solar to accelerate its adoption curve?
Joel Jean: I think it comes down to the cost structure for solar. So, if you look at the cost structure, especially in the US, but in a lotta places, the module, the solar panels themselves, are no longer the majority of the cost. So in the US, in, say, a rooftop- residential rooftop system, the panel is about 30 cents a watt, 40 cents a watt, and the full system's over $2.00 a watt. So 80-plus percent comes from balance of system: all the other stuff, the racking, the wiring, the permitting, interconnection, installation labor, all these other things. And if you kind of look at that, you might ask, "Why are we even working on the technology? We should solve all those things." And I think [inaudible 00:06:46], there's a lot of value in solving those things, the soft costs, and a lot of that is things that policy can help with.
But on the- the other side of that is that you actually get a lotta leverage in solving that balance of system cost problem by having a more efficient panel. So if you have a more efficient panel, you get more watts out per square meter. You put up the same number of panels, you get more watts, so that actually reduces the dollars per watt cost of everything else. So technology there still has leverage, if that makes sense.
Jason Jacobs: Which aspect of that are you trying to tackle with the company?
Joel Jean: With Swift, we're working on a new kinda technology, a new kind of this photovoltaic material and device structure. So the material's called perovskites, so perovskites just refer to the general crystal structure.
The original perovskite is a mineral found by this Russian mineralogist called Lev Perovski, so perovskite, but it's only really been used recently for solar applications 'cause it's more of a man-made kind of perovskite.
So this material lets you make a very efficient solar cell, and in particular, by tuning the material... You can actually tune the composition pretty l- easily just by swapping out some of the ions. So perovskites have this ABX 3 crystal structure so you could switch out the A, you could switch out the B, you could switch out the X, and each of those allows you to tune things like what color of light that material absorbs.
So what we do is actually tune the perovskite, so we make two different perovskites, stacked 'em on top of each other, and each one absorbs different parts of the solar spectrum. So the top perovskite is a wide-band gap we call it, so it absorbs more, like, blue and a high-energy light. And then the bottom absorbs more red and near-infrared.
And because you're optimizing for different parts of the solar spectrum with these two cells, you do end up with a more efficient cell. So you're pushing the efficiency limit up from about 30%, theoretically, 29 and a half for silicon, to about 45. And that's a big theoretical jump, certainly, and the practical performance kinda follows along.
Jason Jacobs: So what is the dominant material that's used today in solar? And also, is it consistent from residential to large-scale commercial and- or utility, even, and everything in between? Or does it depend?
Joel Jean: So today, about 95% of the market is silicon, crystalline silicon, and about two-thirds of that comes out of China. Silicon is, certainly, the dominant technology. It's been around since Bell Labs in the 1950s, been developed over many, many years, lot of government support, a lot of investment, private investment. And that's- It's really gotten to this point where silicon is just considered kind of the standard.
And, certainly, there are thin film companies that have been somewhat successful. So First Solar's probably the most successful example of a thin film company. They used Cadmium Telluride, which is a very stable and, I think, good photovoltaic material. And they've been building their technology for the last 20, 25 years and turning that into a good alternative silicon, in particular in utility scale kind of applications. They do very well in higher temperatures, so you can put 'em out in the desert and have higher energy yield, kilowatt hours per kilowatt installed, than silicon. But it's still a small fraction of the market.
Jason Jacobs: If you asked experts, and I guess it depends on where these experts sit, but let's say the senior folks from the utilities, or maybe from the project developers that are building these big commercial-grade solar farms, or things like that. If you ask them if silicon will continue to be dominant in five years, 10 years, 20 years, what would they say?
Joel Jean: Great question. I think it'd be great to talk to a lot more of those. The ones I have talked to, I think would say that in, certainly, the next five or 10 years they're gonna be dominant, and usually these folks aren't looking beyond that. [laughs] They're looking to work and how to procure modules that are bankable today, or in the next two to three years.
So I haven't really talked to anyone who's saying, "Can I look out 10, 15 years and replace silicon with a new technology?" Certainly, they hope there's more innovation. They wanna see it get more efficient, they wanna see it get easier to install, but it's more of an incremental kind of development.
Jason Jacobs: And I read that this came out of some work that you and your co-founders were doing during your PhDs. What was the initial impetus to pick this area for investigation? And how did you come upon the approach to formulate your research?
