sen severe final nsf i corps presentation

1

Dr. Jason Gu

Co-founder / CEO

jasongu.sensevere@gmail.com

412-370-8293

# of customers: ~85 peopleHydrogen sensors in Chlor-alkali

3Founding Team

Dr. Jason Gu

Dr. Peter Foller

Prof. Robert F. Davis

Prof. Lisa M. Porter

Mr. Jacob Melby

Principal inventorCEO and Entrepreneurial Lead

Former Director of R&D Chemical and Optical, PPG IndustriesMarket Exploration and Acquisition

Professor of Materials Science, CMUNational Academy of EngineeringAdvisor and Mentor

Professor of Materials Science, CMUTechnological Development and Principal Investigator

Graduate Student, Carnegie Mellon UniversityPrincipal Engineering Specialist

4

Major Commodity Market – Chlorine Production

Plant cost: $1B

Thorn in the lion’s paw (184 incidents in Europe, 4yrs)

H2 + Cl2 = Co-produced

5

Hazardous Industrial Environments

[Current Standard-Operating Procedure]Once a week monitoring

[Innovation]Real-time data

VS

Licensed Novel technology [H2]

6

Partnership with dominant technology provider in C/A.

Product development 66% completed.

Customer pilot plant test approved. Plant visits.

Market survey sent out to C/A plant managers

7H2/HC Monitoring

In Severe Environments

Efficiency

Severe Environment

Operators

Provide infrastructure

Component sourcing

Direct

Domain Specific Suppliers

Distributors

Sensor SalesMonitoring Services

Royalties

Suppliers/ Manufacturers

Research Institutes and

Journals

Contract Design Shops

Domain Suppliers

Regulatory and Government

FixedSupplier

Economics

Sales and Marketing

Product Development

Production

IP and Expertise

Capital Assets

Applications

Chlorine Production

Regulatory/Insurance

Explored Item

8Value Propositions‘Need-to-have’s ‘Nice-to-have’s

Detects specific species (typically ratio of species)

Sufficient kinetics and sensitivity Signal reliability (no false

positives/negatives) Wireless (if high volumes) User interface (if software) Visualization of data

Can be display on sensor or even warning LEDs

Sensor lifetimes matching replacement cycle of another more crucial part

Extreme kinetics and sensitivity Wireless (if low volumes) Low-cost Extremely Long-lasting Detection of other species Low-power

Minimum viable product:It only has to work, and be easy to use.

9

Efficiency

Severe Environment

Operators

Provide infrastructure

Component sourcing

Direct

Domain Specific Suppliers

Distributors

Sensor SalesMonitoring Services

Royalties

Research Institutes and

Journals

Contract Design Shops +

Suppliers/Manufacturers

Domain Suppliers, Regulatory and

Government

FixedSupplier

Economics

Sales and Marketing

Product Development

Production

IP and Expertise

Capital Assets

Regulatory/Insurance

Minimum Viable Product

Reliably detect species of interest

Easy to use

Sync with other cycle

Wireless(if volume)

Domain Specific Suppliers

(especially if R&D is needed)

Chlorine Production

…

Explored Item

H2/HC Monitoring In Severe

Environments

Applications

Accepted

10Channel Interviews

1. C/A Partner1. Regional

1. Director of R&D2. Director of Marketing3. Director of Product Service

4. Senior Acct Managers5. R&D Engineers

2. Global1. CTO

2. Jeff Farbacher, CEO Accutran

3. Charles Noll, Marcellus Shale Development Group

4. Former GE Employee

5. Tim Fogarty, Director of IW Energy

6. Ed Faust, Global Marketing, Siemens

7. Dr. Bob Lad, President of Environetix

Emerging Markets Interviews1.Jonathan Levine, Hydrate Researcher2.NETL Methane Hydrate RG3.Berkeley sensors group

Technology Supplier

Industrial Plants

Plant #1

Plant #2

Plant #3

Understand Economics of Plant + Sensors

Understand Economics of Technology Supplier

Value pricingWho does this?

