Lithium ore falls through a separation machine.


Nearly every founder has the same concern: how can they ensure their startup has enough cash to deliver on its promise.

For most, that means wooing venture capitalists early and often, trading equity in the company and board seats for cash to keep the lights on. For Teague Egan, it also means courting retail investors.

Egan’s company, EnergyX, has spent the last several years developing a way to extract lithium for EV batteries from briny water locked underground. To fund its operations, EnergyX has raised over $90 million from traditional investors including GM Ventures, Posco, and Eni Next, according to PitchBook. But it has also raised over $80 million from retail investors, according to Egan, including a $75 million offering that closed today.

The offering “democratizes investment,” Egan told TechCrunch. Plus, he added, “it takes some of the power away from traditional VCs that always want to beat you down for terms.”

EnergyX’s offering took advantage of SEC Regulation A, which allows companies to raise up to $75 million from retail investors every 12 months. In exchange for access to unaccredited investors, companies submit to some light SEC oversight, including the filing of semiannual reports. The company remains private — a Regulation A offering isn’t an IPO — meaning investors can’t sell their shares on an exchange.

Regulation A has been praised for allowing unaccredited investors, or those whose net worth is under $1 million, the opportunity to invest in private companies before they go public. That gives them the potential to profit handsomely should a promising startup go public.

But Regulation A has also been criticized for letting smaller investors to place bets on risky companies. For example, solar-powered EV startup Aptera has raised more than $120 million in recent years by selling shares through crowdfunding sites. But the company, which has been promising to ship vehicles for nearly 15 years, has yet to deliver a single car to customers.

In Aptera’s case, crowdfunding provided a lifeline when it couldn’t secure traditional venture investments. EnergyX has secured recent venture investments in addition to its Regulation A offerings.

The company has used that funding to develop its own approach to direct lithium extraction (DLE), which draws lithium from water. A number of startups, including Lilac Solutions and Aepnus, are pursuing their own flavors of DLE, though EnergyX takes a hybrid approach, running brines through a number of different processes depending on the water’s origin. “All these brines are very different, and there’s not a one size fits all technology,” Egan said.

Egan said he explored going public through a special purpose acquisition company, or SPAC, during the height of the craze, but ultimately decided against it. “We need to be getting substantial, positive EBITDA before we go public,” he said. Instead, EnergyX did a deal with investor Global Emerging Markets, which will provide $450 million in the form of a PIPE. In the event of an IPO, the firm will get warrants along with a fee from EnergyX; it’ll also get shares at a discount when the startup taps that equity.

Still, EnergyX’s IPO appears to be years in the future, if one ever materializes. “We’re at least going to do one more major institutional round, our Series C,” Egan said. “If that gives us enough capital to execute on our first commercial projects that will start generating revenue, then it’s a discussion with the board of directors if we feel like we should go public to raise more capital and get some liquidity for early investors. Or maybe we’re just crushing it so hard that we can start paying dividends. Or maybe those acquisition offers start flowing in from big oil and gas companies.”

Crowdfunding, which it raised through crowdfunding platform DealMaker, and the PIPE aren’t the only hedge Egan has built into the company. EnergyX is aiming to sell its DLE equipment to companies mining lithium like Posco and ExxonMobil. But, Egan said, “those are really long sales cycles because they’re multi-hundred [million] if not billion-dollar final investment decisions.” So in addition, it is also planning to pull lithium out of the ground itself and sell it to customers directly. “In order to control our own destiny, we needed to do it ourselves and go acquire our resources.”

Currently, EnergyX has a lease to explore 90,000 acres in Chile, and Egan said it has a submitted letter of intent to lease 15,000 acres in Texas. In the first half of next year, Egan said the company will be commissioning a demonstration plant at both sites, each capable of producing 50 tons of lithium per year. Egan hopes the first commercial-scale plants are up and running by 2027.

The Regulation A offering will keep EnergyX running for at least two more years, Egan said. And because the common stock offering removes some pressure to raise from VCs, who tend to require preferred stock in exchange for their investment, it should also allow Egan to retain control of his own destiny a bit longer. According to the company’s semiannual report filed in September, he retains 47% of the company’s shares on a fully diluted basis. 

“There’s an extremely high percentage of startups that the founding CEO gets booted because of venture capitalists,” Egan said. “That’s not where I want to be.”

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