Joel Jean: I don't wanna make it sound like it's we're the only ones who do this. It's a huge research community around the world, so I have a lotta people working on this in the academic community, and many start-ups and companies working on it now, too.
So, certainly, we're one of many. I do think that many of my co-founders were pioneers in this space, so they started working on it back in about 2013 or so.
Jason Jacobs: And this space being w- perovskites? Or-
Joel Jean: Perovskites, yeah.
Jason Jacobs: Okay.
Joel Jean: Are you asking about perovskites or a kind of solar, more broadly?
Jason Jacobs: I'm actually just asking about the research that you and your co-founders did that led to the formation of the company.
Joel Jean: Okay, yeah. A little more specific. So yeah, I guess... We have six co-founders, and my five co-founders did PhDs and Postdocs working on perovskite tandem technology, or perovskites in general, so a lot of this work was done at Oxford and at Stanford and UDub, and, ultimately, at NREL, and they're really pushing for this technology.
And two of my co-founders, Giles and Tomas, were the ones who first developed these all-perovskite tandems, so stacking two perovskite cells on top of each other. Another co-founder, Kevin, set the first world record for perovskites on silicon as a perovskite-silicon tandem, so another alternative product or technology type.
So they were doin' this kind of very, very good work on pioneering these high-efficiency tandem cells, and at MIT, I was doin' my PhD, and, uh, ultimately, leading a research program there working on very lightweight and flexible solar cells, and particularly looking at applications off-grid in India, so things like flexible, portable panels for solar water pumping in India, or for powering rickshaws in India, [laughs] things like that, sponsored by the Tata Trusts.
So I was focusing a lot on the markets thinking about sort of where the economics for solar were going. All of my co-founders were working deep on the technology and pushing that forward. We ended up coming together over Skype, over four different time zones in 2016, and started these conversations about where would a new technology like perovskites, which were kinda up-and-coming, be able to fit into the market? And I think it was really at that point that we realized that there was this scope for if you could get more efficient, potentially have different formats, like lightweight and flexible formats, and lower cost, that's kinda like the [laughs] Holy Grail. You can check all the boxes, and you do need to check all the boxes in solar to be competitive.
Jason Jacobs: So was there a light bulb moment where this transitioned from research to a company? Or was it a more gradual process than that?
Joel Jean: I think it was a very gradual process 'cause we spent the first two years really exploring... first years of coming together as a group, really just exploring the different options for what kind of technology you choose, what kind of manufacturing approaches you take, talking to customers, potential customers, and looking at where could you potentially deploy these things.
So it was really, I think, a learning process for all of us and really getting to know each other as a team, and I think that's been- that early work, having that freedom to continue to work in the academic setting, but then still be able to explore the commercial opportunities was really valuable. And I think we're really thankful to have had that opportunity working out of MIT, Stanford, UDub, NREL, and Cambridge, so all these different universities where we're able to do this.
Jason Jacobs: And so even if it was a gradual process, what were the things that you pieced together and learned over time that gave you the confidence that this needed to exist as a company?
Joel Jean: I'm not sure there were any fundamental insights, any, like, [laughs] "Damn," like, "That's what we need to do," kinda thing. I think we'd all been working and thinking about solar for, at that point, five-plus years, and I think you kind of gather a lot of these pieces, I think, that need to go into starting a company over, uh, time, even as a researcher, especially if you're kinda thinking ahead to where these technologies you work on have impact in the market. I think you do sorta gather that over time.
I think some of the key pieces for us were bringing this group together, deciding that we wanted to work together. I think the insights around customers, and specifically, what kind of... You could think of a million things to do with a solar panel, especially if you can make it lightweight or flexible, but most of them are probably not very good markets. They're either super custom or very low volumes or people aren't willin' to pay enough for it. It's just a commodity and not a high-value thing.
And maybe the most important is that in a lot of these places, silicon is gonna be just as good an option as a new technology. As a new company and a new technology, you're never gonna compete with silicon on dollars per watt out of the gate. You need to be a massive scale to do that, so a big part of our journey was really identifying what kinds of early markets really make sense for this kinda technology.
Jason Jacobs: And so what year did you actually incorporate the business?
Joel Jean: We incorporated in November 2017.
Jason Jacobs: Got it. And then, once the business was incorporated, was it pretty much just operating similarly to as you had been as a group when it was just research? Or did things start to change in terms of how you were going about it?
