INTRODUCTION

Imagine a network of underground utility tunnels, big enough to walk in and perform maintenance that normally requires specialized equipment and tremendous expense, connecting every city (including underserved communities) on every continent, moving 100% clean energy, water, high-speed data & e-commerce goods via pneumatic tubes. What if these tunnels are created exponentially faster at a fraction of the cost of conventional techniques, with a plasma-powered robot using primarily renewable power & air? Does that sound like a future you want to help build?

the problem

This year alone we've had rolling blackouts in both CA & TX, power lines are causing fires and many Americans lack access to decent broadband.

The current grid is outdated and overloaded...

Imagine a network of underground tunnels across America containing ultra-high-speed broadband (1,000 Mbps+), 100% clean power, pure water, and tubes moving e-commerce parcels directly to homes & businesses. The tunnels could remove waste (sewer, recycling, compost) & larger tunnels could move people and large freight.

the solution

business model

market

A transition to renewable energy in the US will require significant electrical grid infrastructure additions on local, state, and national levels. This is driven by increasing electricity demand and changing supply location. The current grid and fiber data network cannot handle the increased demand. In addition to electricity supply; high speed internet, water/wastewater, and highway/railroad tunnel infrastructure will need to be added or replaced. Current technology to accomplish this is slow and costly in the best case. In the worst case, delays make cost and timeline unpredictable.

Frequently asked questions

What is the biggest risk to the business model of owning your own tunnels for utilities or transportation?
Obtaining Rights Of Way (“ROW”) for our tunnels. We believe construction, project development (including regulatory & permitting), capital, political, competitor, and technology risk are all manageable.
How do you intend to mitigate your biggest risk?
In 2018 our founder Troy Helming, along with Advisory Board member Rachelle Chong, discovered a clever solution to solving the ROW risk. By registering EarthGrid as a utility in any given state, and obtaining what is called a Certificate of Public Convenience & Necessity (“CPCN”), the company gains preferred ROW along state & county roads for underground conduits, utility lines, etc. State departments of transportation (DOT, Caltrans, etc.) must grant ROW access to companies with a CPCN for utility lines, as long as such applications for ROW do not unreasonably interfere with the operation of the affected or adjacent transportation corridor.
Who are your competitors?
- Petra. Our founder Troy Helming co-founded Petra (aka ArcByt Inc.) in 2018 with Kim Abrams Lembo and still owns a significant amount of stock and some of the patents. Their business, and the patents sold by EarthGrid to ArcByt/Petra in 2018, is focused on short, small diameter micro tunnels using fewer torches that articulate (a slower process). We don’t see their model as really solving the big problems but we do appreciate their validation of the tech. What they accomplish is more like a small diameter direct burial method, but in rock.

- The Boring Company (conventional TBM but upgraded to all-electric with some robotics).

- Foro Technologies (laser drilling). Foro struggled with putting sensitive laser equipment underground too far away from the surface.
Who do you believe will be your main competitors in 3-5 years?
For hardware related to boring of tunnels: Petra (my former company), The Boring Company, Herrenknecht, Mitsubishi Heavy Industries, Robbins (we don't expect much innovation from any companies other than TBC).

 For developing tunnel projects, we don’t expect much competition other than ArcByt, and their team is limited in their ability to do difficult infrastructure development projects. They can (and most certainly will) add people to their team for this. Direct Connect (developers of the SOO Green project) could be, but I am working on a JV with their CEO Trey Ward to collaborate and share resources (we would provide tunneling on their projects, they would provide HVDC services on our projects).
What is important to win in this market and how do you compare to the competition now and in the future?
Getting our robots & tunnels in the marketplace quickly gives us 1st mover advantage and we believe it would be hard for others to catch us... due to the speed of our boring and tunnel project development efforts.

The 5+ years Mr. Helming and his team have been accumulating trade secrets will be difficult for newcomers to catch up and master. We’d complete tunnels from potential customers so fast that we could move on to the next tunnel quickly and so on, leaving limited commercial opportunities for our customers if we're already contracted into the "queue" of various key pathways.

Capturing & consuming the economic value of a key pathway (e.g. from point A to point B where there may be an acute need for more transmission capacity to relieve congestion in the grid, or a similar gap in fiber bandwidth) creates a natural competitive moat. Once we have bored a tunnel (quickly and if possible, quietly) from A to B, there would be limited to no economic benefit for a competitor to bore a tunnel along that same route.

