Stralis: Graduating Y Combinator

Deep Dive

An American and a Scotsman walk into an Australian aerospace startup …

It sounds like the beginning of a bad joke, but, in fact, it describes the founding of Stralis, a Y Combinator graduate and new(ish) player in the nascent hydrogen-electric aircraft sector.

Although it looks as though there are fewer serious hard tech startups out there and the trend is swinging to software, accelerators like Y Combinator (YC) still lend a validating hand to some. The Silicon Valley startup school, responsible for names such as Stripe, Monzo and Airbnb, has been called the ‘Holy Grail’ for fledgling companies. Among over 4,000 graduates, aerospace startups include Boom Supersonic, Astranis, Wright Electric and Heart Aerospace.

“YC is probably the one place in the world where you can say that you want to start an aerospace company and they’ll take you seriously,” said Anders Forslund, founder and CEO of Heart Aerospace. “It’s a tough place that challenges all your assumptions, but they never question you as a person.”

YC helped accelerate Heart Aerospace from a $50,000 Swedish research project to a global player in just a few years, Forslund tells Revolution.Aero. “It all boils down to a two-minute presentation in front of investors on stage and I’ve never been so nervous in my life.”

Just graduated, from the class of winter 2023 (W23), Stralis is a hard tech startup with plans for a 15-seat, 800km (500 mile) range aircraft to enter commercial service in 2026. Operating out of Australia, the firm, founded by Tennessee-born Bob Criner and Glaswegian Stuart Johnstone, is building a green hydrogen-based fuel cell stack which will be retrofittable to an existing airframe. The proprietary hydroge-electric propulsion system is 35% lighter than current technology with just one emission, water, says Stralis. Once in service, Criner and Johnstone will focus on delivering a 50-seat aircraft, the SA-1, of which they hope to sell 50,000 by 2050.

To achieve their vision, the Stralis team has a three-step plan. The first stage, which includes graduating from YC, will see the team test their technology (in this case a 250kw propulsion system) in a light aircraft. The type in question is a Beechcraft Bonanza (pictured above and below), chosen, says Criner, due to its cult-like status in aviation circles.

“We chose the Bonanza because it is a bit of a cult aeroplane. Our roadmap and vision for Stralis, is to be the world’s leading emission-free aircraft company. I know that sounds super bold and not humble, but we see the decarbonisation of aviation as essential,” says Criner. “We saw what Covid did when we can’t fly and connect with our loved ones and we want to be able to fly in the future. And we think it is going to take grand ambitions to get to this net zero by 2050. That is around the corner in aerospace timelines.”

The second step will be to retrofit a Beechcraft 1900D with the hydrogen-electric fuel cell stack, this will be the solution that goes to market. Stralis just crossed the $145m mark in pre-orders, thanks in large part to YC, says Criner. Finally, as noted, the final step will be a 50-seat clean sheet aircraft similar to a DASH 8-300 or ATR 42.

Culminating in demo day that Stralis pulled off the Friday before last, each YC programme lasts around a quarter. As well as investing $500,000 as standard, the programme connects graduates with serious investors. The success rate is good too, only about 20% of startups have failed (although many are still too young to have reached that point).

With experience at battery-focused firms such as GoogleX and Heart Aerospace and having met at MagniX, why did Criner and Johnstone choose hydrogen? “We couldn’t get the range out of battery-electric applications, so that is why we settled on hydrogen,” says Criner. “Yes, there are a lot of hurdles to overcome, but the fundamentals show that you can make a hydrogen-electric aircraft that can fly useful ranges. Battery-electric offers negligible range and you couldn’t carry a useful payload. So that was what spawned Stralis.

“Once I combined my passion for sustainability with my aerospace experience, I decided that is all I ever want to do,” he adds.

‘To vertically integrate or to not vertically integrate?’ is a question that faces every aerospace startup. Criner and Johnstone have decided to remain in-house as much as they can. Referencing the likes of Archer and BETA, doing as much as you can within the company makes sense, says Criner. “If you have expertise in the propulsion system, the cryogenic tank design use it. I think we would lose a lot of IP if we were to work with somebody like Airbus or Boeing,” he says. The other point is time. The majority of hydrogen use cases being explored by established OEMs and airlines target, at the earliest, a mid-2030s service entry. Most of the smaller players, Stralis included, want to be operational pretty much a decade earlier. He may have a point too, traditional OEMs are behemoths. Lots of cash to invest but just as many areas to invest it in. If a startup can remain “laser-focused” on one product, in this case hydrogen-electric aircraft, it may emerge a market leader.

Tesla provides a point of reference as to the potential for zero emissions aircraft companies, according to Criner. “If you go back 10-15 years, the idea of Tesla being the biggest or most valued carmaker was seen as crazy. People said you will never beat GM, you’ll never beat BMW. I think that inspires us to see whether the aerospace industry is ready for a new OEM to follow a similar trajectory. 

“I also think the industry needs a shake up,” he adds.

It is difficult to say if being a YC startup is any better than being taken on by a top tier investor at the same stage, however there is no doubt that graduating from the programme provides an invaluable basis for many startups. As one mid-to-late stage VC put it to me, YC offers a lot of educational value for entrepreneurs, some good connections, a little bit of money, and some help in thinking about what the company can get in terms of valuation. The brand value can also help early stage start-ups in negotiating valuation and raising money.

Graduating with that basis behind them, the first stage of the three-step plan is halfway complete. No doubt, upcoming ground tests and subsequent scaling up of the prototype will present some of the biggest challenges to date for the Stralis team as it targets commercial entry in three years. But Criner is confident it will be smiles all round come 2026.

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