Joel Jean: Part of the impetus was actually because we had it... some investors were interested in putting in some money, so I think that we had to incorporate then. We also had a grant that was coming in that required that, so we were able to stay in the academic setting for another, I think, six to nine months working, kind of laying that ground work to spin out. And it was only in mid-2018, in the summer, when we actually all kinda came together at NREL to spin out the companies, to work full-time on it.
So yeah, I think that was a gradual transition as we got funding in, as we got the team together and had the logistics worked out.
Jason Jacobs: And so when you did step out and you had some funding and it was time to treat it like a company, was it at that point that you started investigating the best markets? And tell me a little bit about that process of evaluating markets, and then, either where you ended up or where you are in that exploration today.
Joel Jean: A lot of that first couple years actually before we incorporated was doing this kind of work, and I think we were lucky in the university settings to be able to do a lot of that exploration. Certainly, at multiple places we did these kind of customer-discovery programs where you spend a lotta time, you interview hundreds of customers and y- you have conversations about what are their needs? Right? You really focus on what is it that these customers are lookin' for, and can you help satisfy that with the technology or product or service.
So I think we had been doin' this all along, and it wasn't like we had a step change when we spun out. I think if anything we dug deeper into the technology at that point 'cause we could. We were all there in person. We could work together in- in the lab. I think the customer stuff has just been ongoing in the background, and especially with COVID last year, I think we're able to ramp that up even more.
So in terms of where we actually ended up, there's a set of markets that we think are very promising. So one of them is sort of aerospace, where you need a very, very lightweight product, maybe naturally, to keep something like a high-altitude UAV in the air for months at a time, or for satellites where you need very efficient, lightweight solar 'cause, obviously, you need to get out into space, so launch costs are high. So for all these kind of aerospace type applications, there's a very high value in having efficient, very lightweight solar. That I think is for one exciting area for us, and I could, certainly, talk about more if you're interested.
Jason Jacobs: Great. And what about the product itself? So where are you in terms of development, and where do you need to be when you actually feel like you'll be ready for wide-scale deployment? And how does that phasing work in between now and then?
Joel Jean: That actually reminds me... So I think a big part of this first couple years... Sorry to go back to your last question, but a lot of the- the development was actually mapping out that course to get to scale because it's...
I think one of the big stumbling blocks for the first generation of solar companies, aside from all the macro-issues in China and all those things, was not having that, like, kinda stepping stones to market. It was really like, "Oh, we have $100 million of VC money now. Our competitors do, too. We need to go and build that big factory." [laughs] And I think you've probably talked to a lot of investors who fell into that trap, and a lot of companies that fell into that trap.
China aside, I think that was one of the big issues in the first wave of solar companies in that you- if you scale up [inaudible 00:19:03] the factory before you're able to have the refined process in high-efficiency compelling product, with product market fit, I think you're gonna waste a lotta money. You're gonna be retooling your factory at a stage when it's very expensive to do so, on venture dollars. That was a lot of it, development early on.
[laughs] And in terms of our pathway or where we are on that stepping-stone approach, I think we're still early. We're still in the product development phase. We can make small mini-modules, things kind of on the 4- to 6-inch scale right now, and they're not as efficient as they are on the very small 1-inch or smaller scale that we would use for R&D. We still do a lot of development on these small, sub-centimeter square kind of areas, just because you can do a lot more iterations that way, and you waste a lot less material. So we still are in the R&D scale.
We have a 10,000-square foot facility what's mostly geared towards R&D, but actually for these, like, 4- to 6-inch mini-modules that I'm talkin' about, that actually can be our first product, and we're excited to actually deploy those with customers in the next six to 18 months, which is kind of our runway into our next round, and really prove out that there's a lot of demand for this. And then from there, we can start to scale to larger products, and also our- start to scale our manufacturing.
Jason Jacobs: And so when you're bringing a company like this to market, how do you think about grants versus equity capital versus project finance and first of its kind, and second and beyond, and all that kinda stuff? It's still a little fuzzy for me when I'm tryin' to piece together the best source of capital for businesses of this nature.
Joel Jean: It's a great question. I think it's still a little fuzzy for me, too. I wish there was a single answer. I think there are a few pieces to that. All of those things, I think, have a role to play.
