Over the last few years, America’s shift towards clean energy and electric vehicles has birthed a new region dotted with scores of high-tech manufacturing facilities. Legislation and business incentives have turbocharged the development of the country’s new economic powerhouse: the Battery Belt. The need for domestically-sourced rechargeable batteries is causing the Battery Belt to become the epicenter of the clean energy transition.

Batteries 101

The world is going through a renewable energy revolution. The switch from fossil fuels to clean energy through electrification has taken hold of policy and business initiatives. Billions of dollars are pouring into the development of transportation and energy generation and storage, two mega-industries whose decarbonization will have a significant impact on slowing climate change.

The increasing demand for electrification has made batteries the most important technological advancement in the pursuit of net-zero emissions. The most crucial systems rely on lithium-ion batteries due to their superior energy density and rechargeability. Lithium-ion batteries work by releasing positively charged lithium ions from a negatively charged anode which is carried via an electrolyte through a separator to a positively charged cathode, often made of critical elements like cobalt and nickel. This creates free electrons in the anode and a charge at the positive current collector which causes an electrical current to flow through a circuit, powering a device. When charging, the ions flow in the opposite direction, resupplying the battery for its next use.

Lithium-ion batteries are ubiquitous and found in mobile phones, computers, and notably electric vehicles (EVs). The World Economic Forum predicts demand for lithium-ion batteries for EV and storage applications to grow to 9,300 GWh by 2030, 17 times the demand from 2010. This increase is driven by consumer demand for EVs and the goals of countries and corporations to achieve net zero emissions. China currently commands the EV battery market, making up 56% of the global market. A single Chinese firm, CATL, produces one-third of the world’s total supply.

Batteries are also used for mass energy storage of renewable-powered grids. Solar and wind energy are not always reliable as they both depend on specific natural factors to capture energy. This can lead to an inability to service energy demand, especially at night or when the wind is not blowing. Large-scale battery systems can capture energy during low demand and release it onto the grid when needed.

Rechargeable lithium-ion batteries are clearly important to further America’s shift towards a sustainable future, and given China’s domination of the supply chain, the government has taken notice.

Legislation Driving Change

In 2022, President Biden passed the Inflation Reduction Act (IRA) which prioritizes the push for a “Made in the USA” supply chain for critical materials. The Bill includes a $369B earmark for energy security and climate change spending over the next 10 years. Included in the provisions is a revised $7,500 tax credit for consumers that only applies to EV manufacturers that have a portion of their critical battery materials extracted or processed in the U.S. or by a free trade partner. The previous EV tax credit did not have a domestic battery sourcing requirement. The threshold for eligibility will be 40% of materials sourced in the U.S. in 2024 and 80% by 2026. With the goal of half of all new car sales being EVs by 2030, there is a coordinated effort by the government and automakers to invest in and develop a domestic battery supply chain.

Since 2021, more than 15 lithium-ion battery factories have been announced. These gigafactories are all in a region newly dubbed the Battery Belt, a stretch of land spanning from Michigan to Georgia through most of Appalachia. Not coincidentally, many of the major automakers have manufacturing facilities in this part of the country, so having battery factories nearby simplifies an already complex automotive supply chain. Planned investment from the IRA to support these factories and ensure the supply of EV batteries is expected to be north of $40B.

The push for electric vehicles is further supported by the recent passing of the Bipartisan Infrastructure Law which includes a $7.5B investment for a nationwide EV charging network and the CHIPS and Science Act which will onshore semiconductor manufacturing used in EVs. With this help from the government, the private sector is preparing to rapidly scale capacity and production of electric vehicle fleets.

Progress through Joint Ventures

The American auto industry has poured billions into new EV and battery manufacturing facilities over the last few years, and that investment is expected to increase given the federal tax credits of the IRA. To qualify for these benefits, U.S.-based auto companies are forming joint ventures with existing battery manufacturers to bring their capabilities and supply chain onshore.

Ford pivoted to EVs with the release of its Mustang Mach E and F-150 Lightning. To service high demand, the company is working to source raw materials, already sourcing 70% of its expected four-year run rate. Ford is further expected to spend up to $50B on its EV initiatives through 2026, and the IRA will help further these initiatives. For example, Ford is planning two battery factories in Kentucky via a joint partnership with South Korean firm SK Innovation. The facilities could be eligible for a $3B tax break.

General Motors meanwhile plans to spend $35B through 2025 on battery technology for their EVs. In December, the Department of Energy granted a $2.5B conditional loan for Ultium Cells, which is a joint venture between GM and LG Energy Solutions, another South Korean battery company. The loan will be used to finance the construction of three new lithium-ion battery facilities across the Battery Belt. Notably, the factories are set to create over 11,000 new jobs across Michigan, Ohio, and Tennessee, aligning government spending, corporate initiatives, local communities, and the United Auto Workers.

Progress also extends upstream to battery component manufacturers. Redwood Materials is investing $3.5B into a Nevada facility to process cathode and anodes, another process that is primarily done overseas. Redwood’s production of materials in the U.S. makes them eligible for a 10% tax credit under the IRA. It is worth noting that Redwood is also known for lithium-ion battery recycling where discarded batteries can be stripped of their components and refabricated into new ones. Battery recyclers are expected to be critical stakeholders in the circular clean energy value chain.

The Market Opportunity

Venture capital and growth equity investors are no strangers to battery technology companies. According to TechCrunch and PitchBook, the last decade has seen 1,700 battery deals worth nearly $42B. With legislative tailwinds and a renewed commercial interest in innovative battery technologies, venture investment in particular is picking up. EV battery startups raised $3.6B across 26 deals in 2021. Chinese battery cell manufacturer Svolt raised $3B, but even subtracting that amount from the total leaves a total investment amount nearly triple that of 2020.

Global Battery Tech Funding

The landscape around battery investing is also changing alongside the technology. With evolving ecosystems, deal flow is increasing into areas such as battery design, supply chain management, and charging capabilities, not just manufacturing or recycling processes. That isn’t to say these areas have not continued to receive funding, however. In 2022, Northvolt, a lithium-ion manufacturer from Sweden raised $2.8B, Redwood Materials raised $750M, and Washington-based Group14 completed an oversubscribed $614M Series C.

Furthermore, investments are being made into new high-energy density solid-state batteries, instead of technology around lithium-ion batteries. However, such science-based investments have longer R&D cycles than companies with products ready for commercial use, a potential deterrent for shorter-term investors.

Despite a venture slowdown in 2022, climate tech (which battery tech is a subset of) has continued to receive the lion’s share of funding. Funding for climate tech companies representedmore than 25% of every venture dollar invested in 2022. With climate change showing no signs of slowing, investors are taking note and putting their money to work.

A New Future in a Non-obvious Place

The IRA has essentially shifted the incentives for electric vehicle adoption from the consumer to the manufacturer. The consumer still benefits from lower costs and an ability to skip the gas pump, while automakers are now federally rewarded for using materials in the U.S. This is why Ford and GM have expanded on their core capabilities and partnered with battery manufacturers to onshore while investors have sought out opportunities to take advantage of.

We can expect a race for control of domestic materials supply chains through more joint ventures and verticalization as automakers ensure their vehicles are American made. With this activity, new partnerships will form and new startups will emerge to address increasing demand. Investment dollars will continue to flow into the Battery Belt, developing the heartland that will be critical to America’s future success.

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This blog post is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security or instrument in or to participate in any strategy with any Fund. All figures are based on information provided by third-party sources and we cannot guarantee the accuracy or completeness thereof.

