Battery materials startup NanoGraf Corp. raised $65 million to scale up the domestic production of silicon anodes for lithium-ion batteries.

NanoGraf’s series B capital raise comes on the heels of the company winning a $10 million contract from the U.S. Department of Defense in November to build the nation’s first large advanced silicon oxide factory, a 17,000-square-foot facility in Chicago’s West Loop neighborhood.

NanoGraf previously raised $27 million in funding from a mix of venture capital and angel investors.

Silicon anodes are a material that can add energy density to lithium-ion batteries that power electric vehicles. However, silicon metal is difficult to incorporate into electric vehicle batteries because the metal can swell and cause damage to the cells during the charging process.

The silicon anodes produced by Chicago’s NanoGraf will be incorporated into its 18650 battery cell, which the company bills as “the world’s most energy-dense lithium-ion battery.”

NanoGraf unveiled the 18650 battery cell in October. The company said its product was 20 percent more energy dense than the industry’s leading batteries.

NanoGraf previously produced silicon anodes in Japan but took advantage of a 10 percent tax credit in the Inflation Reduction Act to start producing battery materials in the U.S.

The Pentagon is not the only U.S. government agency funding silicon battery technology development. In October, the U.S. Department of Energy awarded $250 million in cost-sharing grants to three companies developing silicon technology for EV battery storage and charging stations.

“This funding not only ensures a domestic supply of a key strategic component of next generation lithium-ion batteries but also enhances our national competitiveness in the global energy storage space,” said NanoGraf CEO Francis Wang.

The funding round was led by two Chicago-area companies, Volta Energy Technologies and CC Industries. Other participants include Emerald Technology Ventures, Material Impact, Arosa Capital, Nabtesco Technology Ventures and TechNexus.

“Nanograf’s technology promises to enable higher energy density in lithium-ion batteries in a way that uses silicon with what is practically drop-in to existing battery manufacturing processes,” said Volta Energy Technologies CEO Jeff Chamberlain.

NanoGraf’s existing investors who also participated in the series B round were Hyde Park Angels, Evergreen Climate Innovations and Goose Capital.