A startup backed by Albuquerque's Roadrunner Venture Studios that's developing a technology it says could drastically cut the cost of clean hydrogen production pulled in its first chunk of funding through a blend of venture capital and state monies.
Hydrosonics Inc., founded by Luis Chavez, Ph.D., a University of Texas at El Paso graduate and former researcher at Los Alamos National Laboratory, said Thursday it raised $875,000 in a pre-seed round — typically the very earliest stage of funding for new startups.
That $875,000 comes from two sources — $525,000 in equity-based venture dollars, and $350,000 in non-dilutive monies from the New Mexico Economic Development Department through its Office of Strategy, Science and Technology's inaugural Advanced Energy Award Pilot Program grants, announced Monday.
Roadrunner Venture Studios, which named Hydrosonics as one of its first three portfolio companies in December 2023, led the venture portion of the round, and Dangerous Ventures, a Santa Fe-based venture firm that targets climate tech investments through a New Mexico-focused fund, also invested.
So too did a local angel fund focused on deep tech innovation in New Mexico, although Chavez didn't provide more information on that angel fund.
Chavez said the pre-seed funding will be used to support prototype development and initial testing of Hydrosonics' hydrogen technology. That technology uses electrode chemistry to help alkaline electrolyzers — pieces of equipment required to produce hydrogen using electrolysis, or the splitting of water molecules — operate more efficiently.
It's intended to integrate directly with renewable energy generation sites, including solar and wind generation, with electric utilities and at locations already producing hydrogen.
Ultimately, Chavez said the startup's goal is to use its technology to significantly reduce the cost of electrolysis-based hydrogen production. Current estimates for the cost of electrolysis-based hydrogen production using alkaline electrolyzers range around $5 per kilogram of hydrogen produced, sensitive to the price of electricity and electrolyzer capital costs, although the U.S. has set a target of lowering that cost to around $2 per kilogram by 2026.
Electrolysis production is typically dubbed "green" hydrogen because, when using electricity from renewable energy sources, the process doesn't release greenhouse gases like carbon or methane.
"This summer we will scale up our product development and create the first, critical building blocks for an electrolyzer capable of producing green hydrogen accessible to everyone," Chavez said in a statement.
Chavez developed the electrolyzer technology at Los Alamos National Laboratory, where he said the technology is patented, using one square centimeter cells. He added the startup is in the process of licensing that patent out of the laboratory.
Over the next year, Chavez said he wants to scale up to 100 square centimeter cells as an initial "base unit," eventually combining 50 of those 100-square-centimeter units together into a 10-kilowatt prototype.
Hydronics plans to develop "at least a couple" of those 10-kilowatt prototypes by the end of 2024, Chavez said. He added the startup intends to sign several letters of intent to install the units at renewable energy sites and with electric utilities by the end of the year, as well.
Chavez said those initial deployments could include sites where hydrogen is already being produced, and at renewable energy generation sites where some amount of electricity is being lost in transmission.
He added the startup wants to complete its first prototype in the next two weeks.
Once that first 10-kilowatt prototype is ready and field tested, Chavez said Hydrosonics would open a seed round of funding — another early stage investment round that typically follows a pre-seed raise.
"If everything goes to plan, we will kick off the seed in September," Chavez said.
Ward Hendon, general partner at Dangerous Ventures, the Santa Fe venture firm that joined Hydrosonics' pre-seed round, said in a statement the firm is "thrilled to partner with Luis Chavez as he brings the Hydrosonics technology out of [Los Alamos National Laboratory].
"Dangerous [Ventures] supports entrepreneurs solving hard problems with the potential to make a big impact in the energy transition and lead us to a sustainable future," Hendon's statement continued. "This is precisely what Luis [Chavez] is building with Hydrosonics."