Certainly, we had a kind of funny trajectory, I think, where we had, uh, some super angels we were lucky enough to run across who were excited about what we're doing and ready to back it. I think we've also had four government grants through a couple- the DOE and DOD and NSF, and I think those were- were very helpful as well, part of that as validation, and partly as actual capital to go and build.
And I think that challenge that we've seen with the government funding is that even though it's nominally geared towards developing the technology and kind of helping- I think, helping bring them into the market, what we found is the timeline is often very, very long. For when you apply, you maybe wait for six, nine months to get an answer, and then maybe another three to six months to negotiate the contract, and then finally the award starts. And then there's a lot of reporting and a lot of- just a lot of structure around that capital. And I think that, so far, for the amount of capital that we've come across, at least for perovskites, has been limiting.
So we've been very fortunate to have the outside capital, these super angels who are very flexible and have that longer v- view than a more traditional VC fund to kind of support that and be able to work flexibly with us.
Jason Jacobs: Now, do you think that when these investors are coming in, is it the financial opportunity that's driving them? Or is it the problem that you're solving? What do you think is motivating them to write these early checks?
Joel Jean: It's a bit of both. I mean, for the angels that we have, I think it's- a lot of it's around climate and the mission and the fact that if we are v- successful here and are able to make solar more affordable and more accessible broadly, I think that's a lot of value being created. And I think they do believe that that's gonna impact climate, it is gonna impact kind of the [laughs] bottom line of the company, and the path we've chosen does make it not a commodity product. And, certainly, the majority of our products would not be aiming for commodity solar, so I think that's kind of a way we've framed it so that it's not just purely about being altruistic. It's also building a strong business, and I think that's important for us and for our investors.
Similarly, we have other investors. We have s- a couple strategics actually in our seed round, and for them it's slightly different motivations. One of them is a Fortune 500 telecom company, and they wanna deploy lightweight, flexible solar on their products.
And then, another one is a major- one of the top 10 silicon PVs cell and module manufacturers, and their key into work on perovskite and silicon tandems, and kind of supplement their existing products. There's a lot of different motivations depending on kind of which set of investors we're looking at.
Jason Jacobs: From an impact standpoint, what does a success case look like if the company is successful beyond your wildest dreams? What have you achieved?
Joel Jean: I think if we're wildly successful, we would be out deploying many, many gigawatts of solar, and I think we'd be seeing very different approaches to deploying solar as well, compared to our typical shower door kind of modules today that bolt them to the roof.
And I think we'd be very excited to be able to see solar going everywhere, in many places where you wouldn't deploy solar today. So, I mean, kind of new formats of, for example, flexible shingles that are integrated into your roof, kind of a flexible version of Tesla's solar roof.
You could see it going into things like electric vehicles where you can have self-charging vehicles under the sun, where you actually can get a lot of miles out of it, and a lot of convenience and CO2 savings from not plugging in your electric vehicle.
You'd see solar all over trucks and buses and kind of all over the place where you might think that sunlight's not energy-dense enough, where it doesn't make sense to put solar indirectly, but there is actually a lot of value to the consumer in the end to having that.
And I think in the very end, the lowest cost solution is often gonna be the more traditional format because of the cost of flexible packaging if you wanna make a flexible kind of solar product. So right now our vision is that in the end we can go after a glass-based module, but just make it the most efficient and lowest-cost product out there. And I think that could have a major impact on emissions, on solar deployment, and on climate.
Jason Jacobs: And you mentioned that you have 12 or 18 months of runway. I think I heard that right, and correct me if I'm wrong, but what are the key milestones that you are driving towards as a company between now and then?
Joel Jean: A lot of them are around continuing to push the technology and manufacturing forward. I think the biggest piece is really de-risking the customer side, so showing that there's early customer demand for the kinda prototypes that we're gonna hand over to customers in the very short-term. Those are the set of milestones, like, customers coming in and saying, "Hey, this is really cool. We actually want to... If you can produce this with the kinda spec sheet that you believe you can, then we'll buy a lot of it."
And I think those kind of conditional purchase orders or commitment letters, things like that, to purchase, are gonna be really valuable for us and are the key milestones that we really need to hit, with all the R&D goin' on in the background.
Jason Jacobs: I don't know a lot about the silicon landscape, but I assume that there's some large players that are dominant in the market in terms of the silicon manufacturing. And if that's not the case, please correct me if I'm wrong. Or actually, even better, maybe talk a bit about that landscape. But my question, as well as just getting some more color on that landscape, is what is stopping those larger players from dominating perovskites as well?