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Dig, baby, dig

Infrastructure and utilities systems across the world are failing. In recent years, aging infrastructure combined with increased storms and wildfires has led to a rise in utility-related disasters. According to a report coordinated by the U.S. Water Alliance and the American Society of Civil Engineers, the United States would need to increase its investment in water infrastructure by $2.2T over the next 20 years, or roughly $109B per year to close the water industry’s current investment gap.

In 2022, the combination of the American Rescue Plan Act (ARPA) and Infrastructure Investment and Jobs Act (IIJA) delivered a potent one-two punch for the water and sewer sectors, providing more than $350B in financial assistance, with water and sewer projects. According to the American Society of Civil Engineers and U.S. Army Corps of Engineers, the average age of our sewer and water pipes is 45 years old, with some cast-iron pipes more than a century old. A relevant example of the scale of this problem was recently featured in KQED-NPR: to fix the underground sewage pipes in just three neighborhoods of our sewer infrastructure in San Francisco will cost $600M.

Traditionally above-ground utilities, like power grids, are also fragile and vulnerable to man made threats. In 2021, a series of winter storms triggered a failure of the Texas power grid resulting in nearly $200B in damages and hundreds of deaths. The Texas grid is notoriously disconnected from the rest of the United States which made redirection of power from other states impossible. A few years earlier, equipment owned and operated by PG&E caused 2018’s Camp Wildfire in northern California, leading to many deaths and ultimately a multi-billion dollar settlement.

Power consumption in the U.S. is on pace to set a record in 2022 as the economy demands more electricity and average temperatures continue to rise. Back in November, the EIA projected power demand to hit 4.04T kWh by the end of the year — an all time high. This snapshot of the situation in the U.S. is not an outlier — Exxon projects power demand to grow 50% by 2050.

These trends of aging infrastructure, climate change, and global power reliance point towards the fact that utilities are fragile and vulnerable to natural and man-made threats. The solution? Move everything underground.

The value proposition of bringing power grids underground and overhauling aging water and sewer tunnels is clear. Utilities will be significantly more protected from climate-related disasters reducing the risk of failures like we saw in Texas.

But in order to bore new underground utility tunnels, the world needs new tools. Trenchless tunneling machines have been around for decades, and the industry struggles with the reality of installing critical infrastructure through disparate geologies. When construction teams encounter geologies they didn’t anticipate, especially geologies that are difficult to bore through like rocks, sands, and high water table soils, project costs skyrocket. The biggest risk in boring utility tunnels is encountering a nightmare geology you didn’t anticipate.

Put simply, in order to underground the world’s infrastructure, we need more flexible tools that can excavate all geologies. We need an integrated tunneling method that can bore through all geologies at a variety of diameters, especially the geologies that are a “nightmare” for traditional trenchless teams. For example, think of the greater Denver metroplex which is experiencing massive population growth. New communities are expanding into the Rocky Mountain range from the plains and the reality for trenchless contractors is that they can expect to encounter soft soils, cobblestone, boulders, and even intact rock in a single project.

As a result, the boring business has become a fragmented industry because there is no single technological solution in the market capable of boring through all geologies. Most of these players operate a single machine and drill head, making each project dependent on a machine that is effectively a “one-trick pony.” Changing ground conditions can lead to damaged equipment in the millions of dollars and as a consequence, increased time for project completion and increased project cost.

Enter Petra

Petra is transforming grid infrastructure to make undergrounding more accessible for all.

There has yet to be an operational company that has built an all-geology utility tunneling tool that is flexible enough to accommodate a wide range of diameters to bore through all geologies in a single integrated machine.

Petra’s integrated robot bores critical utility tunnels — it is the first electric-powered trenchless multi-tool on the market. These microtunnels are the ideal size to service different types of utility applications. Petra’s new methodology enables utility installations through the hardest rocks and softest sands on earth, faster and cheaper than conventional methods. These conditions are often located in fire and wind prone areas as well as challenging coastal regions. This technology enables Petra’s “core” business in the construction of water and wastewater lines, and its “near core” business is the construction of power lines, as well as pipe rehabilitation.

Petra’s machines are especially performant in the types of nightmare geologies that traditionally drive up the cost of utility tunneling with conventional methods. Petra’s multi-tool robot can bore through difficult soft soils and softer rocks between 8 and 72 inches with the flexibility to be powered electrically. The hard rock module is non-contact and utilizes a thermal drill cutterhead, removing thrust and consumable cutting discs as a requirement for excavation. Its various modules for different geologies can be swapped in as little as 15 minutes versus the days or weeks it could take the one-trick ponies.

The value that Petra’s machines bring isn’t theoretical either. To date, Petra’s system has completed 18 jobs in LatAm and is on track for use on various job sites across the United States with dozens of more customers lined up in early 2023. Petra is working with regional trenchless contractors through strategic partnerships in order to get their machines out on a variety of jobs in 2023 and is already bidding on jobs with several North American contractors. Through these partnerships, Petra plans to provide exclusive access to their systems. Petra is equipping existing trenchless tunneling teams with more sophisticated technology, giving them a competitive advantage when it comes to winning contracts while keeping costs low.

In an impressive early demonstration, Petra’s machine bored through 20 feet of Sioux Quartzite, considered one of the hardest rocks on Earth, and a separate tunnel through 40 feet in granite.

Earlier this year, Petra acquired and integrated with Zilper, a Bogota-based manufacturer of its own boring machine capable of digging through high water tables, cobbles, boulders, and watery sand and mud. This combination of Zilper’s trenchless machine with Petra’s hard rock module presents a solution to address the trenchless market and grow market share in geologies through which others weren’t able to previously bore. Petra’s service addressable market dominates that of the vast majority of niche competitors.

At first glance, a full-stack tunneling service would require expensive machines whose costs are passed down to the end user. But Petra’s costs are considerably less, at times up to 90% less, on a per-job basis. An average job today can take millions of dollars as initial proposals balloon once you factor in backup machines and potential complications in the process. Sometimes, a contractor will hit unplanned geology, either breaking the machine or requiring a new part to be brought in. Petra eliminates these headaches because of its integrated system for tunneling needs. Petra allows contractors to complete a job in less time, for less money, and without worrying about the unknown.

In the past year, the company has achieved important milestones::

1. Non-contact cutterhead
2. Trenchless machine remotely operable via Petra’s software platform
3. Fully vertically-integrated trenchless company (R&D + Manufacturing + Construction Services)
4. Multi-tool in the trenchless industry
5. Hybrid-powered trenchless multi-tool
6. Machine to bore through all geologies, including the world’s most difficult geologies

In addition to this, Petra has a patent portfolio of 23 patents issued or pending, two products currently in the market and one in the final stages of R&D. The company will be scaling out its commercial services in 2023: boring-as-a-service.

The San Francisco-based company has some of the grittiest founders we have ever met at Republic Capital — and they have to be. Working in a field like construction or digging utility tunnels requires you to walk the walk and talk the talk.

You can get an idea as to why they’d want to tackle such a difficult problem from their founding story:

“For years, Petra CEO and Co-Founder Kim Abrams watched her home state of California crumble under the pressure of natural disasters. After running air purifiers 24/7 for months at a time to keep her home air breathable in the face of unprecedented wildfires, and watching hurricanes tear through her parent’s home on the eastern seaboard, enough was enough; she had to do something. She founded Petra to keep communities lit, safe and connected in the face of natural disasters and climate change. To do this, she resolved to figure out a way to bury the world’s critical infrastructure. What Kim learned was that while burying critical infrastructure protects communities from natural and man-made threats, the world didn’t have the right equipment to do so at scale.

With Petra, Kim founded her second robotics company to build technologies to bury infrastructure at scale. Petra is solving one of the biggest challenges in underground construction: how to bore utility tunnels through all geologies with a single method. After initially backing Petra as an early seed investor at Lemnos Labs, Shivani Torres joined forces as an early co-founder and Chief Product Officer to lead engineering and help Petra build the future of utility infrastructure.”

