A company that had humble beginnings in Chilliwack more than 20 years ago hit the big time last week when it went public on the Toronto Stock Exchange. Loop Energy, a pioneer in the world of hydrogen fuel cells, may one day soon be a billion dollar company.
Here’s part two in a three part series, detailing the long journey from there to here.
David Leger has two rules he follows when raising capital for business opportunities.
Don’t invest money you can’t afford to lose. And if I do lose your money, you’ll still have a beer with me.
When Loop Energy was incorporated in June of 2000 and the founding directors went to work raising capital for his fuel cell project, they found plenty of Chilliwackians willing to accept those rules.
There were lots of discussions at kitchen tables about his vision and his dream for what he thought might be possible. Local business people kicked in cash. People dipped into the retirement savings plans, handing Leger $10,000 here or $12,500 there because they believed in what he was doing.
The company ended up pulling in $350,000, with the majority of the company’s initial shareholders hailing from Chilliwack.
That sounds like a big amount of money, and it is, but Leger chuckles now as he looks back at those early days.
That startup capital was enough to get Loop Energy through its first two years, where now, in a company that employs 40-plus people, it would run out in 20 days.
Leger also chuckles when he looks back at the early business plans he drew up, calling them hilarious.
They were going to build a fuel cell for $60,000 and within three or four years they’d have one in a vehicle.
It was funny and naive, he says now.
But with the startup capital fueling their efforts, they had started down the path towards something big. They were seeing improvements in their design, despite being, according to Leger, unsophisticated. They were still learning about things they would come to know well, like compression and humidification, yet they were still getting great results.
It didn’t make sense. But it did make sense, if that makes sense. David was seeing too much evidence that the way they were building their fuel cell was closer to the way it should be done.
As Leger likes to say, he never ran into a reason to stop, and by 2004 Loop Energy was close to something even he hadn’t dared to consider.
They had a chance to optimize a fuel cell.
Leger likened it to the Venturi tube, just a little tube in a carburetor that transformed the auto engine into a far more efficient and powerful thing.
“We might have the Venturi tube equivalent in a fuel cell,” he mused.
By 2005, with key contributions from the engineering team, including that of Chilliwack born Greg Montie whose father owns Montie’s Small Engines, they had officially filed a patent on their ‘eFlow’ technology, and Loop Energy had a decision to make.
Continue their pursuit of a fuel-cell powered electric motor, or focus on the fuel cell alone.
“Well, in order to build the motor we need the fuel cell, so that tells us what we need to do,” Leger suggested to the Loop Energy board.
He also knew they had to keep hitting new points of credibility, or they would quickly become old news. And that’s kinda sorta what happened. Loop Energy didn’t become old news, but with the fuel cell industry as a whole did.
Vancouver-based Ballard Power led the fuel cell hype train in the early 2000s. They had the backing of Daimler and Ford, and statements were being made that there would be 100,000 electric vehicles fueled by Ballard fuel cells on the road by 2003.
Ballard’s stock went through the roof, but it was a case of over-promising and under-delivering.
Thousands of electric cars didn’t hit the highways, and by 2006 the hype train had stalled, interest in fuel cells had waned considerably and Leger was having trouble getting more capital for Loop Energy. At a 2006 board meeting, the decision was made to put the company into hibernation.
They could have kept going, but at a high cost, giving away 80 per cent of the company just to fund another year.
“The company shouldn’t be alive just to pay paycheques,” Leger thought. “It should be alive because it’s going towards being successful.”
The lights were shut off, and while the dream wasn’t dead, it was on hold.
For how long? No one knew.
See www.theprogress.com for part three in this three-part series on March 3.