Sakti3 Doubles Its Funding from Khosla, Michigan

Sakti3, a battery startup spun out of the University of Michigan, has filled its coffers with $7 million — more than doubling its total fundraising to date.

The company, working on lithium-ion cells for electric vehicles and portable electronics, announced Thursday afternoon that Khosla Ventures, which invested $2 million in Sakti3’s first round, has come back for more. So has the state of Michigan, which awarded Sakti3 a $3 million research grant back in 2008 and supported this latest round through an economic growth fund managed by venture capital firm Beringea. A spokesperson for Sakti3 confirmed with us today that Sakti3’s total fundraising now amounts to $12 million.

The economic development fund, dubbed the InvestMichigan! Growth Capital Fund, is meant to provide capital for emerging businesses in the state that are at the expansion or small buyout stage. For Sakti3, the investment will go toward expanding research and development efforts, as well as “manufacturing capabilities.”

Sakti3’s technology stems from research led by CEO Ann Marie Sastry, who heads up University of Michigan’s energy systems engineering program. Details on the technology remain relatively scarce, but Sakti3 says it’s working to commercialize “high performance solid state batteries….using a novel manufacturing process.” The company said on Thursday that it plans to release more information “related to its technology, expansion plans, and other partners in the coming months.”

Since launching out of the university in 2007, the startup has partnered with General Motors (s GM) to share expertise in developing batteries for plug-in vehicles  — a vote of confidence in the startup’s battery cell tech. In a separate deal, Sastry is helping to retrain 50 GM engineers at the University of Michigan.

Sakti3 requested $15 million from the Department of Energy’s battery grant program last spring to help accelerate the often long slog toward commercial scale manufacturing and make it happen in just three years, but those funds have not come through so far. According to a Time report this week, the company is now working on prototypes that it plans to deliver to car companies later this year.

Khosla (who will be speaking at our Green:Net conference next month) has called lithium-ion batteries “overhyped” and said the tech “will possibly be replaced.” But he explained to us following a talk at Stanford last year that his firm is backing the technology (through investments in startups like Sakti3 as well as Seeo) because the “lithium-ion markets are here today. We’re investing because there are good markets.”

Today in a statement about the new funding for Sakti3, Khosla commented that he’s seen “progress and growth” at the startup. “It’s the kind of play we like — one that uses advanced computational science and manufacturing to produce a potentially disruptive technology.”