Kim and Shivani’s backgrounds in mechanical engineering, technology, and finance make them the ideal founding team. They both have what it takes to understand the machinery and market, allowing them to solve a pressing issue while making a viable business out of it.

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We are incredibly grateful to work with Kim and Shivani and lend a helping hand to build out Petra. The business is helping solve climate change in an effort to make the world better for all of us. If you have any questions about Petra, please feel free to reach out to us at ir@republiccapital.co. And leave us feedback if you enjoyed this piece or would like to see another Republic Capital portfolio company highlighted.

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This blog post is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security or instrument in or to participate in any strategy with any Fund. All figures are based on information provided by third-party sources and we cannot guarantee the accuracy or completeness thereof.

Over the past year, the crypto industry has faced unprincipled management, financial fraud, and avaricious behavior. Do Kwon, SBF, 3AC, and centralized lending operators’ careless oversight paints a false narrative of blockchain and decentralization. Despite this, crypto today still has some of the brightest developers building on this novel technology. Unfortunately, certain centralized operators have manipulated crypto assets to a point of near extinction, causing the retail market to lose trust.

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” — Warren Buffett

Macroeconomic headwinds persist in a rather dire environment. We expect interest rates to remain high while liquidity is sucked out of the market. We expect interest rates to remain high while liquidity is sucked out of the market and retail investors choose to hold cash in their bank accounts as they have given up on investing. The economy cannot inflate away its problems and such a strategy would leave an overwhelming majority of Americans worse off. According to Hoisington Investment Management’s Q3 2022 review, “[f]ailure of the Fed to achieve its inflation target would also have the consequence of allowing an emergent money/wage spiral to become entrenched. The Fed’s mettle will be tested because over-leveraged institutions will fail as they have in the past.” We hold a similar sentiment, with the latter having already played out in crypto over the past year.

It took the S&P 500 12 years to return to its Dot-com Bubble high from 2000. This was during a historic period of technology growth and the introduction of quantitative easing, a monetary policy that is not out of play during this economic cycle…

Source: Factset, S&P 500 | (accessed) November 2022

We believe that the business of venture is to bet in emerging sectors before the flow of institutional funds reaches that sector. That being said, we still hold a strong belief that smart contracts and decentralized systems represent a long-term pervasive investment theme in venture capital. Our thesis on crypto remains the same — R/Capital’s multi-faceted investment approach focuses on blockchain-enabled gaming, emerging market financial infrastructure, and decentralized ecosystems with application-specific purposes. In our opinion, autonomy, openness, and transparency are all facets of decentralized technology and the two crashes of 2022 were the opposite of those characteristics.

While the crypto market has significant headwinds in store, R/Cap has two thesis-driven narratives that we believe are staples in our venture investing practices.

Blockchain-enabled Gaming: Interoperable value transfer enables when projects build their technology stack on a blockchain and gaming is a prime use case for this. While blockchain infrastructure facilitating consumer-facing experiences is still maturing, blockchain-enabled gaming creates a form of bi-directional value transfer. In turn, tokens within games can incentivize loyalty and create sticky customer retention through shared ownership and governance. Financially aligned user bases through a decentralized marketplace is a sub-use-case that we predict will be prominent in most Triple-A games moving forward.

By launching games where the players cannot tell that there is blockchain technology in the background, crypto could onboard millions of users without them even knowing. Once gamers start to get curious about how much their assets are worth, they will begin to explore blockchain technology via ramps and other chains as well.

Gunzilla: R/Capital led Gunzilla’s seed round with a $2M check into the private token round. Gunzilla’s Off The Grid is a Triple-A gaming studio that plans to launch Off the Grid in 2023. Off the Grid is a cyberpunk battle royale game compatible with all platforms built using Epic Games’ Unreal 5 engine.

Gunzilla plans to build an Avalanche (another portfolio company of R/Capital) subnet within the game. Since Avalanche subnets give web3 games complete control with their customizable networks, without sacrificing security or decentralization, we remain confident that Avalanche is the most suitable blockchain partner in our opinion for Gunzilla. Thus, this builds on our wider thesis of creating “spider webs” within our portfolio companies here at R/Capital. Our main focus is to create ways to marry portfolio companies that are building alongside the same mission and goal.

Emerging market financial infrastructure: We expect crypto prices to remain down as retail liquidity is low and retail confidence has withered. However, there is still a strong utilization of crypto present in emerging markets. Due to the desideratum for financial infrastructure present, we believe these markets will drive crypto demand Emerging markets with high inflation and no banking services can use crypto financial rails to process P2P transactions at a significantly cheaper cost than ACH or Western Union.

Busha: Busha has given us hope in terms of its resilient management style. R/Capital invested $400K into the Nigerian-based crypto application’s Pre-Series A. Busha is a vertically integrated crypto application that provides a suite of products and solutions that enable their customers to onboard easily into the crypto economy, thereby accessing financial opportunities that they would have otherwise been closed to. Generations of Africans have grown up with aggressive wealth erosion due to the devaluation of their local currencies. The financial borders make it difficult to access more stable global assets, condemning people to poverty.

Low levels of liquidity, lack of institutional fund flow, and austere regulatory guidance are issues that crypto will face for years to come. However, the asset price is not a fundamental metric to value the developer activity happening in the space.

Source: Alchemy Web3 Development | 2022

We expect to see a continuous talent migration from web2 to web3. Developers will flourish during a cold winter as they continue to build applications on decentralized technology stacks. In fact, we believe that this downturn benefits developers. Additionally, the crypto developers’ continued maturity gives us hope that the necessary infrastructure is now present to use any coding language for smart contracts. Compatible software development kits (SDKs) across multiple layer-1 platforms give developers access to infrastructure that wasn’t present two years ago.

Our team at Republic Capital will continue to work with our portfolio companies to take a more strategic and hands-on analysis of the evolving situation so they can come out stronger than ever.

This blog post is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security or instrument in or to participate in any strategy with any Fund. All figures are based on information provided by third-party sources and we cannot guarantee the accuracy or completeness thereof.

Source: DALL·E 2

After months of delays, NASA’s Artemis I mission is set to finally kick off. The Space Launch System (SLS) plans to lift off from Kennedy Space Center on November 16, 2022. Artemis is a successor to the Apollo program and aims to land humans back on the Moon for the first time since 1972. A permanent presence in cislunar space and on the Moon’s surface will prove out technologies for future missions to Mars and jumpstart commercial activity in the new space economy.

As the U.S. stands at the cusp of a new lunar frontier, it is imperative to understand the specifics of the missions. In doing so, we can strategize for the coming age — for all mankind.

Here at Republic Capital, we have our finger on the pulse of the entire space industry. Please reach out to ir@republiccapital.co if you would like to read our 2022 Space Report.

Apollo flexed American might

Today, we are discussing Artemis, not Apollo. However, we would be remiss to not highlight the program that first landed a man on the Moon.

The Apollo program was the most significant step forward in the technological innovation of the space age at the time. It was the third United States human spaceflight program carried out by NASA (after Mercury and Gemini), and succeeded in landing the first humans on the Moon. The United States spent approximately $260B (in inflation-adjusted dollars) on the Apollo program. It was, and still is, the most expensive R&D project of all time.

Powered by the Saturn V, Apollo 8 put the first humans in lunar orbit in December 1968. Less than a year later on July 20, 1969, the first man walked on the Moon as a part of Apollo 11. Apollo 17 launched in December 1972 and was the last time that a human has set foot on the Moon. Altogether, six Apollo missions resulted in a crewed lunar landing.

