The path to growth-stage funding led to South Korea for XG Sciences Inc. in Lansing.
The company, founded in 2006, uses technology developed at Michigan State University to make an advanced nano-scale material called graphene. XG makes the carbon-based material for customers who develop lithium-ion batteries, a hot alternative-energy area of research for automakers and electronics manufacturers.
XG had just under $4 million in revenue last year, and its products are used in research and development by battery makers as they strive to produce smaller, more powerful batteries, CEO Mike Knox said.
XG’s $500,000 in seed funding came from Capital Community Angels Investors Inc. in Lansing and Ann Arbor Spark, Knox said.
For follow-on funding, XG had a hard time finding capital from in-state venture firms and corporations. But after a lot of legwork, Knox received backing from two major Korean conglomerates: Hanwha Corp. and Pohang Iron & Steel Co., or POSCO.
Through four rounds of funding from these companies as well as private individuals, XG was able to raise an additional $10 million. The company is working on another round now.
Half of the money has gone toward buying manufacturing equipment and the other half toward R&D. Knox said. The company in the past year and a half has gone from eight employees to 30.
Additional funding will help ramp up production as XG increases supply to existing customers and builds its business in the electronics industry, where companies can use graphene materials to cool processors and circuits.
Large Asian companies generally are more likely to nurture a tech startup that can benefit the large company down the road and will act faster to get these deals done, Knox said.
“We deal with global companies including automakers and big suppliers,” he said. “In our case, we had better luck with the Asians.”