Warren Hogarth, an investor at venture capital firm Sequoia Capital, spoke Thursday at an industry event and said, "It won't do the industry any service if we put companies out that run up in the first 3 months and then collapse soon afterwards."  Hogarth added that "companies are filing [for IPOs] and there is optimism for those companies, but there is also a pervasive sense of caution," concluding:  "It's earnings that matter."

We repeat: "It's earnings that matter."

Which brings us to Fallbrook Technologies of San Diego, a start-up that is building an innovative transmission for vehicles and wind turbines. The company had $11.7 million in losses in the nine months through Sept. 30, 2009, and a net loss of $10.6 million in 2008, which was up from a $6.6 million net loss in 2007 and a net loss of $6.3 million in 2006. 

The startup just filed for a $50 million IPO.  Here's a link to the SEC filing, the S-1

Those losses fly in the face of Hogarth's message, but are quite consistent with the recent streak of VC-based greentech IPO filings:



The only two companies on this list that are actually making profits pulled their IPOs on account of "market conditions."  None of the other IPO hopefuls have turned a profit. 

Here are some of Greentech Media's recent looks at these imminent IPOs:

Greentech IPO Scorecard 
Solyndra by the Numbers 
Tesla Files for IPO  

Fallbrook has developed a transmission that improves the efficiency and performance of mechanical systems that run at different speeds between primary drive and operating drive.  Here's a link to a video that explains their technology. 

In the S-1, the start-up identifies several multi-billion dollar markets for its NuVinci transmissions:

  • Automotive accessory drives - The NuVinci transmission can be used in alternators and air conditioners to maintain an optimal operating speed whether engine speed is increasing or decreasing. 
  • Bicycles: Fallbrook expects to sell 24,000 of its smooth-shifting bicycle transmissions in 2010.
  • Electric Vehicles: Fallbrook claims its transmission improves EV battery life and increases operating range.
  • Lawn care equipment: Fallbrook claims its transmission lowers fuel consumption, emissions, and noise.
  • Small wind turbines <100kW: Fallbrook claims the NuVinci transmission can improve energy capture.


The company has 47 employees, with 24 concentrated in R&D.  Executive offices are in San Diego, CA, but most of the employees are in Cedar Park, Texas.

The firm has received $55 million in venture funding since its founding in 2000 and its largest shareholders are NGEN and Robeco.  Fallbrook intends to pay down debt with part of the IPO proceeds, according to the document.

One more time: "It's earnings that matter."

Battery maker A123 made it out of the gate to a reasonable response despite continued losses.  Will institutional investors continue to back greentech start-ups with no clear short- or medium-term path to profitability? 

Or will we contunue to see more IPOs pulled due to, ahem, "market conditions?"

Tags: cleantech, eric wesoff, fallbrook technologies, greentech, ipos, michael kanellos, ngen, nuvinci, robeco, sequoia capital, transmission, warren hogarth