EcoFlow, a Chinese hardware firm developed by former JDI engineers that sells portable power stations, has pulled in a Series A round of over $4 million ahead of the imminent launch of new products and an international sales expansion.
The Shenzhen-based company has taken an interesting route. Founded in 2016, the startup burst on to the scene when it launched its River product in an Indiegogo campaign that pulled in $1 million. Today, River is available in the U.S. where it is sold via Home Depot, Camping World, Amazon, HSN and the EcoFlow website for $699 upwards.
That’s pretty impressive progress for a young company, and CEO and co-founder Eli Harris told TechCrunch in an interview that relationships with key partners are at the core of that. In particular, EcoFlow has raised strategic investment from supply chain partners rather than traditional VC and that is the case again. This new $4 million came courtesy of battery makers Guangzhou Penghui Energy and SCUD Group, industrial design tooling factory ESID, and supply chain-focused firms Delian Capital and Chunjia Assets.
Names that aren’t known in Silicon Valley, for sure, but the key is what they bring to the table.
“Our investors are almost entirely vertically integrated with every component in our supply chain,” Harris said. “That gives us access to these top-tier manufacturers that no startups could enjoy and help us get direct access to vendors at large companies.”
Aside from reaching quality components and getting a good price, relationships with these component makers help EcoFlow with its cash flow — always a challenge puzzle piece for hardware startups. Harris explained that the relationships allow his company to delay paying for components rather than having to pay upfront — before product is sold and revenue comes in — which optimizes the books and means the capital can be put to work on R&D, sales and marketing and more.
The River itself is touted as industry-leading portable power. Aside from an aesthetic nice design, the li-ion-based device has a total output of 500 watts, weighs just 11 pounds and features two quick-charge USB ports, two USB type C ports, two standard USB ports, two AC outlets, two DC outlets and one 12V car port.
Now EcoFlow is doubling down with plans to launch two new products before the end of this year. Harris isn’t providing specific details right now, but he said the company is looking to take advantage of its promising growth.
“We think we are around 18 months ahead of the market in terms of engineering capabilities. Most experienced battery players are going after electronic vehicles and industrial opportunities, while smaller players have issues getting to manufactures, talent and money to build portable energy solutions,” he said.
While $699 may make the product a luxury for some — despite a $100 discount right now — Harris said that the price is likely to decrease going forward as technology develops.
“Batteries are expensive products but we will see costs come down with the expansion of the EV market, so we’ll be trending in the right direction. But people who understand the tech don’t think it is an expensive product,” Harris explained.
“A lot of the tech we use now will be utilized in future products so that’ll mean lower development costs as we leverage existing IP. We’re also exploring using second life batteries since cells are one of the biggest expenses of the product,” he added.
Working with those battery makers that it also counts as investors could help on that second-life battery push, which could cut the costs to one-fourth of what EcoFlow pays now.
While tactically-selected investors are a boon for many reasons, Harris admitted that they do require educating of the investor-investee relationship as it is unconventional in their space. But, he said, increasingly large component and manufacturing firms are keen to do startup investments to help get new ideas, open relationships in the U.S. and explore other new areas of focus.
“A lot of the manufacturing industry players have been stuck in that OEM wheelhouse and there’s more competition now. The previous models of just churning out product might not be sustainable, and margins are thinner,” he said.
Most immediately, EcoFlow is looking to expand sales beyond the U.S and Canada with plans to move into Europe later this year. It also plans to raise a “significant” funding round before 2018 is out as the two new products hit the market.