Joel Jean: It's a great question. So first, I guess, the landscape of silicon PV, there's... Primarily, when we talk about silicon PV, it's gonna be the cell and module manufacturing. Similarly, there's upstream a lot of the processing of raw poly-silicon and turning that into wafers.
[inaudible 00:26:25] let's talk about kinda cell conversion and module manufacturing. And for that, there, certainly, are very, very large players. You've probably heard of many of them. They're kind of Trinas and Longis. Most of them are in China, to be frank.
So a lotta these big companies, yes, absolutely, they're interested in perovskites, and many of them, I think almost all the ones we've talked to, have looked at perovskites as the next step on their roadmap, or a [laughs] couple steps down the line.
A lot of it's because, if you look at silicon's roadmap, the best cells today are 26, 26-and-a-half percent efficient, and manufacturing may be more like 25, 24, 25, and the modules today are around 20. So they're kind of seeing, yeah, there's some headroom to improve, make it more efficient, maybe more affordable, but five years out, they're kinda looking at the roadmaps and saying, "What's next?"
And actually on the industry road map, the ITRPV, International Technology Roadmap for PVs, they're actually showing tandems in that three to five-plus year range as a growing part of the market. So [laughs] I think they do see that as an important piece, but it's, rather than kinda cannibalizing their existing market, I think a lot of it's gonna be supplementing it with perovskite-silicon tandems, and I think, certainly, it is a risk. It's hard to tell what's going on in China.
There is a lot of private capital going into perovskites, both the perovskite start-ups and big companies. But I think there's an opportunity if you kind of chart your market pathway in a more unique way, I think not going head-on against silicon for rooftops or utility-scale PV, that you can build the product to a point where you can be a sustainable and competitive company. I think that's the only way, honestly, that you can be a sustainable and competitive PV company today. You can't just go run into that silicon wall.
Jason Jacobs: And the larger players, historically, as they've moved into new areas or new materials, such as the Swift Solar approach, do they tend to do it by building or by acquisition?
Joel Jean: Sorry, when new players tend to go into...
Jason Jacobs: When the big players... So let's say, if the big players were gonna go from silicon into perovskites, or silicon into whatever, but some kind of new line or big step forward or "five-years-out-what's-next" kinda thing, do these companies tend to be acquisitive or do they tend to have a bias towards things that they build themselves?
Joel Jean: That's really interesting because I think in the silicon world, there's been very little acquisition. I think the technology has actually... If you look at a panel in 1985, it [laughs] actually looks very similar to a panel today.
And, certainly, there's a lot of incremental innovation. I think a lot of development on increasing wafer sizes, making the cells more efficient using less material, making the module overall more robust, a lot of kind of stepwise innovations. But I think there hasn't been a lot of kind of e- revolutionary innovation, whether by acquisition or by internal development. So I think that's kinda like the baseline where the industry is today.
I think part of the challenge for acquisitions within the industry is that the margins are very, very small. So if you're looking at traditional markets, you're talkin' about gross margins that are [laughs]... Well, let's say, in the few tens, maybe the low tens percent, then operating margins have historically been sometimes negative, sometimes 10%. I mean, it kind of varies a lot.
So it is a very commodity market, and I think that's been one of the challenges for existing companies, even with huge balance sheets, to go and either acquire new companies or spend a lot of money on R&D.
Jason Jacobs: And I think what I'm hearing from you, and, again, correct me if I'm misunderstanding or misstating, but is that the silicon is kinda where it's at today, and even, say, in the medium-term, like the next five years, but as you get further out, there's gonna be kind of a local maxima, and that in order to continue to get solar down the cost curve and to keep innovating new materials, new processes, like, there needs to be... New in that perovskites are a promising candidate for that, and that you'll stay away from a strategy standpoint, from the commodity categories, and from the ones that are a direct threat to large players in the silicon world, and pick off these kind of niche-y, high-value categories where there's more room for differentiation. Is that correct?
Joel Jean: I think that's very fair, especially in the short-term. We do think long-term there's value in going directly after these large markets, but I think the initial play, yes, definitely is not going head-on.
