WHILE some may take the gloomy economic climate as a sign to hold back, local companies SunGreenH2 and Flexxon believe that it's now all the more important for them to make their marks. The winners at the 2022 SelectUSA Investment Summit are setting their sights on expanding in the United States.SunGreen H2
While hydrogen is mostly derived from fossil fuels and natural gases today, there is the emerging lower-carbon alternative of green hydrogen, produced by electrolysis and powered by renewable energy. Cleantech startup SunGreenH2 uses a "unique set of materials and nanostructures" to make electrolyser components that increase efficiency and lower the cost of this electrochemical water splitting.
Amid rising energy prices, this technology is particularly relevant, chief executive officer and co-founder Tulika Raj believes.
"Higher oil prices contribute to inflation directly and by increasing the cost of inputs," she explained. "Alternative sources of fuel and feedstock like clean hydrogen help reduce demand for oil and gas and relieve the pressure from rising oil prices."
Headquartered in Singapore, the company opened a research and development (R&D) centre in Australia in early 2022 and is ready to put down roots in North America.
It plans to open a US office in end-2022 or early 2023, from which it will facilitate more strategic partnerships and evaluate the possibility of establishing a mass manufacturing facility in the country.
"There are 90 million tonnes of hydrogen currently being used in the world. 10 million tonnes of this market is in the US," Raj said.
"Everybody wants supply chain to be local," she added, noting that it is costly to ship parts across the globe. "We expect to see significant volumes (of orders) from the region and it makes sense strategically to actually locate ourselves alongside the industry in the major manufacturing hubs."
To finance its growth, SunGreenH2 has already raised a "multi-million dollar seed round of funding" from local and international investors, and is looking to hold a Series A funding round to raise US$15 million to US$20 million in early 2023.
According to Raj, "more than 99 per cent" of the world's hydrogen is stripped out of natural gas and fossil fuels today, despite the long history of producing hydrogen from water, which was at one point the "predominant way of producing hydrogen".
This is because it is significantly more expensive to produce green hydrogen. While rising commodity and gas prices over the past year drove up the production cost of fossil fuel-based hydrogen to about US$1.70 to US$2.20 per kg, this is still cheaper than that of green hydrogen, which is currently about US$6 to US$8 per kg.
However, the Inflation Reduction Act may change this. The piece of legislation, which includes about US$370 billion for climate and energy programmes, was passed by the US Senate on Aug 7. If it is then passed by the House of Representatives and becomes law, it would offer tax incentives that could lower green hydrogen production costs by US$3 per kg, Raj said.
As green hydrogen becomes more cost competitive, industries that traditionally use cheaper "grey hydrogen" from non-renewable sources will make the switch, thus boosting demand, she said. Given this expected boom -- and the corresponding rise in demand for its electrolyser components -- it makes sense for SunGreenH2 to have a presence in the US, she added.
The company is currently delivering pilots to "major electrolyser manufacturers" in the US and scoping out the eastern and western seaboards as potential locations to establish itself.
Said Raj: "Everywhere in the world, hydrogen is going to become cheaper than any other form of hydrogen production by 2030. Now, the question is, where is it going to become cheapest first?"Flexxon
With existing offices in Singapore, Malaysia, Hong Kong, mainland China and Taiwan, cybersecurity business Flexxon is now preparing to set up a regional office in the US, its first in the Western hemisphere. The company, which specialises in hardware cybersecurity solutions and industrial NAND storage devices, currently has 2 on-the-ground sales staff in the country.
With the expansion, Flexxon intends to shift away from its sales-focused approach to the region, moving into R&D and local production instead.
CEO Camellia Chan and chief operating officer May Chng have met potential partners in the US and visited cities in the Bay Area, Sacramento and Texas to scout for a potential site for Flexxon's US headquarters, which will include an R&D facility, sales operations and an eventual manufacturing facility.
Flexxon plans to start on-ground operations in the US within the next 6 to 12 months, financed via some US$30 million in external funding as well as through internal profits, the figures for which they declined to share.
"The US, much like Singapore, is also a global leader in innovation and technology, and also possesses a great talent pool which will be beneficial for the sharing of expertise," said Chan. "Further, the US is also a gateway to many other countries in the region that are in dire need of leading cybersecurity tech solutions."
Last year, Flexxon officially unveiled its flagship cybersecurity solution, X-PHY Cybersecure SSD, "the world's first Al-embedded hardware-based cybersecurity solution" which removes the need for human intervention and protects against physical attacks.
It has partnered with major PC manufacturers Lenovo, HP and Asus to integrate the X-PHY into their computing devices, Chng added.
Flexxon is confident in its ability to thrive in the US market, said Chan and Chng: "Even in the face of a recession, cybersecurity remains essential. In fact, it is even more important to invest in cost-effective cybersecurity solutions during an economic downtown."
Chng added: "We have been laying the groundwork for this move over the last 2 to 3 years, in which we have established strong links with on-ground experts and affiliates, and customers too. We believe that now is the right time for us to move."A gateway to the US
The international SelectUSA Investment Summit, hosted by the US Secretary of Commerce, promotes foreign direct investment to the US by bringing together economic development organisations, industry experts and tech companies to network and collaborate.
This June, supported by Enterprise Singapore, 39 delegates from 28 Singapore companies attended the event in Maryland, comprising the largest Singapore delegation to date.
At the event's startup pitching sessions, which covered industries such as cleantech, cybersecurity, fintech and medtech, Singapore secured 4 wins -- the highest out of the participating countries.
"The US market leads in technology and innovation for areas like agri-food, sustainability and electric vehicles. These are areas that also see strong demand in Singapore and Asia," said Clarence Hoe, global markets executive director for Americas and Europe at Enterprise Singapore. "Hence, the US remains an important source of innovation that Singapore companies can tap to build capabilities to address the demand in Singapore, Asia, and beyond."
Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.