Greentech Media

In May, New York-based fuel-cell developer Plug Power Inc. acquired General Hydrogen for $10 million. Plug Power had scooped up another Ballard Baby two months earlier, spending $45 million for Cellex Power Products Inc., a competitor and neighbor to General Hydrogen. Both Richmond, British Columbia, startups proved there was a business case for forklifts powered by fuel cells, which they demonstrated could outperform that longtime industry standard - lead-acid batteries.

"Given Ballard hasn't quite commercialized its products, you look for other things that did emerge from it, and this has been one of those wonderful side benefits," says Mossadiq Umedaly, a former chief financial officer of Ballard who spent eight years with the company.

Umedaly went on in 1999 to become CEO of a little-known power electronics company called Xantrex, which at the time had less than $10 million in revenues. He raised more than $100 million, led acquisitions and eventually guided Xantrex through a successful initial public offering. Now a profitable company pulling in more than $200 million a year in revenues, Xantrex is also considered a leading supplier of power electronics to the fast-growing renewable energy sector, including fuel cells.

"What ties us all together is that Ballard was such a unique experience," says Kirk Washington, a co-founder with Vancouver-based venture capital firm Yaletown Venture Partners who worked alongside Umedaly at Ballard. "We dealt with the oil and gas industry, the automotive industry, the electric utility industry … What's common are the problems these industries are trying to solve."

Ballard helped Washington and others not only understand the problems, but also realize that Ballard's focus on proton-exchange membrane fuel cells wasn't necessarily the solution - at least not at the time. "We got a unique perspective on what will fly, what will succeed and what may not. Obviously, Ballard was a little bit ahead of its time in that regard."

One of Yaletown's investments, founded by former employees of Ballard, is three-year-old NxtGEN Emission Controls. But, unlike Ballard, the company has stayed clear of fuel cells. It's instead focused on emission controls for diesel-engine systems, a much more immediate market opportunity.

Ex-Ballard-staffed venture capital firms such as Yaletown, Ventures West, and Chrysalix Energy have played a critical supporting role as financial catalysts for the Vancouver technology scene largely spawned from Ballard. It's a scene, a dense hub of fuel-cell innovation, that has been recognized by Ron Pernick and Clint Wilder, authors of The Clean Tech Revolution, as one of the world's Top 10 clean-technology clusters.

"Ballard has gone through a number of expansions and contractions over the years, and any company that goes through that inevitably conceives a number of startups," says Mike Walkinshaw, managing director with Chrysalix Energy, which has put money behind two Ballard babies - Angstrom Power Inc. and fuel-cell membrane developer PolyFuel Inc.

Walkinshaw spent five years at Ballard, at one point as manager of product strategy, before joining Chrysalix in 2002. Ties run deep between the two firms. Chrysalix co-founder Michael Brown made the first venture investment in Ballard back in 1987 while at his former firm, Ventures West. He remained on Ballard's board for just over a decade, helping guide the company through its formative years.

"Chrysalix's relationship with Ballard gives us special access to people, and that gives us a key advantage over our fellow venture capitalists," explains Walkinshaw. The same goes for Venture West, which has played a role in financing Cellex Power, Angstrom Power and gas-purification developer QuestAir Technologies Inc. - all of them shaped by their alma mater, Ballard.

One investment shared by both Chrysalix and Ventures West is PolyFuel, a Mountain View, Calif.,-based maker of advanced membranes for micro fuel cells. Three of PolyFuel's executives are former Ballard people, including CEO and president Jim Balcom.

"We've done well," says Balcom, who also spent a year at Chrysalix before joining PolyFuel. The company raised $50 million through four rounds of financing before listing on the AIM, an international market for small companies that's part of the London Stock Exchange. PolyFuel has more than $15 million in the bank, enough to last until micro fuel cells are launched commercially around 2008 or 2009.

Balcom expects more siblings to come out of Ballard. "I wouldn't be surprised," he says. "I think there's still more development going on and going to be going on until this industry really gets on its feet."

It won't, however, be an easy ride. Companies still focused on fuel-cell technology are tackling a market where overall revenues, while growing, have yet to result in profits for individual players. Standards remain uncertain, skepticism still looms strong and new technologies, such as advancements in battery systems, continue to emerge that threaten the technical edges that fuel cells may claim today.

Whatever the future holds, Ballard's impact on the past will continue to be felt, says Washington. "Ballard always, in my mind, will hold the position as one of the real pioneers that showed investors there was money to be made in this stuff before it was called cleantech.

"It's very much part of the Northwest story, and it helped put the region on the map, globally."