Semiconductor startup Phononic entered 2014 with a $21 million funding round to bring the company’s new cooling technology into refrigerator production lines.
Phononic is still on track to break into home refrigeration. But the company is closing the year with an additional $44.5 million in funding as it stakes out opportunities to cool other devices beyond the home. The Durham, NC, company raised its latest funding in a Series D round led by Eastwood Capital Corp. and the Wellcome Trust.
Barring any new financing announcements before the end of the year, Phononic’s $44.5 million round could end up being the largest for any North Carolina company in 2014, based on a review of figures kept by the National Venture Capital Association.
Phononic does not make refrigerators, air conditioners, or any other type of cooling equipment. It makes a solid-state heat pump that replaces the compressor—the motorized pump that moves refrigerant throughout a conventional cooling system. In addition to eliminating the need for a toxic refrigerant, the technology also uses less energy. Those characteristics have drawn attention from a swath of industries ranging from telecommunications to the life sciences.
“We revisited the other markets,” CEO Tony Atti tells Xconomy. “We found the opportunities in electronics were not only compelling, they were remarkable.”
The technology is based on thermoelectric generators, devices that convert heat into electricity. That process can be reversed, resulting in thermoelectric cooling. Phononic’s business model is to work with equipment makers, such as refrigerator manufacturers, who incorporate the Phononic heat pumps into their production lines.
Atti won’t disclose Phononic’s refrigerator partner in China, nor will he say whether the company has more than one partner in Asia. But he has said that the company initially focused on Asia because it represented the best market opportunity. Many households in Asia are getting refrigeration for the first time, so market adoption could be faster there than in the United States, where consumers would need to be convinced to upgrade.
Last year’s $21 million Series C round actually topped out at $26 million, Atti says. That funding was applied to Phononic’s North Carolina manufacturing facility, located just outside Research Triangle Park, while also supporting the steps needed to bring a new component into refrigerator production with Phononic’s undisclosed partner. Atti says the new financing will be used to expand the company’s manufacturing capabilities along with its sales and marketing efforts.
Phononic is now split into two business units: a cold products division, which targets refrigerators, and an electronics division. The electronics division will address
