Fallbrook raises $25M for transmission tech

San Diego-based startup Fallbrook Technologies today announced it raised $25.4 million to speed the commercialization of its transmission technology for bicycles, light electric vehicles and automobiles.

Fallbrook’s NuVinci continuously variable planetary transmission uses rotating and tilting balls to improve the performance of engines by up to 30 percent. The company has created a subsidiary, Vyrid, to use the technology to improve the performance of wind turbines, with units for small wind expected in the next 12 months.

Fallbrook CEO Bill Klehm told the Cleantech Group that the company has sold more than 20,000 transmission systems since late 2006 to the bicycle market. The company began shipping units in December for light electric vehicles and expects to have a market-ready product for the larger automotive market in 12 to 15 months.

"The technology risk has been taken out of the equation," Klehm said."Now it's time to commercialize the applications we've built."

NGEN and Robeco, the investment arm of Rabobank, each contributed $10 million to the round, while undisclosed previous investors contributed $5.4 million. Those undisclosed investors previously provided Fallbrook with $25 million in equity.

Today’s fund-raising was Fallbrook’s first from the venture community, which Khelm said was because Fallbrook needed experienced investors to help grow the company. NGEN Managing Partner Steve Parry and Robeco’s Senior Investment Manager Keimpe Keuning are joining Fallbrook’s board of directors.

Parry characterized the investment as a technology play, saying the need for energy efficiency goes beyond the electric grid. Fallbrook's technology offers efficiency improvements equal to those achieved by battery technologies without the high cost, he said.

"This technology provides the same type of energy efficiency improvements and is ready to go to market today," Parry said. "We see this as a much more elegant and simple way to create energy efficiency in the transportation sectors than other methods being financed today in the venture community."

Fallbrook CTO Don Miller developed the technology behind NuVinci, and the company's team of researchers in Austin, Texas, have since expanded the patent portfolio to 300. The company is now seeking to license out some of that technology, including applications in lawn and garden care.

Fallbrook outsources manufacturing because its components are simple, Klehm said. NuVinci improves the engine’s performance, increasing the ability to climb hills and accelerate, he said. In wind turbines, the system adjusts to variable wind conitions by shifting the transmission so the generator sees a constant speed.

The company has few direct competitors, as many companies are working on increasingly sophisticated electric motors but few are looking at using the transmission to improve performance, Klehm said.

Fallbrook expects to sell a couple thousand transmission units for LEVs in 2009 and hopes the new financing will bring the company to profitability. The market with the biggest potential is accessory drives for the automotive sector, Parry said.

Klehm said the transmission technology has several applications for accessory drives: to power systems such as lights at idle, to boost turbocharged or supercharged engines, and to improve overall fuel economy by powering accessories such as air conditioning.

"Our system allows the engine to operate independently of accessories to optimize conditions," Klehm said, noting that about 9 percent of the nation’s oil is used to power the air conditioning units of cars.

Fallbrook has 50 employees and serves OEM customers around the globe, although predominantly in Europe.