Faraday Grid: How the energy startup Adam Neumann invested $30M in collapsed - Business Insider

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Bullying allegations, $1,000 pens, and a celebrity chef: Inside the collapse of Faraday Grid, the billion-dollar energy startup backed by Adam Neumann

By the mid-2010s, Scobie had moved to Edinburgh and was devoted to Faraday Grid's lofty mission. Throughout 2016 and 2017, his business was working on developing a prototype of its "flow control device," called the Faraday Exchanger.

Amp, a small Canadian clean energy firm which previously invested in Faraday Grid and sat on its board, had committed to a further funding round before having to pull out, two sources said. To fill the gap, Amp's executives introduced Faraday to other potential backers — including Adam Neumann. The eccentric Israeli-American real estate entrepreneur had none of the same reservations as other prospective investors. It was, one source with knowledge of the encounter said, a "meeting of the minds."

"It was driven by a fear that if Corbyn gets in, he nationalizes the electricity grid and then Faraday Grid is at risk from the government stealing its intellectual property," one source said. By this point, the firm's monthly burn rate was between $3 million to $4.4 million, two former employees said. But despite a rapidly depleting balance sheet, Scobie was bullish and pursuing additional funding.

The pair were open about their spending, and also spent lavishly using the company credit cards, according to internal documents. Scobie said some of the purchases were made in error on company cards. "I purchased a number of personal items which were misallocated to company rather than personal accounts, and were repaid to the company," he said in a statement.

Documents suggest that up until this point, 166 2nd's involvement with Faraday Grid was still being overseen by Daragh Murphy, the WeWork employee. But Stern was a blue-chip investor, with stints at venture capital firm General Catalyst and Soros Fund Management. He immediately began scrutinizing his client's investment, and took a board seat at Faraday Grid.

Four ex-staffers also described a "culture of fear" to Business Insider. "Despite the company's values of rational thinkers, being open minded, challenging the status quo, if you didn't bring good news you were quickly on the out," one former senior staffer said. After its internal investigation, Faraday Grid's board felt it had sufficient grounds to fire the pair in June. Amp executive Paul Ezekiel took over in the interim, and the firm scrabbled to stay afloat. But in all the months it had been hemorrhaging cash, Faraday Grid was not making any money.

The firm went into administration in August 2019, and almost all of its employees were let go. The company's intellectual property and some of its assets were then sold to the highest bidder — straight back to excommunicated Andrew Scobie and his new company, Third Equation.

 

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