The Apollo program won the U.S. the Space Race over the Soviet Union, establishing it (and global democracy) as the clear world super power. America won because of the willingness of policy-makers across the aisle to coordinate and work towards one goal. Kennedy committed to landing a man on the Moon by the end of the decade in 1961. Six years later, the Saturn V rocket was functional. Two years after that, Neil Armstrong stepped foot on the lunar surface. And for nearly 50 years to the date, we have not been back to the Moon.

America was losing the Space Race before aligning its resources in one direction. We need this sense of awe, coordination, and drive if we want to do it again.

Source: Pulitzer

Losing unipolarity

Over half a century has passed since the U.S. cemented its position as the leader of the bipolar world, before becoming the unipolar power with the fall of the Berlin Wall. Since 1991, Americans have enjoyed an era of relative peace and prosperity.

Then in 2016, China’s GDP eclipsed America’s on a PPP basis. Over the next few years, it became clear that China was relentlessly focused on bridging the technological gap versus the U.S. in all industries, including (and especially) space. The first Chinese astronaut went to space in 2003. Since then: China has become the first country to land a probe on the far side of the Moon, the second nation to land a rover on Mars, the third nation to successfully bring lunar soil back to Earth, built the world’s largest telescope, deployed Beidou (a next-gen competitor to GPS), signed an agreement with Russia to jointly build a lunar research base (originally schedule for completion in 2036, but now reports say 2027) and is second only to the U.S. for the number of satellites in space.

Source: Aerospace Security

Just last week, China launched its final module and began orbital assembly of the Tiangong Space Station which will be operated by the China Manned Space Agency (CMAS). As the ISS begins to wind down this decade, China is positioning itself to lead the cislunar economy which it believes will generate $10T per year on economic return.

As mentioned above, coordination towards a single goal was what won us the Space Race. Policy missteps have splintered a singular priority as the U.S. spreads itself thin across the myriad plans it has. Across the Pacific, Xi Jinping just secured an unprecedented third term in an authoritarian regime. For the CCP, there is no losing focus. What Xi says is what Xi gets — and he wants to show the world that his method of rule works.

Great ambitions cost significant capital

The decade-plus long Artemis project will culminate by boldly returning Americans to the surface of the Moon. A consortium of commercial and international partners will then establish the first long-term, human-robotic presence on the Moon and in lunar orbit. This infrastructure will be used as the launch pad to bring astronauts to Mars and beyond.

These objectives do not come without their fair costs, however. It is estimated that since development began in 2011 through 2025, the combined components of the Artemis Program (SLS, Orion, etc.) will cost NASA $93.1B. The RS-25 engines supplied by Aerojet Rocketdyne cost NASA $146M per unit. Each SLS has four of them.

The bloated cost-plus structure of NASA and its prime contractors has created a very expensive rocket, however there is hope that this can change. Milestone-based contracting is a new shift advocated by NASA Administrator Bill Nelson. It hopes to do away with the cost-plus model which has created misaligned incentives on cost and timing. Much of this has been clearly reflected by the Artemis program, and SLS in particular.

The rocket is expendable, meaning that it is discarded after each use. Thus, the combined SLS and Orion launch costs $4.1B per attempt, equating to ~$31,500 / kg to LEO. For reference, the Apollo-era Saturn V, which first launched in 1967, was capable of reaching LEO for just $8,800 / kg in inflation-adjusted dollars. This is attributed to the complete policy coordination of the United States to put a man on the Moon before the Soviet Union, something we lack today.

Source: NASA, SpaceX

The future of Artemis, near and far

Next week’s Artemis I mission will be the first integrated flight test of the SLS and Orion. Artemis I will be an uncrewed flight, providing the proof-of-concept for future missions. After a successful launch and detachment from the SLS, the Orion spacecraft will be powered by a European Space Agency service module and travel 280,000 miles from Earth, completing multiple lunar orbits before returning home after three weeks.

In the event of a successful first mission, a roughly seven year proposed window will open in which NASA plans to complete five more Artemis missions.

The second mission is scheduled for 2024 and intends to bring a four-person crew on a lunar flyby. This would be the first crewed spacecraft to travel beyond Earth’s orbit since Apollo 17 last landed on the Moon in 1972.

Artemis III then aims to land two people, including the first woman, on the Moon’s surface to conduct scientific experiments. The 2025 mission intends to again utilize the SLS and Orion, but land on the lunar surface via SpaceX’s Starship. NASA awarded the $2.9B firm-fixed, milestone-based contract to SpaceX in 2021 — a benefit of new commercial suppliers.

2027’s Artemis IV intends to deliver the first module of the Lunar Gateway, a human-tended space station which will orbit the Moon. Gateway will be critical in developing the technology needed to support lunar and Martian exploration and habitation. The current plan has SpaceX again providing service, using both the Starship and Falcon Heavy to deliver modules over time. International partners include: the European Space Agency (ESA), Canadian Space Agency (CSA), and Japanese Aerospace Exploration Agency (JAXA).

Source: NASA

A year later, Artemis V expects to deliver the ESPRIT Refueling Module to Gateway and land the new Lunar Terrain Vehicle (LTV) on the Moon’s surface. ESPRIT is ESA’s contribution to the lunar station and will provide refueling infrastructure and telecommunications. The LTV is a Northrop Grumman-led program to develop the next generation of transportation on the harsh surface of the Moon while providing life support for astronaut drivers. The LTV will eventually be reworked for use on Mars.

The sixth and final planned Artemis mission will include another lunar landing and delivery of the Gateway Airlock Module which will be used for performing extravehicular activities outside of the station. It will also include a docking station as a stop before eventual deep space exploration.

The Artemis mission doesn’t end there, however. There are five more proposed missions which will focus on the delivery, fabrication, and maintenance of the Habitable Mobility Platform and Foundational Surface Habitat, the first ever permanent Moon base. These missions are dependent on the success of the already planned Artemis I through Artemis VI and would occur in the early 2030s.

The importance of the commercial sector

In order to accomplish Artemis, the government needs support. These are large goals and the political bureaucracy that NASA has to navigate makes success difficult. But there is hope in the commercial sector. Manufacturers and contractors have been the backbone of American progress since the country was founded. This perseverance has led to innovation and this innovation is starting to metamorphosize into a new Space Boom, spawning new categories in which to invest.

Launch providers like Firefly, SpaceX, or Relativity are capable of putting communications or Earth observation satellites, like Hedron or Albedo, into orbit.

Once in space, we need stations like Axiom to establish a permanent space presence, and platforms like Privateer to warn us about potential orbital debris which may put lives in jeopardy. Such companies ensure the security and development of other commercial space assets.

And eventually, we believe that what was once considered science fiction, i.e. mining asteroids and building interplanetary infrastructure, will soon become a reality as SpaceX’s Starship helps companies rethink the mass and volume constraints that have historically prevented viable business models in economies beyond Earth’s orbit.s

A final rally cry

Artemis represents the next chapter in NASA’s storied history. It showcases the willingness of the U.S. and its allies to continue the development of space alongside commercial endeavors. Despite its hefty costs and delays, the mission will happen. But it is worthwhile to analyze its issues and understand the implications it has for the private sector and for us as Americans. We didn’t have these issues during Apollo and if we want to beat China to the Moon, we must address them.

Space is the next frontier, with plenty of countries all vying to be its leader. It is up to all of us to rally around the collective mission, Artemis and beyond, and win this new Space Race.

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Republic Capital has previously invested in the companies listed and linked above.

Graphics for illustrative purposes and not to scale.

This blog post is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security or instrument in or to participate in any investment strategy. All figures are based on information provided by third party sources and we cannot guarantee the accuracy or completeness thereof. Any opinions expressed herein are those of the author’s. Certain information contained in the presentation discusses general market activity, industry or sector trends, or other broad‐based economic, market or political conditions and should not be construed as research or investment advice. Do not forward or otherwise duplicate this information without the written consent of Republic Capital.

