Magnevane

Magnevane is a disruptive clean tech company, that has patents for a range of highly efficient industrial equipment. We use super magnets to increase efficiency of sliding vane equipment by up to 60%. The primary uses of the technology are in pneumatics, fluid pumps, compressors and heat pumps. The Global TAM for our technology is just under $100bn. We have a precision manufacturing facility in Portugal, 18 years of patents remaining and are ready for exponential scaling.

Magnevane registered 4 patents in 80 countries in 2017, and closed their first commercial deal with Sappi pulp and paper the same year. Also in 2017 Magnevane secured commercial pilots with two large mining houses in South Africa, Harmony Gold and Impala Platinum. All the commercial pilots were extremely successful and created demand for the product. Initially we attempted to partner with local OEM's through royalty agreements of our motors in their equipment, but due to the high reliability of our motors disturbing the existing OEM commercial model we made little progress with them. In 2018 we purchased a precision manufacturing facility in Trofa Portugal to seed the market with product. We now have a range of air motors in production as well as a pneumatic chainsaw, which are being sold at present. The company also has several new patents that are being developed and will file for PCT in the coming months. These new patents extend the current IP into new applications including compressors, displacement pumps, blowers and hydraulics resulting in a global TAM for the extended IP of just short of $100bn. Our head office is in Portugal, but we have a distribution and business development office in South Africa. The group revenue was $2m in 2020 and we employed 50 people. Magnevane has an eco-system of partners including consultants, application specialists, process engineering firms, distributors, service companies, business development agents and OEM's that are taking our products to market. We are at early stage revenue in Magnevane but our business is poised for strong growth in 2021 both in Africa and Europe. As a matter of urgency we need to establish operations in North America to service the large demand there and to attract royalty agreements with the large pneumatic and hydraulic OEMs.

In doing the analysis of the market we found there to be 9 key industries that use pneumatics extensively; Oil & gas, Chemicals, Food & beverage, Mining, Automotive, Machinery, Pharmaceutical, Waste and sewage and Pulp & paper. All of these sectors have specific requirements that suite air motors; intrinsically safe, no oils and lubricants, easy and safe, high torque applications, and operation in moist conditions or even underwater. There are currently millions of air motors in operation across the globe on a daily basis. in 2020 the global air motor market was $8,8bn and the broader pneumatic equipment market was $18,2bn growing at just over 5% CAGR for the next five years. Air motors range fr om $2000 - $10 000, so there are a significant volume of motors sold annually. These pneumatic networks are extensively deployed across the globe wh ere ever these industries are found. Magnevane does not require any of these systems to be changed in any way, with just the changing of a normal air motor with a Magnevane motor the client will generate up to 60% efficiency on that application, or be able to drive a much higher performance for the same air consumption, depending on the application.

Pneumatics are a very old and inefficient set of technologies that have not changed materially in a century because they fulfill a critical need. Pneumatics are used whenever a clients environment is highly hazardous or sensitive. This is because unlike electrical and combustion motors there is no spark and there are no contaminating fluids (oils and lubricants). So in the Zone 0-3 Applications pneumatic equipment is king as it is safe and simple. But it is one of the most expensive ways to do work because you use energy to compress air through a compressor, then you reticulate the compressed air through a network to drive a pneumatic piece of equipment. On average 10kw of electrical energy are required to make 1kw of pneumatic power. Industry therefore tolerates pneumatics because it is necessary, but it comes at an unacceptably high cost to operate. For example a large deep level mine can spend 18% of their total electricity bill on creating compressed air. For context every three years a client pays 12 x the cost of the pneumatic equipment in electricity and maintenance. Total pneumatic OEM equipment sales in pneumatics in 2020 was $27bn growing at 5% CAGR for the next five years. The main users of pneumatics are Oil and Gas, Chemical manufacturing, Food and beverage, Mining, pulp and paper, sewage, and a host of light industrial applications. So the problem is there, it is well defined and it is very big. Magnevane reduces energy consumption by up to 50% depending on the application, and can increase the lifecycle of the equipment by up to 300%. Magnevane is also a direct retrofit to existing processes and equipment and can therefore be introduced without any client change management. This creates a major opportunity for energy savings and efficiency at a global scale.

Magnevane provide a range of equipment that is manufactured at our facility in Portugal, this includes a range of air motors, pumps and chainsaws at present with several other products in development. These we can manufacture and send anywhere in the world to any spec. But we are fundamentally a technology company so we are looking to establish royalty arrangements with other manufacturers to incorporate our technology into their products. There are over 180 applications that we have identified for the technology, so we cannot tackle all of these ourselves. therefore in the long run the bulk of our revenue should move from equipment sales to technology royalties. We have attached videos at the bottom. The main problem that we solve is that we have a technology that takes an old motor technology and makes it more powerful and up to 60% more efficient in a market that consumes 10% of all industrial energy globally.

There are many competitors in this domain the largest being, Atlas Copco, Gast, Ingersoll Rand, PTM mechatronics, Wilson, Deprag, ASG, Parker, PSI Automation, Globe, Modec, Huco, Mannesmann Demag and SPX flow. But Magnevane motors outperform these motors of every aspect by 30-60%. We have taken a technology standard and improved it to a point that it should be considered a new technology. So when it comes to sliding vane motors there are many competitors but there are no peers on performance. Alternatives exist in terms of moving away from pneumatics to electrical equipment which is more efficient, this creates additional risk and the transformation of legacy systems.