12

Efficiency

Severe Environment

Operators

Provide infrastructure

Component sourcing

Direct

Domain Specific Suppliers

Distributors

Sensor SalesMonitoring Services

Royalties

Research Institutes and

Journals

Contract Design Shops +

Suppliers/Manufacturers

Domain Suppliers, Regulatory and

Government

FixedSupplier

Economics

Sales and Marketing

Product Development

Production

IP and Expertise

Capital Assets

Regulatory/Insurance

Reliably detect species of interest

Easy to use

Sync with other maint. cycle

Wireless(if volume)

Domain Specific Suppliers

(especially if R&D is needed)

Chlorine Production

…

Explored Item

Minimum Viable Product

H2/HC Monitoring In Severe

Environments

Applications

Accepted

13Diaphragm Membrane

$240/MT Cl2

Cost of damages + downtime per incident per year

Operational conditions Capital cost per incident Downtime per incident # of cells protected Time between incidents Number of cells, US and worldwide

Diaphragm Membrane Membrane Header

$2,500 $270 $10,600

Value per unit per year

14Soft product launch projected for Q1-Q2 2012General launch projected for Q4 2012

Year Type % Revenue [/year]1 Innovators (US) 2.5 $271,500

Operating costs for 1st year projected to be $350,000

2 Early Adopters 16 $15,040,000

3 Early Majority 50 $47,000,000

4 Late Majority 84 $78,960,000

Full Penetration 100 $94,000,000

Diaphragm Membrane Membrane Header

$2,500 $270 $10,600

15

ensors market2011: $5.6B (US) $15B (World)2014: $6.1B (US) $20B (World)

Hydrogen in Chlorine: $94MHydrogen in [Fluorine, Bromine, Iodine]Hydrocarbons in high pressure (methane hydrate exploration)Hydrogen + hydrocarbons in high temperatures (refineries)Wireless transmission of temperature data at high temperatures (quality assurance)pH and temperature in acidic solutions (steel making)Hydrogen + hydrocarbons in anaerobic conditions (transformer gas monitoring)…..

Fragmented technologies and market

16Next Steps

• NSF SBIR Phase 1 Submitted

• Product launch in chlor-alkali market

• New markets

• Grow, Grow, Grow….

17

Back-up

18

Sensors for improved process control in severe environments

But!Deployment of sensors in severe environments is very

difficult.

represents severe environment sensing technologies and products aimed to serve energy production/generation and commodity chemicals

IdeaBig

19

Hazardous Industrial Environments

Low Volume / High Customization

Where do they get their sensors? Specialized systems distributors

Will fund R&D Existing channel into markets

Industry technology providers Will fund R&D Excellent channel into specific market

Specialized sensor providers

Current Chlor-alkali Partner

21

End Users

Direct Sales LicensingDistribution Partnership

Direct Marketing Possible if localized

customer base – Very difficult

Very difficult to gain internal approval for infrastructural applications

Sourcing Agency Not possible if there is

competition from a larger supplier

Agency will not risk relationship with bigger firm if only for a marginally better product

Specific industry supplier[Chosen path for H2 in C/A]

If no overlap in product offering, then great deal

Will fund research and development to add to their product offering

Generally no desire to enter broader market

Strong ties with market

Sensor distributor Potential source of

competition if marketing similar product

If allow them to access different branch of market, then OK

Specific industry supplier Depends on product

control If no control, then bad

arrangement. No guarantee on service or QC

If control, then can be a good arrangement

Sensor distributor Potential source of

direct competition If allow them to access

different branch of market, then OK

22Value Add Interviews

• Industry clients– Chlor-Alkali Partner– Dr. Peter Foller, Former Director of R&D, PPG– Former C/A plant employees

• Domain Experts– Prof. Ruby Ghosh– Prof. Anita Spetz– John Matsumura– John Crofton– Former employee of hydrogen sensors company– Dr. Harpreet Gulati– I2T Consulting Services– Chevron Advanced Technologies

23Interviews1. C/A Partner

1. Global Director of Technology Seek,

2. Regional Engineers, Senior C/A Client Manager

2. Dr. Peter Foller, Former Director of R&D chemical and Optical, PPG

3. Tim Fogarty, Former Director of IW Energy

4. Ann Truschel, Corporate Insurance Broker

5. Gerald Driggs, Ground Floor Consulting

6. Custom semiconductor grower

7. Funding organization

Emerging Markets Interviews1.Dr. Gary Hunter, NASA Glenn Research Center2.Frank Stienke, Schlumberger Affiliate3.Eilis Rosenbaum and Jonathan Levine, Hydrate Researchers4.Pine Liu, Entrepreneur in Smart Sensor Monitoring5.Jim Miller, CMU Researcher

Drying Towers

Liquifaction

Each step process has different risk premium associated Detection limit of the sensor required is different for each

step of the process. Discussions are in cell technologies

Price the same product differently based on what we protect as opposed to an agglomerate value add.

