Magnets and water net Magnotherm $6.9M seed round to kill hazardous refrigerants


Man standing in front of refrigerator cases at a supermarket.
Image Credits: SolStock (opens in a new window) / Getty Images

A warming world is going to need a lot of cold drinks. Problem is, today’s refrigeration tech is anything but climate friendly.

The way we cool our food and drinks has barely changed in a century and the technology is still reliant on environmentally harmful refrigerants. Now, a German startup thinks it can freeze those refrigerants out of the market using little more than magnets and water while consuming up to 40% less energy.

Magnotherm has been refining its technology, known as magnetocaloric refrigeration, since it was spun out of TU Darmstadt in 2019. Though it’s only a seed-stage company, the startup has already shipped five display coolers to beverage giant Coca-Cola, TechCrunch+ has learned, and it’s on track to build another 55 that will be rented out for events.

But beverage coolers are just the tech demo: “We are really building a bigger box for supermarket cooling cabinets,” co-CEO Timur Sirman said. “This is where we can actually reduce energy costs and maintenance costs significantly.” The global market for commercial refrigeration is worth $37 billion, according to Grand View Research.

To capitalize on the opportunity, Magnotherm is announcing a seed round today. In an exclusive with TechCrunch+, Sirman said the company was shooting for €5 million, “and now, we’re actually oversubscribed.” Investor interest was so great that they’re closing the round with €6.3 million.

Extantia Capital led the round, with Hessen Kapital, Lauda Dr. R. WOBSER Beteiligungs-GmbH and Revent joining. Four investors from the Better Ventures Angel Club also participated.

Dethroning old tech

The technology Magnotherm hopes to dethrone is broadly used and deeply entrenched. It’s not as efficient as it could be, but more troubling are the substances it uses to keep things cool. The refrigerator sitting in your kitchen gets its chill from the physical properties of its refrigerants, the gases that loop through the cooling system.

None of these refrigerants come without tradeoffs. First generation refrigerants — freon and its ilk — chewed a hole in the ozone layer. Newer ones are more ozone-friendly, but they are powerful greenhouse gases, warming the Earth hundreds to thousands of times more than an equivalent amount of carbon dioxide.

Countries are working to phase out their use, but finding replacements hasn’t been easy. One frontrunner, propane, is flammable, and regulators have hesitated to greenlight its use in larger refrigerators in case of leaks. Carbon dioxide is another contender, but it only works as a refrigerant under very high pressures, which makes the whole system more expensive.

Hydrofluorocarbons remain the default, because they’re not flammable and can turn into liquids at low pressures.

An everyday refrigerator basically works like this: The refrigerant flows through a compressor, which pressurizes the gas to the point where it turns into a liquid. That process also heats up the refrigerant, which is piped through a condenser to cool it off. (That’s the grate on the back of your fridge that gets all dusty.)

Once the excess heat is shed, the refrigerant flows through an expansion valve, which separates the high-pressure, high-temperature side of the loop from the low-pressure, low-temperature side. When the refrigerant escapes past the valve into the low-pressure tubing, it expands into a gas. That expansion chills the refrigerant, allowing it to absorb heat and cool its surroundings. Once it’s done its job inside the fridge or freezer compartment, the refrigerant flows back to the compressor to start the process all over again.

Magnetic refrigeration works differently. Instead of compressing a fluid, the system uses a magnetocaloric material. When magnets pass over such a material, it heats up. When the magnet is removed, it cools back down.

To use that property to extract heat from a refrigerator or freezer compartment, magnetic refrigeration employs two different loops, both of which can use water. The first absorbs heat from the material when it’s heated by the magnet. The water in the loop draws off the heat and carries it to a heat exchanger, where it’s then dumped into the air.

Then the magnet is removed from magnetocaloric material, which cools. But because the magnet-induced heat was removed by the first loop, the material cools off to a lower temperature than before. This gives it the capacity to absorb some heat. That heat is provided by a second water loop inside the refrigerator. As the water flows through this second loop, it absorbs heat from the cold box — cooling its contents — and transfers it to the now-chilled magnetocaloric material.

Which material? Magnotherm isn’t divulging the specifics, but most systems use gadolinium, lanthanum-iron-silicon or iron-phosphorus. Gadolinium is used in many research units, but it’s expensive, running about $40,000 per metric ton these days. As a result, scientists associated with Magnotherm have been exploring lanthanum-iron-silicon, which likely represents a balance between cost and performance.

The technology can work in a range of settings, from banal at-home fridges to cryogenic coolers that can turn hydrogen from a gas to a liquid. Right now, Magnotherm is targeting its technology at supermarkets, which have predictable and consistent ambient temperatures. Plus, the cooling demands, while large, aren’t onerous and are well within range of the company’s technology.

Added flexibility

Magnetocaloric refrigeration is also a more modular technology than traditional refrigeration. The refrigeration unit can be decoupled from the cold box it feeds. That’s because the hot and cold loops are filled with water (and maybe some antifreeze) rather than the valuable, pressurized, polluting gases that are in many of today’s refrigerators. As a result, supermarkets will be able to swap their refrigeration cases without having to get rid of the pricey mechanicals.

“Supermarkets normally want to change their layout quite frequently. They need to really create the best customer experience,” Sirman said. “But at the same time, they want to use their devices as long as possible because then they’re written off.”

Because of the expense, stores tend to keep their refrigeration units for years, if not decades. By separating the refrigeration device from the cabinet, Magnotherm hopes to free stores from that expense. They’ll rent the refrigeration devices and allow supermarkets to hook them up to whichever cabinets fit their needs at a given time.

For a seed-stage hardware company, Magnotherm is remarkably far along its journey. That’s in part because the company previously landed two grants, one from the German government and another from the EU, that gave it €3.5 million in equity-free money. “In Europe, you have so many opportunities for government money. And this means you don’t have to raise so much money on the private market,” Sirman said.

“We use this money really to get the technology to a point where it’s investor-ready for a seed round,” he added.

That Magnotherm has gotten this far is a testament to the foundational research done at TU Darmstadt and within the company. Almost a decade ago, GE showed off a prototype magnetocaloric refrigeration device, but the industrial giant has been silent since. There are a handful of other startups in the space, but none appear to have the war chest that Magnotherm has raised. If their demos impress supermarkets, there’s a good chance they’ll have the market to themselves for the foreseeable future.

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