IT Arena 2024 kicks off in just three months. IT Arena 2024 kicks off in just three months. Ahead of the country’s most anticipated gathering of tech visionaries, geeks and emerging startups, we decided to give you a chance to get to know the speakers of the upcoming event better. In the first article of the series, we talked to Arnaud Castaignet, VP of Government Affairs and Strategic Partnerships at Skeleton Technologies, a European leader in high-power energy storage and fast-charging technologies. In addition to juggling his day job responsibilities, Arnaud supports Ukrainian defenders with volunteer initiatives. 

What is Skeleton Technologies? Could you provide a concise overview of the company’s activities?

Skeleton Technologies is an Estonian high-power energy storage company created in 2009. We produce supercapacitors – an energy storage technology, which can be compared with batteries but with much more power for a shorter time – and a high-power battery called “SuperBattery”. For instance, we don’t manufacture the usual lithium-ion batteries for electric cars. We don’t compete with ACC, Verkor or Northvolt. We focus on applications that require fast-charging and high-power, in sectors like heavy-duty and off-road vehicles, grid, data centers, rail… We also work in other areas such as space, aeronautics, and nuclear power generation. Our products are very versatile. In the battery industry, it is important to have in mind that there is no silver bullet. Lithium-ion batteries are very suitable for electric passenger cars but they are not suitable to power and decarbonize all sectors and applications. It is critical to have diverse battery technologies.

Our first factory is near Dresden, and now we are building a bigger, fully automated factory in Leipzig, also in Saxony. Additionally, we have R&D centers in Helsinki, Finland, next to Aalto University, and in Bitterfeld-Wolfen, Germany, focused on material development. We recently announced our plans for expansion to France, planning to invest €600 million in an R&D center and a factory for our high-power batteries. In 2027, our French factory should be operational. 

Choosing locations for expansion involves considering where you can build factories quickly, with good quality and low cost, and where strong R&D partnerships can be established. In France, we will collaborate with CIRIMAT, an R&D center, part of the University of Toulouse 3, a leading institution in high-power batteries. Many potential customers in Toulouse and the Occitanie region, including Airbus, Thales Alenia Space, Siemens Mobility, or Alstom, could potentially collaborate with us and buy our products. From a business and industrial perspective, having a presence in this region makes a lot of sense, as it’s one of the most innovative areas in Europe for industry and many potential partners are there. Also, we want to be IPO-ready by 2027.

What are your core responsibilities? 

As the Vice President of Skeleton Technologies, I cover strategic partnerships, government affairs, public policy, and PR. I represent the company in discussions with governments, whether French, Estonian, or others. I draft our public policy positions because there are many regulations and reforms related to batteries and industrial policy. I also represent Skeleton in dealings with the European Parliament and the European Commission.

I help the company defend its interests. Building an industrial company, a clean tech company with a hardware product, differs from developing a software company because you need to think about supporting R&D, CapEx investment, and building a factory. A new law regarding international trade can affect us. We must also defend our interests when facing competition, especially in the battery area where the market is largely dominated by  Asian players, mostly from China.

Skeleton Technologies is part of many European organizations such as Cleantech for Europe and the EU-Japan Business Roundtable, where I represent the company. Additionally, I also manage our strategic partnerships, which are the partners that are both investors, customers, and sometimes distributors of our products, key stakeholders that are critical for our global growth. Here, teamwork is crucial as the topics to address are various, because it can cover finance, investment, commercial and supply aspects.

What recommendations would you make for PR specialists who want to work with strategic partnerships?

Some people see PR as just communication and answering interviews. However, I see it as much wider, perhaps because of my political background. For me, PR is about representing the entire company. You need to promote and explain the business. When you do PR and meet many people, you may become interested in public affairs because you understand what affects the company and what new regulations can bring. You meet politicians, so you need to understand political topics and how they impact your business. This leads to involvement in public policy and government affairs.

Strategic partnerships are a mix of business development, PR and government affairs. Dealing with governments, public or private companies and partners, involves bringing together different stakeholders to find common interests for a win-win situation. In politics and partnerships, you need to understand the interests of the other side and use creativity to find new projects and mutual benefits for both organizations.

In my work, it’s important to be curious. You often understand things by asking questions. You need to listen to what affects us, what interests others, and what they’re working on. So, you need to start asking questions, reading a lot of news, and understanding what’s happening in the markets, the business world, and geopolitically, especially for a sector like batteries, which is pretty linked to geopolitics.