Jason Jacobs: So given that it sounds like the big players are putting some money into this area, and that there's a number of smaller players competing, I guess the question I'd be irresponsible if I didn't ask is for, whether I'm a potential investor or a potential partner or potential customer, whoever, why should I believe that Swift Solar is gonna win?
Joel Jean: There's a few pieces we think are important here. We do have, we believe, one of the leading technical teams in the world working on perovskites, and we've had a history of innovating in this space, and I think it is innovation m- on the technology and on the manufacturing that is gonna really allow this technology to succeed, if it does succeed in the end. So, I think, number one is the team.
And I think second one is the technology, the choice. We are the only company working on all perovskite tandems focusing on putting perovskites on top of perovskites, and I think that is the ultimate kind of best-of-all-worlds scenario. If you can make that work, you're talking about more efficient, lightweight, flexible, more affordable. You kinda check all the boxes with this technology that you wouldn't be able to with even a perovskite-on-silicon kind of tandem approach. And we were the inventors of this technology from the start, and I think have been pushing it forward, so we have a technology leadership role there, too.
Jason Jacobs: Is there an IP angle there as well?
Joel Jean: Certainly, yeah. There [laughs] is an IP position there, but I think a lot of it's also just trade secrets and just kind of innovating on all pieces of the cell stack and on manufacturing as well. So a lot of those things are not gonna be patented, but are kind of in-house IP.
I think maybe one other side is this market strategy, and I think that's very important. You have to recognize the history. You have to recognize the incumbents and be smart about that. And I think we've been lucky enough to have very experienced people advising us and being able to kind of observe and learn from the market for a long time. And I think that's a critical piece of building a successful solar company.
Jason Jacobs: And can you just talk a bit both about the fundraising history of the company, but also if you do execute in the next 12 or 18 months and you raise an optimal follow-on round, which I would envision would be required, what does that round look like in terms of size and also source of capital?
Joel Jean: So far we've raised about 16 million in equity financing, and about a million of grant money as well. So we've done a Series Seed and a Seed II round. We just announced the Seed II, actually, last month of around nine and a half million, and that's what allows us to grow the team and actually prove out kind of this last step before we actually go into some more serious manufacturing, some more serious pilot manufacturing.
So I think for- as we look forward to this next round, it is gonna be a bigger check size that we're looking for, a bigger chunk of capital to actually go and build out a first real pilot manufacturing line. And so, I mean, you can kind of imagine in the 20 million kind of range for a Series A, plus or minus a few, 5 or 10 million, depending on what kind of other capital's out there.
And I think the ideal source... I mean, I wouldn't say there's any single ideal source. I think so far we've had about a million and a half out of our total raised for VCs, and some from strategics, and then the rest, the majority is from angels and super angels so far.
So I think diversifying that a bit, kind of getting more traditional venture support now that we're far enough along that I think we are more venture-backable in that sense, I think would be very exciting. And having maybe more strategics involved as well could be exciting.
Jason Jacobs: But it sounds like in your mind that 20 million, or whatever the final number ends up being, would be equity capital?
Joel Jean: I think it would be primarily equity. We are hoping that with the support of the federal government these days, there could be a lot of support for US manufacturing, and that could be one way to help fund a first factory. Certainly, we wouldn't go and... it'd be difficult to raise private debt for such a thing right now.
Jason Jacobs: I'm curious. I mean, this is not necessarily a Swift Solar question, but a question I've just been kind of poking on in general so I'm really excited to ask it to you 'cause this is a great data point here. So this type of first-of-its-kind, 20 million, is the decision for equity capital, is it because it's the best of what's available, but it's really not optimal, and there would be a better source, but that source doesn't exist? Or is it that equity actually does the job just fine and there's no gap?
Joel Jean: I think you need to ask me that in two years. [laughs] But I- I do think that there are some major benefits of equity. It is very flexible, and I think that's important when you're at a stage still kind of developing the technologies.
As a counter-example, if you look at something like equipment financing, and you were to finance equipment with debt, you do need to get the debt provider's actual approval for this equipment. They need to make sure that they can have a resell market in case you end up screwing it up. [laughs] So there's more constraints in- on timeline and on what you can actually do with that capital. Uh, equity is much more flexible.
Obviously, it's [inaudible 00:35:39] its- there are limits to what you wanna do with equity, so I think if there were kind of a risky debt alternative or something like that, maybe that would be ideal. Could be a loan guarantee that's more tuned for smaller, not Tesla $500 million kind of factories, but smaller factories from the government, that would be really good. But, yeah, I don't know what's the right answer right now, to be honest.