The “Good Eggs” of Good Eggs — a conversation with Good Eggs CEO Bentley Hall

I had the pleasure to sit down (over Zoom) with Bentley Hall, the CEO of Good Eggs, a start-up aimed at pioneering and revolutionizing the online grocery delivery space, and also our most recent portfolio company in the consumer space. Bentley shared his story, had some great insights about the grocery industry as a whole, and also shared exciting details about Good Eggs, including their goals and values.

Republic Labs is excited to support Good Eggs due to their measured approach towards growth, focus on supporting local producers and creating quality jobs, and involvement in an increasingly growing vertical of online grocery delivery.

Elizabeth: How would you describe Good Eggs in your own words and where you are currently at with it?

Bentley: Good Eggs is a pioneering online grocery marketplace that delivers thoughtfully sourced, peak-quality groceries, innovative service, and good jobs. We are the only company that provides a full bounty of meal kits, groceries, prepared foods, alcohol, and flowers — as well as delivering mindfully sourced, absurdly fresh produce, often within 48 hours of being harvested. Currently, 70% of Good Eggs’ offerings are locally sourced. For context, the average grocer in the US is less than 1% direct and local.

Elizabeth: That’s super cool. Where did the initial inspiration for Good Eggs come from? And I would love to hear a little bit about your personal background and how you got involved?

Bentley: I am a dreamer who does. I love helping purpose driven food and consumer companies scale. I have been doing it for the past 15+ years. I hope to do it for the rest of my life. After spending time with Johnson & Johnson and Clif Bar, I joined the early executive team at Plum Organics. In less than 7 years, Plum grew to become the largest organic baby & kids food company in the US, and was acquired by the Campbell Soup in 2012.

Six years ago, I was living in the UK, my wife and I were about to have our second son, and we moved back to the US. In the city of London, online was 15 to 25% of the overall grocery category. We came back to the US, and it was still 3 to 4% online share. Because of that experience, and all the visible data points from the natural food space, it was pretty clear food had two major tectonic shifts occurring: one toward good food, and one toward online. That was obvious to me, but five years ago, that was not a widely held sentiment. Good Eggs sat right at the intersection of those trends. When you find perfect category timing, and the right company, that overlaps with something you really love — which for me is food — you don’t look for perfection, you leap for opportunity, you roll up your sleeves and you get building.

Elizabeth: That sounds really cool. And I feel like a lot of people consider the US to be such a consumer leader when it comes to ordering things online. So I never knew that we were so behind when it came to online grocery shopping specifically.

Bentley: Yeah. The US often has a US-centric view, but there are so many countries across the globe in this particular category that are way ahead of us.

Elizabeth: For sure. What would you say has been like the biggest challenge with building Good Eggs recently, especially with COVID? Or just overall?

Bentley: Good Eggs has been around for almost a decade and I joined as CEO more than five years ago. The biggest challenge when I first joined was that the business was a turnaround. Good Eggs had scaled back from four markets to one. We had weeks of cash left. That was a challenging period.

With COVID, the speed and magnitude of the shift in consumer behavior has been incredible. We opened a brand new 120,000 square foot warehouse in Oakland a few days before “Stay in Place” went into effect in California in March. That is really good timing for business, but not for our team’s sleep. For the following four or five months, it was non-stop, sixteen-hour days, seven days a week. As an essential service, it felt really important for our customers, our team, and our business to do everything we could to meet that unprecedented demand. And so that was an arduous, but also transformational period.

Elizabeth: Would you say that things are kind of starting to cool down a bit, or is it kind of full steam ahead? Because right now you serve San Fran, and you’re expanding to LA?

Bentley: It is definitely cooler than infinite free demand [laughs]. So yes, it is cooler, but the long term tailwinds are still incredibly strong, and this is just chapter one of a larger shift. Online food and grocery shopping are here to stay.

Elizabeth: What would you say you’re most excited for in the future? What’s new, up and coming and exciting that you can share?

Bentley: The one that I already have shared is expansion — we’ve spent five years building out a reliable, profitable, consistent foundation. Now it is time to accelerate good, customer-centric, multi-region growth. I am excited about that.

If I look beyond that, there’s some very cool things we are doing on the customer experience side. Giving customers more dynamic choice, allowing the site to transform based on who you are. Those are two things, but there’s a lot more coming.

Elizabeth: I imagine you’re planning on expanding outside of California — where are you thinking next?

Bentley: Unlike many people who are trying to be everything to everybody, everywhere, we actually want to just have these deep roots into the top five to eight West Coast Metro markets. So after California, the Pacific Northwest, Rocky Mountains, Arizona, and Texas. They’re all west of the Mississippi, but those are all big markets in themselves. That will keep us busy for the next few years, and once that is done, we will unveil larger national and global plans.

Elizabeth: Awesome. And then you mentioned that one of your biggest differentiators is sourcing local. How do you find these people that you work with locally? Is it a really hard process? Or is it something that kind of comes naturally?

Bentley: If you are a peak-quality, high-integrity food producer in the Bay Area, you probably know about Good Eggs. We also have a great buying team, who is always on the hunt for new suppliers. This is natural for us, and very unnatural for the larger national retailers. First, you need to have the right intent, and then you need to back that up with a team and technology tools that makes local sourcing possible at scale.

We’re trying to do that for multiple reasons. For customers, it ensures we give them the best quality. A lot of other retailers aren’t trying to prioritize quality. They’re trying to prioritize low price and durability of food. And so it’s just a different choice. For the business, it lets us turn around our absurdly fresh inventory faster than anyone else. That improves margins and reduces spoilage. And last but not least, it is the right thing to do for our purpose.

Elizabeth: That’s super exciting to hear. I’m from my tiny little farm town, and so people are very gung ho on supporting local. I’ve had plenty of apple picking and potato picking trips, so that’s really awesome to see that you’re capitalizing on that.

Is there anything else that you want to share?

Bentley: The one thing that we didn’t talk about, which is important to us, is good jobs. We have a pretty strong point of view about good jobs for our 700+ people. Most of those are in a fulfillment center, receiving product, picking orders and delivering food. Most food deliveries depend on temporary gig labor. We do the opposite. We pay our team a living wage, provide full benefits, equity and upward mobility. We believe this is a requirement to consistently deliver really high quality service for people.

Republic Labs is the advisor to clients which have invested in Good Eggs, nothing herein should be construed as investment advice.

By Elizabeth Olshanetsky (elizabeth@republiclabs.co) for Republic Labs.

DeFi-ning the Future of Finance with Acala

Acala is a decentralized finance (DeFi) hub and stablecoin platform allowing for cross blockchain liquidity and applications. Built as part of the PolkaDot network, the Acala Network’s native currency, known as the Acala Dollar (aUSD) is a stablecoin, which means that users can always exchange one Acala Dollar for a US Dollar. Eligible users can stake their Acala Dollars and earn rewards.

Acala Co-Founder Ruitao Su has been an engineer and entrepreneur pretty much his whole life, only working one “job.” Before he jumped into the blockchain space he had been an independent app developer, focusing on creating mobile applications, almost all of which were featured in the Apple app store. “I like to create stuff,” Su put it simply, and being an engineer meant he knew how to “create stuff” pretty well. One of the featured apps included Powderly, an app for tracking skiing and snowboarding, which Su created out of his love for snowboarding.

Su fully committed to the crypto space about 6 years ago, but he knew about Bitcoin when it was less than $100. He had discovered the whitepaper (initial technical description) on Reddit, read it, and decided it wasn’t going anywhere. He was glad however, to have been proven wrong, and doesn’t feel too beat up about not joining the Bitcoin train back then. “Even if I had participated back then, I would have probably mined Bitcoin, sold it, and regret bitterly now.”

