Interview with Ken Waters, CEO, Ben Cantwell, COO and Will Stewart, Managing Director, APV
(Q) When was SMJ Technologies (SMJ) established?
(BC): Approximately ten years ago several automotive enthusiasts debated the limits of the internal combustion engine (ICE) and how to improve upon it. As thoughts progressed to a solution we incorporated an LLC in 2013 to
formalize the Company. We most recently switched from an LLC to a California C-Corp in 2018.
(Q) Why did you establish a company?
(BC): Our founders are intimately aware of the deficiencies of current ICE technology - yet fully appreciate the impact automobiles have had, starting with the Model T, in paving a better life for everyone globally. Frankly, we
understood the need for better emission outcomes and better engine performance. We also knew CAFE, EURO6, and other regulatory standards could not be met. We believed then as we do today that our invention would address the need to make the ICE more effective, and extend its life underlined with the trillions of dollars of infrastructure that currently supports it.
(Q) How did you set out to accomplish these goals?
(BC): SMJ has combined recent technology advancements from various industries to create a software-enabled solution for dramatically improving the efficiency of the internal combustion engine by actuating engine valves
with next generation technology. The goal of this being truly Infinite Variable Valve Timing (IVVT). The idea of decoupling valve timing from crankshaft rotation is nothing new. Henry Ford’s Model T had a mechanical lever that
would advance or retard spark timing - effectively changing valve timing to create more horsepower or torque. As you can see the desire has been around for quite some time! SMJ conducted research in the various fields - hydraulics, pneumatics, mechanical, electromechanical, electromagnetic, etc., and we knew the field with the most untapped potential was in electromagnetics. SMJ began the research of building our own electromagnetic linear machine, and we partnered with a very reputable source in the electromagnetic field of study. Over the course of two (2) third-party sponsored research agreements it was concluded that the potential is there, and it is possible to actuate the valves in the manner and with the design specifications we desire.
(Q) What were the initial technical challenges to overcome?
(BC): The four largest challenges we knew from the beginning was heat, durability, power consumption, and control. The linear machine would need to withstand and operate at desired function curves in a high heat application,
with extreme precision and do that without service for years on end. It would also need to do this with acceptable power draw from the engine electric power system.
(Q) Have people or companies tried this in the past?
(BC): Absolutely! This is not a new idea as we’ve established already. The desire for Infinite Variable Valve Timing (IVVT) goes back decades. This is shown in the massive amounts of prior art that we combed through as we
were filing our patents. Nearly every automotive OEM in the world has filed patents on some version of Variable Valve Timing ranging from very few degrees of variation to unbelievable control and variation. However, most
importantly keep in mind that no one to date has been able to make it work with respect to timing, lift, duration, and rate of open/close, while maintaining the durability and acceptable power consumption. SMJ is the first and only
globally to demonstrate this patented solution.
(Q) What IP does the company have to protect this technology?
(KW): SMJ has made substantial investment in IP protection to date. SMJ has two (2) patents issued, and two (2) pending. The latest application has over forty (40) claims which aggressively protects the integral aspects of the company’s technology. All patents and applications have been filed with the PCT for international protection as well. In addition, SMJ will continue to invest in its IP position going forward.
(Q) What is the current operating status of SMJ?
(KW): SMJ has achieved the following successes: 1) Patents, 2) affirmation of conceptual outcomes by third party, 3) initial prototype, 4) completion of mechanical design drawings. We are currently modifying the prototype to get better efficiencies and once completed we will test and record those results and we will build the next
prototype. While development continues to a product demo - our business team is engaging with interested OEM’s and vehicle manufacturers to bring forth this technology to the world.
(Q) What are the current financial needs of the company?
(KW): We are in the global equity markets to raise $3~$4M to continue development, test, and then provide data from the prototype - both with respect to the Linear Machine, and a single cylinder laboratory engine. Today, SMJ is comprised of experienced executives from the information technology industry, engineers with automotive experience, patent specialists, and software developers. Investors to date are highly successful business people, and known to the founders. There is no bank or venture money in the Company but we are now approaching them.
(Q) You mention vehicle OEM’s, Suppliers, Banks, how will they all play into SMJ’s plans?
(KW): SMJ believes, at this point in partner discussions, that ultimately the company will eventually be acquired by an OEM or Manufacturer who will use SMJ’s know-how and product to extend the life of the ICE, and meet
current regulatory standards.
(Q) Will, can you share why you invested and how you are involved with SMJ?
(WS): First off, I go back with Ken Waters as a friend and business partner over (25) years and as an investor there is nothing better than investing in and with successful people as I have with Ken in the past. Secondly, as a venture capitalist for the past 25 years, I know every investment is all about one’s ability to properly time the market opportunity. For the past ten years all I have heard is “the coming death of the Internal Combustion Engine,” and
yet today Electric Vehicles (EV’s) account for less than 1% of the global automotive market. Note, not vehicle market but solely automotive market. Honestly, the EV dominance conversation is as boring as the Peak Oil demand conversation as well bringing forth the death of ICE. My conclusion - in my life time, the combustion engine is here to stay and with added technological efficiencies provided by companies like SMJ that ICE is here for another 25 years at a minimum. Third, SMJ is a global market opportunity and I only invest in technology opportunities that have global application. Lastly, as you touched upon, I am involved in the business beyond simply investing in SMJ. Like all successful venture capitalists, I look for the exit before I enter the front door of any investment and so I completely agree with Ken that most likely SMJ will be acquired and given my international operating, investment, and business development experience the past 30 years, I am now introducing global OEM’s, investors, and many others to SMJ.
(Q) Ken touched on it but can you elaborate further on the current capital raise for SMJ?
(WS): Yes, as Ken touched upon, SMJ is currently raising $3~$4M to complete all development and the proto-type. However, the founders of SMJ have been at this research and development for over ten (10) years and have only applied $1.6M to get where they are today. So in my view, SMJ is an excellent value investment right now as any new investor in SMJ captures all that prior value. As much as I am sharing the SMJ investment opportunity with my fellow global venture capitalist’s and high net worth family desks, it is my focus and desire that a strategic vehicle OEM like a Toyota or Ford or Denso or other potential acquirer would invest in this current capital raise at SMJ. Such an investment in this capital raised would provide a potential acquirer a huge discount to an eventual acquisition. One never believes that this would be the last capital round but in the case of SMJ and current global OEM discussions I am convinced SMJ will be acquired and so it is just a matter of when.