#GOAL

Cell Technologies

Current MeasurementGas chromatograph

25

Safety

Efficiency

Environmental

Severe Environment

Operators

Provide infrastructure

Component sourcing

Direct

Domain Specific Suppliers

Distributors

Sensor SalesMonitoring Services

Royalties

Suppliers/ Manufacturers

Research Institutes and

Journals

Contract Design Shops

Domain Suppliers

Regulatory and Government

FixedSupplier

Economics

Sales and Marketing

Product Development

Production

IP and Expertise

Capital Assets

Chlorine Production

H2/HC Monitoring In Severe

Environments

Applications

26Potential Product Offerings

Diaphragm Membrane Membrane Header

Sensitivity 0.1 vol.% 0.5 vol.% ?

Response Time < 5 sec. < 30 sec. ?

Data Transmission Wireless N/A ?

Power Supply Scam + Batteries External ?

Display LCD LED Indicator ?

Longevity 1 year 1 year ?

Assay H2, H2O H2 ?

Price $2,000 $250 $8,000

27

Diaphragm Membrane Membrane Header

Price $2,000 - $2,000

World (include US) 26,400 - 2,900

Total Revenue for

is $58,600,000

Year Type % Revenue [/year]1 Innovators (US) 2.5 $271,500

Operating costs for 1st year projected to be $350,000

2 Early Adopters 16 $9,376,000

3 Early Majority 50 $29,300,000

4 Late Majority 84 $49,224,000

C/A Distribution Partner Margin = 20%

Laboratory Industrial

1. Hydrate research2. Micro-temperature

measurement and heating

3. Wireless smart building control

1. C/A2. Transformer gas

monitoring3. Wireless smart building

control

Achieve sales in both ends of the spectrum and all other applications fall within possible demonstrated capability

#GOAL

#KILLER APPChlorine production

29H2/HC Monitoring

In Severe Environments

Safety

Efficiency

Environmental

Severe Environment

Operators

Provide infrastructure

Component sourcing

Direct

Domain Specific Suppliers

Distributors

Sensor SalesMonitoring Services

Royalties

Suppliers/ Manufacturers

Research Institutes and

Journals

Contract Design Shops

Domain Suppliers

Regulatory and Government

FixedSupplier

Economics

Sales and Marketing

Product Development

Production

IP and Expertise

Capital Assets

Applications

Chlorine Production

30H2/HC Monitoring

In Severe Environments

Efficiency

Severe Environment

Operators

Provide infrastructure

Component sourcing

Direct

Domain Specific Suppliers

Distributors

Sensor SalesMonitoring Services

Royalties

Research Institutes and

Journals

Contract Design Shops +

Suppliers/Manufacturers

Domain Suppliers, Regulatory and

Government

FixedSupplier

Economics

Sales and Marketing

Product Development

Production

IP and Expertise

Capital Assets

Regulatory/Insurance

Minimum Viable Product

Reliably detect species of interest

Easy to use

Sync with other cycle

Wireless(if volume)

Domain Specific Suppliers

(especially if R&D is needed)

Applications

Chlorine Production

Oil and Gas

Power Infrastructure

…

31H2/HC Monitoring

In Severe Environments

Efficiency

Severe Environment

Operators

Provide infrastructure

Component sourcing

Direct

Domain Specific Suppliers

Distributors

Sensor SalesMonitoring Services

Royalties

Research Institutes and

Journals

Contract Design Shops +

Suppliers/Manufacturers

Domain Suppliers, Regulatory and

Government

FixedSupplier

Economics

Sales and Marketing

Product Development

Production

IP and Expertise

Capital Assets

Regulatory/Insurance

Minimum Viable Product

Reliably detect species of interest

Easy to use

Sync with other maint. cycle

Wireless(if volume)

Domain Specific Suppliers

(especially if R&D is needed)

Applications

Chlorine Production

Oil and Gas

Power Infrastructure

…