Su mentioned that it is commonly said that “for Bitcoin to go from $0 to $100 was considered impossible, but for it to go from $100 to $1,000,000 is inevitable.” He is fully convinced that if the “impossible” has already happened, that things are looking good for the future.

Su got involved once people started to get excited about the applications of blockchain in tech, specifically creating products useful in the finance world. By then, he was fully convinced that blockchain would disrupt the world of finance. “The revolution was coming and I wanted to be part of it.”

He met his Acala co-founders in New Zealand and China. They aligned on their mission, setting out to create something useful that can also add value to its token holders or anyone. “Blockchain is a solid technology but there’s so much speculation,” and Su emphasized they wanted to have a solid product, not just contribute to the ICO craze that was happening a few years back, when everyone and their uncle was selling a token all of sudden.

When setting out to create, they had one rule: create something finance related with a real use case. They explored a variety of potential infrastructures — Ethereum 2, Cosmos and Substrate among them — and compared their features and communities. Taking an educated guess on how the blockchain developer will evolve, and thinking that Substrate was “super cool and promising,” they decided to build on top of the Polkadot network. Polkadot is a newer decentralized platform, focused on security, scalability and innovation.

Now, Acala is almost ready to launch.

As Polkadot has been gaining popularity recently, I was curious to dig into more detail on the decision behind becoming part of the network. Su said for them it was less of a technical question, moreso based on how they see blockchain technology evolving.

“We believe the future is going to be focused on multi-blockchain, interconnected networks and interconnected money levels. Ultimately, the blockchain network is going to turn to specialization; more and more networks will be fine-tuned for one particular purpose or domain, and not handle everything, just it’s own domain super well.”

The team felt that Ethereum 2 was more of a general computational layer, and wanted to see a network more fine-tuned for a particular usage; in the case of Acala, the usage is finance. After looking at some options, they decided Substrate was the best choice for what they wanted. Su explained that Substrate is the first purpose built framework, comparing it to a React or Node.js (JavaScript) on blockchain where you can pick and choose what module you want. Examples include a staking module, currency module and a smart contract module.

The team is excited to be part of the Polkadot network as they strongly believe in the framework behind it, and according to Su, “framework always drives the ecosystem.” Polkadot allows the applications built on it to utilize its strong security layer, is truly decentralized and also allows for interoperability for the different applications on the network. The applications are no longer constrained to themselves or siloed: they are part of a larger network where they can “communicate” and work together.

As we get more involved in the cryptocurrency and blockchain space, Republic Labs is excited to see how the industry is evolving. With more efficient, interconnected and user-friendly use cases, it’s awesome to see the decentralized space becoming more and more mainstream.

Republic Labs is the advisor to clients which have invested in Acala, nothing herein should be construed as investment advice.

By Elizabeth Olshanetsky (elizabeth@republiclabs.co) for Republic Labs.

Dapper Labs leverages blockchain technology to create highly accessible entertainment and games apps for retail user adoption, with unparalleled brand partnerships such as those with the NBA, UFC, Dr. Seuss and more.

I had the privilege to speak with Weilei Yu, Head of Marketing at Flow. Created initially as a side project at a venture studio, Dapper Labs saw raging success with their first product: CryptoKitties. Since then they have released other projects such as NBA Top Shot — passing CryptoKitties as #1 in all-time transactions volume — which allows anyone to own basketball moments as collectibles, and Cheeze Wizards, “the world’s first blockchain battle royale.” However, it is the virtual felines that originally took the internet, as well as the Ethereum blockchain, by storm. Cryptokitties garnered so much traffic that it slowed transaction speeds across the entire Ethereum network during its boom back in 2017. This showed a point of weakness, and as Weilei Yu said, “no matter how good your dApp design or product is, if the underlying infrastructure can’t meet demand, you have almost an automatic break.”

Aside from latency issues, one of the other biggest grievances the Dapper Labs team had was the barrier of entry for users. Although simple compared to most blockchain based projects at the time, there were still quite a bit of steps to get set up with CryptoKitties and other decentalized applications (dApps). Users had to install the MetaMask plug-in, generate a seed phrase (usually a sequence of words for safe keeping — a common part of blockchain security, but also very easy to lose), make a CoinBase account to fund the “kitty” and more. All of this combined with worries of Ethereum “sharding” (the initial blockchain splitting into pieces) made the team ready to look for some kind of alternative solution. Weilei emphasized that as dApp developers, they knew “what the experience should be to sustain momentum and keep talent,” and that of course unhappy developers plus unhappy customers was a recipe for disaster. It was time for a new blockchain: Flow.

Weilei explained that Dapper Labs was the original creator of Flow, and they set out to make it with three goals top of mind:

1. Build a scalable blockchain for mainstream consumer adoption
2. Make it very developer-friendly and centric
3. Offer smooth user onboarding

After months of hard work, the Flow main network (mainnet) launched in the summer of 2020 and saw glowing results. Weilei mentioned that the developers using Flow have generally been impressed with the infrastructure — one cool feature of Flow is that it allows developers to pay “gas” (processing power) fees on behalf of the users on the protocol level, without having to leverage complex and expensive workarounds (which are often necessary on the Ethereum blockchain).

On the user side, onboarding friction has been greatly reduced. You can create an account and use it right away, and if there are any additional steps that aren’t essential right away, they can be completed at a later time. This is a great feature for developers, as Weilei explained, because they can create experiences with gradual access to the users:

“If a user is completely new [to the space] they might require a bit more hand holding, and once they’re ready they can be granted full control. If it’s too hard right off the bat, it might chase a lot of people away from the space.”

The team strongly believes in straying away from the conventional difficulty of getting into the cryptoverse and is focused on being able to attract a mainstream user base to finally open up mainstream blockchain adoption. Speaking of mainstream adoption, how is Flow going to compete with Ethereum if there are already so many dApps and developers in that community? The way Weilei puts it, “Ethereum is heavily focused on DeFi (Decentralized Finance) but there’s a lot more that crypto can offer.” Most of the projects the Dapper Labs team works on and Flow revolves around focus on bringing blockchain empowered entertainment apps to mainstream consumers. Plus, in terms of competition, lack of users or developers has not been an issue for Flow — when TopShot launched on the Flow mainnet this past summer, they saw over $60M in marketplace transactions, and there are currently over 100 groups of developers building on top of the Flow blockchain. Additionally, according to CoinList, a record breaking amount of people (over 12,000) participated in the public sale of the Flow token (native currency of the Flow blockchain) — and Weilei was actually the one who led the campaign for the sale.

One of the special features of Flow that Weilei told me about is the ability for developers to not only receive grants, but also to get support with go-to-market strategy and user acquisition. “It doesn’t matter how many dApps you have, if the teams just build them and leave, and nobody uses them, their worth is 0.” It’s awesome to see the Dapper Labs team already delivering on their goals of creating a user and developer-friendly blockchain. As Weilei also said, there is “no one as powerful of a marketer than a community that really trusts and believes in the project,” and so they will continue to put people in the center as they build out Flow.

Even on a personal level, Weilei mentioned a passion for accessibility within the blockchain and cryptocurrency space. Prior to his work with Flow and Dapper Labs, Weilei worked as the Head of Developer Relations at Streamr, a crypto project dedicated to decentralizing accessibility of content. Two years later, he joined the Flow team, leading marketing across the globe. Aside from the successful Coinlist campaign, he focused a lot of his energy on the Open World Builders, a comprehensive free bootcamp open to anyone to learn about building blockchain empowered applications (that had over 400+ applicants, 20+ universition, 10+ professional fields, from 4 continents) and Open World Summit, the annual Flow summit (which offered panels hosted in 4 different languages). These events are meant to empower regional communities, as Weilei explained that “many global events are English-based, so it doesn’t benefit local communities as much, but only addresses the privileged few who know English well.”