What are the key trends currently shaping the energy storage industry?

One major trend is that supply chains are becoming more localized due to geopolitical reasons. When building batteries or drones, make sure you have access to all components. Previously, components came from everywhere. Now it gets more and more difficult. In key technologies like batteries, solar panels, electrolyzers, hydrogen fuel cells, and semiconductors, having full control over the supply chain is important. If any crises happen, you need to still have access to production. 

Many battery industry players now try to focus on creating batteries that don’t rely on nickel, cobalt, manganese, or even lithium. Innovation is happening in advanced materials, better recycling, and developing synthetic alternatives to critical materials. You will not need to mine them from the Democratic Republic of Congo, then process them in China, etc.

Electricity production and consumption are also crucial. As we electrify more, we need more power plants – nuclear, renewables – and must build them quickly. We need to strengthen the grid to integrate more electricity from renewables because, in the future, the grid might be much more destabilized, and there will be many more power cuts if the grids are not more robust and able to handle peak power. Some of the next major battery innovations will likely focus on electricity grids rather than vehicles. Without more electricity and a better grid, building more factories is impossible. 

AI is obviously a major trend. The use of AI is booming. AI’s increasing use significantly boosts electricity consumption, particularly in data centers. In Ireland, for instance, 25% of electricity consumption is for data centers. This could become a major issue for all the sectors.

Is cooperation with Ukraine possible for Skeleton Technologies?

Although we do not have business cooperation with Ukrainian companies, it is possible. Ukraine would potentially need energy storage and grid stabilization systems, especially given the attacks from Russia on power plants. There’s more and more need for electricity generation that can be generated quickly and more decentralized, likely wind power. We can see more wind power plants being developed in parts of Ukraine. If rockets are sent to one gas-fired or coal-fired power plant, it can be taken down easily. However, if you have fields with 20 wind farms, they cannot all be destroyed at the same time. Decentralized and distributed generation installations are often promoted to improve the resilience of critical infrastructure during disasters or grid-disrupting events.

Electricity from renewables can however be unstable due to intermittency – there’s not always wind or sun. This can destabilize the electricity grid and cause power cuts. Energy storage systems focused on high power can stabilize the grid, handle peak power, and integrate renewables, making them more acceptable to the grid and reducing the risk of power cuts. Therefore, energy storage is crucial to strengthening Ukraine’s energy independence. We can build a more robust infrastructure by decentralizing energy production and storage.

Energy storage can effectively help balance supply and demand in Ukraine’s power grid, minimizing power outages and fluctuations. By pairing large-scale battery installations with hydroelectric plants, for instance, excess energy can be stored during low-demand periods and released when needed to ensure a consistent electricity supply. High-power batteries and supercapacitors can also act as temporary energy buffers during short-term power outages, helping maintain power quality and prevent blackouts.

We don’t do business with Ukraine at the moment. However, we are open to discussing potential cooperation with energy companies or transmission operators.

What advice can you give to Ukrainian deep tech and defense tech startups?

You should target those willing to invest in defense startups because not all investors want to. Additionally, finding R&D programs and grants, especially in Europe, is particularly useful. Many Ukrainian companies can apply for grants from the EIC or Horizon Europe. Grants can provide a lifeline during the development and prototype phase before you have production or customers.

Public grants are very much available so try to leverage them. Many people are unaware they can apply for them. Examples, like Seeds of Bravery, can raise awareness about available entitlements. Many European funds go unused simply because people don’t know they can apply. A lot of money is available, so it’s important to understand which grants can support your company at each stage, whether for fundamental research, industrial research, or CapEx investment.

Lastly, finding an industrial partner is critical. Industrial companies need strategic partners, unlike software companies, which can scale quickly and on their own. These partners can be investors and help with manufacturing and customers. So you need to find the right complementarity with industrial companies.

Ukrainian startups in Europe, especially in defense, are among the most innovative. They can quickly test, develop, and receive feedback on their products. Ukrainian startups need to leverage this advantage. I know it’s strange to say that this is advantageous. This happens only because of the war, and this is really horrible. However, it has led to the development of creative and innovative products that are much more innovative than in big companies. These products can be tested in real conditions.

For defense startups to scale from Ukraine, it is critical to target big industrial companies like KNDS, Arquus, or Rheinmetall. These companies have experience building factories and producing on a bigger scale, which is going to be difficult for Ukraine startups. This is where the help from these companies can be really important. At the same time, Ukraine defense startups can bring creativity and a mindset of “moving fast and breaking things” to these companies. 

