What You Don’t Know About Canadian Business Success: Next Hydrogen x HSBC

While long associated with chemical processing across the energy, industrial and transportation sectors, hydrogen today represents a method of long-term clean energy storage and distribution if produced sustainably, and a once-in-a-generation opportunity to de-carbonize the planet.

Next Hydrogen is a Mississauga, Ontario-based developer and manufacturer of electrolyzers—machine units that perform water electrolysis , the most sustainable hydrogen energy production method that uses electricity to split water molecules to produce hydrogen, with oxygen as the only by-product.

Founded in 2008 by Dr. Jim Hinatsu, Dr. Michael Stemp, and a cohort of successful renewable energy entrepreneurs, Next Hydrogen is revolutionizing sustainable hydrogen production at scale, and fast becoming a Canadian success story.

“While the technology has been around for about a century, we are the first to significantly change the design of electrolyzers,” says Kasia Malz, Chief Financial Officer, Next Hydrogen. “Whereas most companies fine-tune or swap out component materials, we’ve completely revamped the design to make it more efficient.”

Growth pains become opportunities

Before Malz and CEO Raveel Afzaal joined Next Hydrogen in 2019, the company had five employees, no office space, and was facing significant financial and operational pressures.

While Next Hydrogen had achieved impressive de-risking milestones, the company was limited in taking the technology to the next step by human and financial capital factors. Pandemic-related challenges including a lack of financing, remotely managing a small team, and a limited talent pool of hydrogen experts threatened to ground the company before it had a chance to take off.

But soon after joining, Afzaal and Malz completely transformed Next Hydrogen within two years. They raised $60 million in financing, took the company public, acquired solutions provider CleanFuel Systems and new office space, and grew the team to about 50 employees—as Malz puts it, “we got the right people in the right seats.”

“We’ve significantly grown our team, infrastructure and processes, which will allow us to properly develop our technology, commercialize the business and see it through to the finish line,” says Malz. “It’s really exciting.”

Finding the right partner

As Next Hydrogen began its journey from startup to scale-up, establishing a collaborative relationship with a trusted banking partner was vital to their success.

HSBC stepped into the role, with Ishan Vij, HSBC’s Director of Corporate Banking, becoming a key advocate in helping realize Afzaal’s vision and aligning it with Malz’s fiscal directives.

“When you’re in such a fast-paced environment, you need answers and direction right away,” says Malz. “HSBC and Ishan have always been there for us. They tell me what I can and cannot do, ensure I understand the variables, and help me make the right decisions before moving forward.”

Vij also introduced Malz and her team to HSBC’s Green Deposits program, which lets Canadian small and medium-sized enterprises invest in sustainable initiatives.

“It was a happy accident,” says Malz. “Even though sustainability is built into our entire offering—it’s in our DNA—we were having difficulty figuring out how to communicate our ESG strategy to the world for the first time. Once we discovered Green Deposits, we knew they were going to be a critical part of enhancing our mission.”

“Green Deposits provides our corporate and public sector clients, who may have limited financing options but still have surplus cash available, with the opportunity to make direct investments in environmentally beneficial projects,” says Michael Klopchic, HSBC’s Country Head for Canada, Global Liquidity and Cash Management. “These deposits enable companies to incorporate their sustainability agenda into their entire business model and demonstrates a real commitment to sustainability through concrete financial action.”

The view forward

While the team focused last year on building Next Hydrogen’s business foundation, Malz says 2022 will be focused on executing the next stage of its technology roadmap—getting the product in front of people who can understand its benefits and collect the data to prove it. Looking ahead, 2023 will be focused on commercializing the technology and scaling the business globally, with an immediate focus on U.S. expansion in tandem with analyses of the European, Australian, and Indian markets.

“It’s been thrilling to see Next Hydrogen rise from the ground floor to where they’ve ended up today,” says Vij. “As they continue to grow and build plans, bonding limits, and letters of credit, our products and services are going to move with them and play a key role in their success as a global sustainable energy leader.”

Malz predicts Next Hydrogen’s challenges will continue to revolve around talent, especially the seamless integration and remote management of its U.S. team members, and navigating ongoing global supply chain challenges.

But as Next Hydrogen continues to commercialize and scale, Malz is confident in the company’s outlook and that HSBC, with its suite of commercial banking products and services, will remain a key partner in its long-term success.