As Christian Sullivan of Republic Labs often says, “Access and Inclusion is the new A.I.” so we are excited to see the Dapper Labs team making an effort to increase accessibility to information and technology that once seemed only available to an elite few. We look forward to seeing what progress they make with Flow and excited to see what 2021 will bring!

Republic Labs is the advisor to clients which have invested in Dapper Labs, nothing herein should be construed as investment advice.

By Elizabeth Olshanetsky (elizabeth@republiclabs.co) for Republic Labs.

Keeping Tabs with R/Labs — Agnetix: Getting ‘Lit’ and Changing (Horti)Culture

Agnetix is a horticulture lighting company with a system approach. They provide not just the physical lights but also software and analytics. Their mission is to empower growers with an efficient lighting system as well as the data to make growing decisions.

I had the pleasure of speaking with two awesome members of the Agnetix team — Jordan Miles (CEO of Agnetix) and Ihor Lys (Co-Founder/CTO) — and learning all about how the company was started and how they’re truly innovating the horticulture industry, and doing way more than just producing a fancy lightbulb.

In 1997, Lys was one of the founders of the world’s first LED Lighting Company, Color Kinetics, which he helped grow over 12 years, and saw it go public and get acquired by part of Philips Lighting (now Signify). He had been doing what he called the “LED thing” for a really long time when he decided to move out to California to retire. However, he didn’t even get off the plane before he had people telling him he needed to build LED “grow lights”. Lys said, “growing weed was the biggest problem people thought we had at the time.”

Fast forward almost seven years later and Lys met Co-Founder Nick Maderas, who “had a handle on what the LED could do in an actual grow environment, what the problems were, and what was going on.” They began to think about what a real grow lighting system would look like: they wanted to make not just some kind of product, but a machine that could help grow weed along with other plants.

One of the biggest challenges of building Agnetix, according to Miles is “overcoming the perception that all LED lights are the same.” He used the analogy of cars in a parking lot:

“They’re all cars, but each one is different in its quality, technology and performance. LEDs are the same way.”

What I found especially interesting is that aside from the whole system approach Agnetix is working on, when thinking about plants outside the box, they refer to them as “biological machines” that use sunlight, water, etc., and will have to work with whatever “machines’’ they develop. Initially thinking about lighting, the Agnetix team wanted to build a full system that could go into a greenhouse, which itself is a “machine,” and provide other features that growers were looking for. Ihor stressed that they “want to be the best at providing everything the plant needs, and what the people need to manage the facility.”

It took the Agnetix team a couple years to create a product to show this was possible. They came up with a waterloop system that captures heat that the plants can’t use and gives it back to the growing facility — this was incredibly efficient because facilities often are “strapped for heat” and this “gives people back the energy they’ve already paid for, and puts it where the plants actually need it.” The Agnetix team continued to innovate, creating a product with a very slim profile in order to minimize any potential sun blockage — why waste available energy? They also added a data plan, which apparently a lot of other horticulture companies have overlooked, as they typically just focus on the light itself. For Agnetix, the ability to be able to control the technology without a ton of extra added parts was at the forefront of what they developed. Once they had the data to control the lights, they could reuse that data to get the growers information about the plants to the growers.

Some of the cool features the team is working on in terms of data is being able to not only know the temperatures of the lights, but also greenhouse humidity, CO2 concentration, as well as light levels from other greenhouse appliances. They are also working on the ability to take photos and integrating other sensors, such as those for soil, into the system. Eventually, they hope to be able to produce a full “digital twin” of everything that’s happening, that key stakeholders could easily access anytime and anywhere.

CEO Jordan Miles has spent the last 25 years helping companies digitize manufacturing workflows, or “taking the human being and pen and paper out of the equation, which eliminates errors and latency.” This makes him perfectly positioned to lead Agnetix to have technology that allows efficient manufacturing at scale, which Miles stressed is increasingly important.

“Efficiency in the old days of cannabis didn’t matter — you could have some lightbulb in your grandma’s garage, and make even if your set-up was terrible, you could make money. But as legalization becomes widespread, the industry will be severely needing this tech.”

Since cannabis is currently federally illegal, it is a pretty fragmented industry. This has sometimes served as a challenge for Agnetix, especially with all of the nuances that come with dealing with regulations and the people in the industry. However, as cannabis is slowly but surely moving towards federal legalization, with the House of Representatives recently passing a bill on decriminalization, the Agnetix team is definitely excited as views on the plant change and embrace of the industry comes closer to a bi-partisan reality.

In general, Miles strongly believes that “tech that allows efficient manufacturing at scale, leverages modern engineering, and its outcome will greatly impact the flora and food market,” and while admittedly even Agnetix had somewhat of a siloed approach in the beginning, focusing on producing a horticulture light, their current system approach, as well as focusing on a design that doesn’t require tradespeople to install makes us excited to see what Agnetix will do in the future.

Republic Labs is the advisor to clients which have invested in Agnetix, nothing herein should be construed as investment advice.

By Elizabeth Olshanetsky (elizabeth@republiclabs.co) for Republic Labs.

Keeping Tabs w/ R/Labs — Apollo Neuroscience: “Banding” Together Against Stress

Apollo Neuroscience is a wellness technology brand that regulates stress through the use of vibrations from a wearable worn on the wrist or ankle. Their mission is to empower people to take control of their health by taking control of their stress first.

I had the pleasure of interviewing Kathryn Fantauzzi, Co-Founder of Apollo Neuroscience. Not only did I learn the history of Apollo and how she worked together with Dr. David Rabin, MD, PhD (her fiancé at the time, now husband), but Fantauzzi also brought me on a journey of understanding how stress works and what Apollo does to help regulate it.

I’ll be honest, prior to speaking with Fantauzzi, I didn’t know much about stress — just that it REALLY sucks and can mess with every aspect of your life. She explained that “things like, getting more sleep, focusing on tasks, and having more energy, are all made much more difficult by chronic stress.” And to top things off, stress is incredibly hard to deal with. Sure, there’s meditation, breathing exercises, even regular exercise, but making time for those can prove to be quite difficult and can lead to being stressed about being stressed — not to mention these stress relief techniques are much more difficult when we’re already stressed.

It all started in the University of Pittsburgh lab. Dr. Rabin was studying chronic stress on the cellular and molecular level, as well as on a personal level for almost 15 years; he worked with patients suffering with anything from PTSD, to insomnia, to substance abuse. Through his research and reading he saw that traditional practices like meditation, breathwork, and biofeedback were helpful in sessions, but it was very challenging for patients to engage in those practices on their own outside of sessions with him. Fantauzzi explained that this occurs because when you are stressed (meaning you are experiencing excess sympathetic, or fight-or-flight activity in the nervous system), the harder it becomes to change behaviors, even when you know how beneficial a change may be.

An example Fantauzzi provided is, “if you’re driving down the street and you’ve had a hard day and someone cuts you off, you’re way more likely to react than if you just came from a yoga class — you’re already primed to be in stress response because your body learns a pattern. If you continually are consistently stressed, your body remembers being stressed and that becomes the familiar path for your body’s response. You end up seeking a short term solution, more of a distraction or avoidance, but don’t actually deal with stress as the root.”

The last thing Dr. Rabin wanted was to develop a method that ultimately led to more stress: it was time for a more active solution, and thus the foundation for Apollo Neuro was built. He looked at 50+ years of literature and conducted various experiments. Dr. Rabin was on a hunt for a non-invasive, non-pharmaceutical way to interrupt and help the body be more resilient to stress that could be used actually in the moment someone needed it. This was very different from everything else on the market, as most solutions are generally things you do before or after you are stressed, but not during.