Creating an organization to represent these defense startups would allow them to speak with a single voice to the Ukrainian government and European organizations, defending the interests of this fast-growing sector.

You mentioned a grant named Seeds of Bravery. Could you explain how Skeleton Technologies contributed to the creation of Seeds of Bravery?

Seeds of Bravery is a consortium involving several organizations, including the Ukrainіan Startup Fund, INNOV8, and many European stakeholders. The coordinator is a Polish organization called Funding Box. This consortium manages a fund set up by the European Innovation Council, created to support Ukrainian deep tech startups. I am a member of the Advisory Board.

The fund, amounting to €20 million, was inspired and proposed by the CEO of Skeleton, Taavi Madiberk, who is also a European Innovation Council board member. When the full-scale invasion started, the priority was to support Ukraine’s defense industry. However, there was concern about deep tech startups, sometimes with public grants that might lose funding or access to European markets. The fund was created to directly support these startups, helping them seize opportunities in Europe and integrate more with the European startup ecosystem, especially in industrial and deep tech fields. Seeds of Bravery is now launching a call for Ukrainian startups.

Despite being associated with war, Ukraine has long been a tech-savvy and innovative nation. Before the full-scale invasion, Kyiv produced GitLab, Ukraine’s first unicorn, and Odesa was home to startups like Looksery, acquired by Snapchat. 

Ukraine was the fastest-growing tech powerhouse in Europe and continues to be, now with a focus on defense tech due to urgent needs. With initiatives from the EIC, Ukrainian entrepreneurs can still build strong ties with the European tech ecosystem and access opportunities. We want to see more tech unicorns from Ukraine. 

But we are convinced that the country has everything regarding education, particularly in STEM, like science, technology, etc. So, the future is going to be bright. That’s why it is really important to have this kind of funding that can help startups survive and access more opportunities, especially in Europe. 

You are also working on the Adopt a Drone initiative, which raises money and delivers drones to the Ukrainian army. Could you explain how it works?

We are running this initiative with two friends from the Netherlands and Estonia. We fundraise and buy drones required by different Ukrainian brigades, delivering them directly to soldiers. Our “Adopt a Drone” campaign allows donors to write a name on a drone. We also get videos showing how drones are used. We started in April-May 2022, responding to calls from the Ministry of Defense for civilian drones to guide artillery and conduct surveillance.

Now, most of our drones are used for kamikaze operations or delivering explosives. We adapt based on feedback from soldiers, sometimes providing FPV drones and other times drones with night vision. Since the full-scale invasion began, we’ve delivered over 250 drones and raised over €200,000. We recently partnered with Wild Hornet Drones to purchase more Ukrainian-made drones, supporting Ukrainian manufacturers and jobs. It’s better than buying drones from Chinese or American companies. 

My last delivery was in May, and the next will be in July to the Rubizh Brigade from the National Guard of Ukraine and the Bulava Presidential Fly Team, which is part of the separate Presidential Brigade. We will continue helping as much as we can until Ukraine’s victory. 

Could you give us a preview of your talk at IT Arena 2024?

One of the things I want to talk about is scaling hardware products. Hardware start-ups face specific issues which can be very different from the ones faced at an early stage by software companies. First, keep in mind that return on investment investment will come much later than with a software company, making it sometimes riskier for investors. They need to be patient and understand they must be here for the long term. This is because even if you have a great idea and technology, you need to develop your prototype, then when you have your prototype, you need to be able to convince potential customers, despite not having at that moment the capacity to produce larger volumes. You may find potential customers who will sometimes agree to purchase only if they are sure you have enough manufacturing capacity. But to invest in manufacturing capacity, you need customers. It’s tough at the beginning, hence why public support and subsidies for instance can be a good opportunity for your first investments, allowing you to set up a pilot production or demonstrators. The first customer is also crucial because you need use cases and flagship projects to showcase your expertise. For us, this first customer was the European Space Agency. 

Once you have production, new challenges arise: how to scale production, what kind of technology to use, and how to move from handmade processes to automated solutions. Next, you need to build large-scale factories. This explains why we chose Germany first, then decided to do R&D centers in Finland, and we’re now expanding to France, where we see a lot of commercial traction and R&D cooperation opportunities. Various factors influence the decision to expand activity in a particular country and you should not necessarily go for the cheapest option.

Don’t miss Arnaud Castaignet’s talk at IT Arena 2024. Tickets: itarena.ua