The same problem that many entrepreneurs encounter is finding sufficient finance to maintain the course of their business. Teague Egan, the company’s creator, is pursuing both venture capitalists and individual investors in an unconventional strategy to finance his lithium extraction business.
EnergyX has raised approximately $90 million from established investors like GM Ventures and Posco. The company develops technologies to harvest lithium for electric vehicle batteries from underground brine. Egan has raised more than $80 million, including a recent $75 million offering, by reaching out to retail investors as well. SEC Regulation A, which permits businesses to raise up to $75 million a year from unaccredited investors, made this possible.
Since retail investment allows greater flexibility without sacrificing as much control, Egan believes that this strategy “democratizes investment” and lessens the influence that venture capitalists have over firms. Smaller investors, who usually have a net worth under $1 million, can participate in private companies according to Regulation A.
Regulation A has, however, come under fire for putting smaller investors at risk. For instance, the solar-powered EV firm Aptera has received more than $120 million through crowdfunding, but they have not yet produced a product. EnergyX’s retail products have attracted a substantial amount of venture financing, but there is still some risk associated with the concept.
Additionally, Egan decided against going public with EnergyX through a SPAC and instead made an agreement with Global Emerging Markets, obtaining PIPE funding of $450 million. EnergyX is now private, with prospective IPO ambitions possibly years away. In the meantime, the company is looking into potential locations for lithium extraction in Texas and Chile in an effort to start making money from commercial plants by 2027.
With the help of retail investment, Egan hopes to hold onto his 47% ownership of EnergyX and prevent venture investors from displacing the company’s founders, which is a typical outcome.