The announcement was made yesterday that Beacon Power will be acquiring NxtPhase for something around $15M. It's unclear exactly how the companies' technologies and products will fit together (NxtPhase focuses on high-voltage monitoring applications, while Beacon Power has flywheels and inverters), but both sides say this prepares them to better serve the needs of the electrical grid.

While this particular transaction hasn't necessarily been the most lucrative for NxtPhase's prior investors (judging from the press releases listed on their website, the company raised more than $40M since 1999), it's worth noting that according to the recent "exit returns" study released by the Cleantech Venture Network (as previously described here -- scroll down a bit to find it) the average return to cleantech venture investors found via M&A exits was about 4.1x over the past ten years.

This is an important and encouraging finding, because in clean technology markets it's probably relatively more likely for venture investments to exit via trade sale than other paths (e.g., IPO). The reasons are largely positive:

• Large acquisitive players with stated strategic goals to pursue some of these markets (for example, GE with clean water and clean energy technologies),
  
• The value of a bundled technologies sale to large, key customers such as utilities,
  
• The fact that many of these technologies are taking over for older incumbent technologies rather than building entirely new markets,
  
• ...to name a few

The study tracked about 400 such transactions over the most recent five-year period, 1999-2003, so the volume is there....

Here's a good profile of Konarka, one of the more highly-visible and well-backed solar startups. It's always interesting to read about the company, which has some pretty lofty goals.

A few days ago I wrote of the importance of machine-to-machine communications in cleantech, and specifically in regards to sensors networks.

Good timing, because it appears that earlier this month the ZigBee Alliance announced they have formalized their certification process and have approved a first few certified products. What, you may ask, is ZigBee?

ZigBee (named after the method by which honeybees communicate) is the nickname for a low-power, low-data, cost-effective wireless communications standard based on the IEEE 802.15.4 standard. In past years many now-familiar wireless standards ("WiFi", "WiMax", "Bluetooth", etc.) have been similarly defined, but for sensors and other such applications you don't need as much data, and you can't afford to use as much power, as those established standards use. See this article for some more information on why ZigBee could be a big deal -- and some of the challenges facing its widespread adoption.

Lacking a certification process and approved products, it has been tough for early adopters to use ZigBee to build homogenous sensor/ remote monitoring/ control networks. Thus, the ZigBee Alliance has been developing the definitions and certification process for the ZigBee standard. It remains to be seen if vendor interoperability and other challenges will be addressed by the formalization of this process, but either way this is a good step forward for ZigBee-based technology providers -- and their investors.

It's not exactly venture investing news, but it's still interesting for cleantech investors. Given how fast the solar market has been growing and (as referenced here) how well things have apparently been going at SunPower, the company's parent Cypress Semiconductor is now looking to spin it out via an IPO.

This is going to bring even more attention to the solar investing market. It's also interesting to see the solar unit's financials, reported at $5M loss on $11M of revenues.

According to the Wall Street Journal (as cited in this Water Technology Online blurb), water industry stocks rose 24% in value in 2004, with companies like GE, ITT Industries and Pentair among those getting the most attention. Wall street investors, the article says, are looking at these and other water technology vendors.

Importantly, these are very acquisitive companies. As these larger firms grow and seek to acquire new technologies, it opens up exit opportunities for venture-stage funders who invest in the smaller firms they will target for acquisition.

It may be true, as many have said, that "water is the next oil."

A couple of deals over the last couple of days are interesting to note:

• SunPower (owned by Cypress Semiconductor Corp.) announced a deal to sell $300M worth of their newest A-300 silicon-based photovoltaic cells to German PV module manufacturer SOLON AG over 5 years. Another sign of how hot the solar industry is right now, esp. in Germany. This means adding another 25MW of capacity at SunPower -- as point of reference, last year total PV installations worldwide were 927MW. That's 62% growth off of 2003 -- and Germany's installations grew 152%. Solar is getting to be a big market with a lot of room for upstarts. But it's also still very much driven by particular regional subsidies.
• WellDog announced a new round of funding led by EnerTech Capital. The company has "downhole" sensing technologies that help natural gas extractors find reserves more efficiently. Some clean energy investors cannot participate in any fossil fuel-based technologies, while others point out that technologies like WellDog's can help minimize the environmental impact of drilling and extraction that's going on anyway, and that (all things being equal) that's a relative environmental gain. An ongoing discussion with many sides. But for investors in the latter camp, technologies like WellDog's can be compelling investments, best of luck to Tucker Twitmeyer and the team at EnerTech.
  

There is a very good column in the latest M2M Magazine about RFID and wireless sensor networking.

Machine-to-machine (M2M) technologies (of which wireless sensor networking is one flavor) is a relatively unheralded area of innovation, one that has caught a lot of attention in the cleantech investing world because of its potential for tangible efficiency gains and near-term implementation. Essentially, the argument goes, if you can move intelligence further out into the edges -- and increase the flow of information -- for a large complex operation (be it a manufacturing facility, an electricity distribution network, or what have you), you can introduce more flexibility and finer levels of control. This in turn helps reduce waste, because you can have systems that are more responsive and accurate.

One example of this would be the "smart building". By deploying numerous remote sensors throughout a building you can monitor temperature, lighting, security, etc., and thus set up an automated system that deploys electricity when and where it's needed -- instead of setting an entire building's thermostat at one temperature for the entire workday, to use one very narrow example. This saves electricity, and thus can save significant cost for the building owner. Other applications can be found in efficient manufacturing, smart metering, environmental monitoring, etc., and etc. (the list goes on), many of which have direct cleantech benefits in addition to hard cash savings.

But to get this system of smart, decentralized decision-making to work, you need to have an M2M communications network that can handle all of the quite significant data flow. Harbor Research calls this the "Pervasive Internet," and it is old hat to a lot of mainstream telecom/ tech investors, but cleantech investors are seeing a wide range of applications in our areas of interest as well.

When you see mention of excitement about the "automated home" or the "smart grid," know that somehow all of these devices need to talk with each other, and cleantech investors should be looking for the additional angles of value which these technologies can unlock. It won't be a "winner take all" market, and there are a lot of competing standards and technologies being developed, but there can be some interesting plays, and also M2M technology can play an important role in enabling other clean technologies as well.