Then, connecting our tunnel segments naturally leads to network effects, similar to how the US interstate highway system created new wealth by stimulating real estate development along those pathways, our vision for this network is to capture increased inputs & outputs of commodities that otherwise would not have been created (e.g. community solar farms inputting power to our network, and new charging stations & data centers enjoying outputs of power & bandwidth from our network).

If we raise enough to build larger, more powerful machines quickly enough to get tunnels built, we believe we have the opportunity to build a significant market share advantage and create a large backlog of customer orders. This may also help us optimize the utilization rate of our machines by coordinating digs within reasonably close proximity to one another (logistical optimization).
What is the environmental impact of your tunnels?
Huge positive impact; minimal negative impact. Unlike HDD (Horizontal Directional Drilling), we don’t use drilling mud (additives, chemicals, etc.) to assist our process. Our only (2) inputs are: electricity & air. Our process is non-toxic & benign.

 We prefer to bore deeper, in hard rock, for many reasons, including:

1) No “critters” live in hard rock, so we only disturb the soil at entrance & exit points of our tunnels, which can be sited on land that is already disturbed soil (and/or zoned commercial/industrial).

2) The tunnel walls will be stronger, unlike most tunnels which prefer to bore through soft soil, cobble, clay, or soft weathered rock to save money.

3) Going deeper avoids the “spaghetti” of existing infrastructure that exists close to the surface.

4) Does it hurt the Earth? Lava tubes and underground water cavities abound throughout the Earth. We simply boring tunnels which are tiny (<0.000001% of the mantle width) relative to the outer shell of the Earth.

5) No fossil fuels are burned in our process, so there are zero emissions. Our robot is 100% electric.

Do you have any concerns with earthquakes? 
If you are on the ocean with a massive tidal wave heading your way, would you rather be on a cruise ship or a submarine? Subway and other tunnel systems in Japan, Mexico, and other cities (including San Francisco and Los Angeles) have suffered minimal damage despite powerful earthquakes. The majority of the destructive energy propagates up to the surface and affects structures that are not connected to bedrock.

team

Use of Proceeds


If the offering's maximum amount of $4,999,998 is raised:

UseValue% of Proceeds
Compensation for managers$250,0005.0%
Tunnel Boring Machine$4,000,00080.0%
Plant Equipment$504,99810.1%
Intermediary fees$245,0004.9%

Terms

This is an offering of Common Stock, under registration exemption 4(a)(6), in EarthGrid PBC. This offering must raise at least $10,000 by March 10, 2023 at 11:55pm ET. If this offering doesn’t reach its target, then your money will be refunded. EarthGrid PBC may issue additional securities to raise up to $4,999,998, the offering’s maximum.

If the offering is successful at raising the maximum amount, then the company’s implied valuation after the offering (sometimes called its post-money valuation) will be:

14,841,552 shares
×
$4.38 per share
$65,005,998implied valuation

Financials

These financial statements have been audited by an independent Certified Public Accountant.

SEC Filings

The Offering Statement is a formal description of the company and this transaction. It’s filed with the SEC to comply with the requirements of exemption 4(a)(6) of the Securities Act of 1933.

We’re also required to share links to each of the SEC filings related to this offering with investors.

Understand the Risks

Be sure to understand the risks of this type of investment. No regulatory body (not the SEC, not any state regulator) has passed upon the merits of or given its approval to the securities, the terms of the offering, or the accuracy or completeness of any offering materials or information posted herein. That’s typical for Regulation CF offerings like this one.

Neither Netcapital nor any of its directors, officers, employees, representatives, affiliates, or agents shall have any liability whatsoever arising from any error or incompleteness of fact or opinion in, or lack of care in the preparation or publication of, the materials and communication herein or the terms or valuation of any securities offering.

The information contained herein includes forward-looking statements. These statements relate to future events or to future financial performance, and involve known and unknown risks, uncertainties, and other factors, that may cause actual results to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond the company’s control and which could, and likely will, materially affect actual results, levels of activity, performance, or achievements. Any forward-looking statement reflects the current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. No obligation exists to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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