Magnevane equipment uses super magnets (neodymium) to change the fundamental principles of a sliding vane motor. In effect a Magnevane motor is a different class of sliding vane technology due to its fundamentally different performance characteristics. As the magnets create constant sealing of the vanes against the stator housing for the full life of the vane the motors have the following performance differences over even the best incumbents (tested against Atlas Copco and Ingersol Rand two of the biggest players in the industry):
-Magnevane technology operates at between 30-50% greater efficiency than incumbents
- Magnevane equipment has higher torque and power than incumbents, and performance remains constant throughout the life of the vane
- Magnevane equipment reliability: up to 3 x longer MTBF than incumbents
-Magnevane equipment is cost effective and easy to maintain while also requiring less maintenance (same cost to manufacture as a standard motor)
-All Magnevane equipment is certified professionally against global standards relevant to the industry where it is targeted
-The TCO of Magnevane equipment is cheaper than that of the incumbents

At the core we are a technology company. We have 4 very disruptive patents to the pneumatics domain and we are at TRL3-5 on several others that will make our patent assets hugely valuable across a $100bn sector. So at the core we want to license our technology to OEM's to take advantage of their existing scale and network capillarity to rapidly scale the penetration of our IP. We also have a manufacturing facility however and will also make a range of our own Magnevane branded OEM equipment in areas where markets are attractive and margins are fat. So we split the business into essentially two parts, R&D and product and sales. The R&D team have a dedicated roadmap that they pursue that can be influenced by the demand fr om business development and the product team. But ultimately the R&D team is tasked with extending the IP and creating new IP. The product and sales teams through a push and pull process prioritise the products and take them to market. The first clients for the company were in South Africa, so while the main offices are in Portugal we have a DC and sales hub in South Africa with its own CEO and board. It is likely that similar hubs will be set up in key locations such as Canada and USA wh ere 50% of global demand comes from. So we can participate in the market in a number of ways, and will remain flexible to these models due to the scale of the opportunity. Also at all stages we can choose what to manufacture at our facility or what to toll manufacture through a trusted third party to manage scale.
Modality 1: License IP to an OEM for a royalty fee
Modality 2: Sell motors to OEMs and distributors with existing networks
Modality 3: Make full end to end OEM equipment and sell directly to clients and distributors

At the core we are a technology company. We have 4 very disruptive patents to the pneumatics domain and we are at TRL3-5 on several others that will make our patent assets hugely valuable across a $100bn sector. So at the core we want to license our technology to OEM's to take advantage of their existing scale and network capillarity to rapidly scale the penetration of our IP. We also have a manufacturing facility however and will also make a range of our own Magnevane branded OEM equipment in areas where markets are attractive and margins are fat. So we split the business into essentially two parts, R&D and product and sales. The R&D team have a dedicated roadmap that they pursue that can be influenced by the demand fr om business development and the product team. But ultimately the R&D team is tasked with extending the IP and creating new IP. The product and sales teams through a push and pull process prioritise the products and take them to market. The first clients for the company were in South Africa, so while the main offices are in Portugal we have a DC and sales hub in South Africa with its own CEO and board. It is likely that similar hubs will be set up in key locations such as Canada and USA wh ere 50% of global demand comes from. So we can participate in the market in a number of ways, and will remain flexible to these models due to the scale of the opportunity. Also at all stages we can choose what to manufacture at our facility or what to toll manufacture through a trusted third party to manage scale.
Modality 1: License IP to an OEM for a royalty fee
Modality 2: Sell motors to OEMs and distributors with existing networks
Modality 3: Make full end to end OEM equipment and sell directly to clients and distributors

he money will be spent on essentially 3 things:
R&D;
- Complete R&D and Patent applications for; positive displacement pumps, compressors, blowers and air starters
- Team lift for the R&D team
Scaling;
- New factory equipment and automation
- Expand facility to meet demand requirements and assembly line
- Team uplift in the factory
Sales;
- Sales and partner team uplift
- Marketing
- Market entry in USA and Canada

10% of the group for $8,3 million

We have seen the behavior of the incumbent OEM's and distributors as the greatest challenge to success to date. We have had patents and working prototypes since 2017 to one of the biggest global industrial problems, but OEM's and distributors have been reluctant to take it up. The main reason is that these parties make more money from servicing the equipment after the sale than they do from the sale. Therefore as our motor lasts 3x longer they get 3 x less ongoing service fees. As a result we have been forced to engage clients directly with ourselves as a network of professional services partners to show to clients the benefit of the technology. From here we have made equipment ourselves for clients, but ultimately want to pressure OEM's to take on the licenses so that we can scale with their capillarity. We believe there is a critical mass of awareness and uptake required on the Magnevane products that will stimulate challenger OEM's to aggressively take on our IP to disrupt the status quo. From there we see a more broad uptake of the IP. At this stage our challenge will be how to maximise the value of this IP to the shareholders, as there are many industries, sectors, suitors and sharks. But at this stage we see less technology risk but a hurdle to overcome in the go to market and scaling of Magnevane due to its disruptive nature.

Magnevane was incubated by Deloitte for 2 years as part of the Deloitte rapid commercialisation programme run out of Deloitte Africa. This programme sought to find young companies with disruptive IP that could be worth $1bn within 5 years.

Spoor and Fischer are the patent attorneys for Magnevane, and they won a global award for the speed and breadth of the Magnevane IP approvals. They had never had IP approved so broadly in such a short space of time with so few challenges.

Unicorn awards are first awards we are entering as a company.

PA171937P - Tangentical vanes
PA162787P - Core magnet technology
PA171938P - Y end caps
PA172758P - Through hole system