Jason Jacobs: If you could wave your magic wand and change one thing that is outside of the scope of your or Swift Solar's control that would most accelerate your progress as a company, what would it be? And how would you change it?
Joel Jean: Well, I think coming at this from a founder's perspective, it's- one maybe silly thing is wiping away Solyndra. [laughs] The history of Cleantech 1.0 where thin film solar has become a dirty word. And I think that's really been a barrier to fund-raising.
And, honestly, like, of course, you need to have the right market strategy, you need to find customers and product/market fit, but I think even with all that, there's a risk for a solar company comin' along and not being able to raise that next round, and I think a lot of that's perception. So I've literally been told by multiple VCs that "Our LPs aren't gonna let us invest in solar after Solyndra." So it's a sort of perspective, I think, a- and a lotta people think that, but aren't saying it.
Jason Jacobs: So, I mean, here's your chance to kinda clear the air. I mean, what's your assessment of why Solyndra failed, and why is this time different?
Joel Jean: So I think it's not just Solyndra. Sorry, a- just to be a little bit broader. I don't wanna singularly call them out. There was a whole wave, a lotta capital flowing in.
And I think there's a lotta reasons why it's different this time. I think the first time around, what we saw was a lot of these companies ran into some issues. I think in terms of the timing, it was just really bad. At the time, there was a big peak in poly-silicon prices, and people looked at the price of silicon modules and thought that it was gonna level out and performance was gonna level out, but it turned out it didn't. And a lotta people tried to compete with silicon directly and scaled up too fast, as we already talked about, and ended up, because of that, running out of money.
I think from "what's different this time" perspective, I think that questions of timing, I think it's a fundamentally just different world in 2020 versus 2010. There's a lot more momentum. And climate change is, you've seen, and, of course, been a part of building, we know where China stands. Fundamentally, we know kind of instead of being in this weird place where China's just starting to get its industry off the ground, and it may put billions of dollars into subsidies or it may not, which was 10 or 15 years ago. Today we know China's gonna support downstream markets, gonna support manufacturing, and that's just how the world is. You have to work around that.
I think governments are more aware that we need to have domestic manufacturing and that energy is strategic and important for the country. And I think having things like SPACs as a [inaudible 00:38:24] access strategy, for [laughs] better or for worse, I think it is a new pathway for growth capital and exits, which wasn't really there in the first wave.
So, like, all of those kind of macro things are helpful, and I think being able to learn from all the challenges and these kinda strategic market challenges of the first wave of companies is also a big differentiator this time around.
Jason Jacobs: So speaking to the listeners for a moment, for anyone that's listening and excited about what you're doing, where do you need help, and what kinds of people do you wanna hear from?
Joel Jean: I think that there's a lot of people we'd love to hear from. I think number one would be potential customers, people who're excited about integrating solar into whatever it is they're building.
But I think things like electric vehicles, electric trucks and buses, and drones, if you're thinkin' about solar, there's higher efficiency and lighter weight solar comin' along, so I think that's something where we'd love to talk to people who are developing those kind of products.
Certainly, maybe on higher end, we are thinking about business development and kind of bringing it... Right now, we have a team of 18 people, all technical R&D kinda folks, except for me, doing, so right now a lot of it makes sense. We're trying to stay lean and do a lot of product development, but we would love to bring in more of kinda business talent and ability to go and actually connect with customers and sell somewhere directly.
So I think those are maybe two big pieces. And, certainly, funding, if anyone's interested in investing.
Jason Jacobs: Great. And is there anything I didn't ask that I should have, or any parting words for listeners?
Joel Jean: No, I think you're doing great things. Just glad to be here and be able to support it. Thank you very much.
Jason Jacobs: Well, I'm psyched to finally make this happen, Joel, and I learned a lot about Swift Solar and about perovskites, and, um, I'm gonna have to keep learning more, but this was a pretty action-packed 45 minutes here. So thanks so much for coming on the show, and best of luck to you and to the whole Swift Solar team.
Joel Jean: Thanks, Jason. Really appreciate it.
Jason Jacobs: Hey, everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is .co, not .com. Some day we'll get the .com, but right now, .co. You can also find me on Twitter @jjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear.
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