Dr. Rabin decided to look at touch, which Fantauzzi explained is the sense we respond to the fastest and the sense that indicates safety the quickest.

“Think of a baby: if you pick it up and rock it and pat it, it stops crying. This is because a touch sends a signal to your brain that says ‘you’re safe.’ Your body then starts to regulate itself — heart rate comes down, breathing evens out, you stop sweating.”

As Dr. Rabin conducted his research at the University of Pittsburgh, its tech accelerator arm reached out to ask if he was interested in participating in innovation competitions. He asked Fantauzzi to join him at these meetings. Given her background in technology transfer (getting novel projects out of the lab faster) and also previously developing a $20M incubator fund at the Energy Research and Development Authority in NY for early tech acceleration, this task was right up her alley. She ended up raising $0.5M of non-dilutive grant funding for Dr. Rabin to do all the initial clinical trials, and joined the team as an advisor.

Through Dr. Rabin’s extensive trials, (double-blind, randomized, single-controlled variable) that involved participants taking a test, he was able to show that when compared against dummy vibrations or no vibrations at all, the Apollo significantly increased heart rate variability (balancing of nervous system). Additionally, people felt less stressed (biomarkers of stress went down) and performance on the test went up by 25%, indicating improved cognitive performance.

Fantauzzi explained that Apollo works by inducing a sort of “flow” state, helping someone be calm so they have more control over their cognition as, “when you’re under stress, your cognitive performance goes down because you’re simultaneously managing your own stress response while trying to do the task at hand.” With Apollo, people had more energy and ability to perform the task and ended up performing better, which was pretty mind blowing for Fantauzzi. She decided to quit everything else she was doing to focus on Apollo.

The team continued to conduct a number of trials, including ones relating to meditative states: they found Apollo is able to help non-meditators match the brainwaves of meditators within 12 minutes, and also helped with athletic recovery. Those with PTSD were seeing reduction in stress and the ability to reduce the number of opioids they were taking. They also tested the Apollo with 2000 people in the “real world” and Fantauzzi said those people displayed, “improved focus, improved ability to sleep, better stress management, and better recovery over time.” The longer people used Apollo, the more sensitive they became to it and the better it worked. However it is not addictive by any means: as an addiction psychiatrist, Dr. Rabin made sure to avoid the potential for dependency.

After their first venture raise, Apollo hired its team and launched the wristband in January 2020 — it was a rousing success despite COVID-19, as they have about 20,000 users at this point. Aside from the tech itself, Fantauzzi attributes the success of Apollo to the interdisciplinary backgrounds of the team as well as their non-siloed roles.

Fantauzzi is super excited for the future of Apollo Neuroscience, as there’s “a lot more to Apollo than just the device.” Community engagement, and particularly listening to customer feedback and requests is super important to them. From developing the product (lab testing), to bringing it to the real world, to making sure it has the same consistency as it did in the lab, everything that goes into the product is based on consumer feedback. The Apollo team always asks customers, “what would be meaningful to you? How can this product be useful to you?” The Apollo team also focuses on providing content as well as context on how best to use their device (and regulate stress in general) as they see this to be the area where a lot of wearable devices fall short — in a sea of information, they want to narrow down what is relevant and really make people understand how or why something works to empower customers to be an active member in their health journey.

Actually, one of the biggest challenges with Apollo was explaining how the tech works. Fantauzzi described how because it’s a fairly elegant and simple solution, “people are skeptical. In this era there is a lot of misinformation, a lot of people trying to sell you things, and it’s hard to track down what’s true and what’s not true.” But with the extensive clinical trials as well as user testimonials, this is becoming less of a challenge. Not to mention, 2020 was a huge paradigm shift towards understanding chronic stress:

“Before you had to explain to someone why chronic stress was a problem. Previously people would say, ‘I eat stress for breakfast,’ when in fact stress was eating THEM for breakfast, but they may not have realized it. 2020 made it really clear for everyone what chronic stress is because we’ve all been on this marathon for the last 9+ months.”

Republic Labs is really excited about Apollo Neuroscience’s successful year, as well as their mission of improving health, so we are eager to see what great things they do next.

This quote from Fantauzzi pretty much summarizes why everyone is excited about Apollo:

“If I can help people manage their stress better, if I can help people feel better, and empower them to take control of their health and get the sleep that they need, then they can contribute in their own lives; if everyone’s feeling better, the world is a helluva lot of a better place.”

Republic Labs is the advisor to clients which have invested in Apollo Neuroscience, nothing herein should be construed as investment advice.

By Elizabeth Olshanetsky (elizabeth@republiclabs.co) for Republic Labs.

Keeping Tabs with R/Labs — Caraway: Where There’s a Will, There’s a (Cara)way

Caraway is a home brand that uses ceramic as opposed to Teflon to create non-toxic, eco-friendly cookware. Their mission is to make the home and kitchen stylish & safe while also making cooking and decor more accessible.

People forget. A broad statement but absolutely true. Did I remember to lock the car when I left? Did I remember to schedule that Zoom meeting or respond to the email from yesterday? Usually, our forgettings don’t have severe repercussions, but what if a slip of mind could lead to toxic poisoning?

Before founding Caraway, CEO Jordan Nathan was cooking on a Teflon non-stick pan, just like any normal night. While cooking, he was distracted and accidentally left his burner on, with the frying pan sitting empty on top. 45 minutes later his apartment was filled with fumes. Jordan became sick and was likely exposed to Teflon poisoning — something he didn’t even know existed. After doing some more research, he couldn’t “wrap [his] head around how something used to cook food could be tied to cancer, lower sperm count, and behavioral issues.” Before this incident, Jordan never really looked into cookware materials, but he felt like this was an opportunity to create a brand that focused heavily on safety. Given his background with Ecommerce, and being CEO of a direct-to-consumer kitchen brand, Jordan was the perfect person to take this on: enter Caraway.

Jordan mentioned that using ceramic is not something new, it’s something that “sat on retail shelves for the past decade but no customers knew what it is or why it exists.” Caraway puts an emphasis on the safety factor and advantages of ceramic — they share their testing reports with consumers and care about transparency. Their blog is focused on home decor and design, as well as lifestyle, in comparison to many cookware brands that focus on recipes. They “preach the easiness of home, don’t use words like ‘professional’ and don’t work with chefs,” proving that an organized, safe, and stylish kitchen can be accessible to anyone.

The first Caraway product, which launched in 2019, was a 100%, non-toxic and eco-friendly ceramic cookware set. Caraway plans on expanding to other areas of the home as well, with thoughtful design and storage solutions as well as other core kitchen products.

As COVID led many to increase their time at home, and we saw a rise in people who wanted to cook and be mindful of what they were eating, Jordan said that people shifted their spending to “spruce up their homes” instead of buying new clothing or paying for experiences. Because of this, Caraway saw a bump in sales, but even now they are still seeing a lot of growth.

One of Caraway’s biggest challenges has been consumer awareness of why ceramic is a better choice than Teflon. Many have forgotten or were never aware of the Teflon-related DuPont lawsuit (although the 2019 film Dark Waters definitely did some reminding), but Caraway is definitely “not in the business of doing scare tactics.” Their focus is on emphasizing safety and style in the home.

Looking forward to seeing how Caraway continues to innovate the kitchen and home to be safe, stylish, and eco-friendly!

Republic Labs is the advisor to clients which have invested in Caraway, nothing herein should be construed as investment advice.

By Elizabeth Olshanetsky (elizabeth@republiclabs.co) for Republic Labs.