Recent Posts:

Advanced Glazings, and other news

Rob Day: April 30, 2006, 5:56 PM
  • A couple of good general cleantech articles recently worth noting: First, see this column by Peter Fusaro, aimed primarily at the mainstream utility industry. It's a fairly optimistic take on the cleantech movement. Next, there's this article, which provides a more sober take, specifically from the VC's perspective. Both are worth checking out.
  • Always thought-provoking, Joel Makower opines here on the emergence of "patient capital" as an investment class. Interesting to contrast his take with the two aforementioned general cleantech articles... [Self-promotion alert: I'm going to be taking part on Joel's panel at the upcoming Investors Circle conference, which should be an engaging session]
  • While this site purposefully avoids discussions of public policy, they do impact cleantech markets. So sometimes it's useful to pass along articles with good overviews and updates, such as this BusinessWeek article discussing federal policies toward energy efficiency technologies.

Fat Spaniel, a World Bank clean energy VC group, and CA Cleantech Open get-together

Rob Day: April 24, 2006, 6:41 PM
  • Buried in this article about the World Bank is a mention of the organization potentially starting up a venture capital group to invest in clean energy technologies. If the CIA and US Army can start up VC groups, why not the World Bank?
  • If you're in the Bay Area this coming Thursday, the CA Clean Tech Open's technologist/ entrepreneur "matching event" should be a fun happening. PS: Since the link got put up, the location has been finalized -- SRI International's offices in Menlo Park.

Happy Earth Day!

Rob Day: April 22, 2006, 1:36 PM
Happy Earth Day, everyone. It's a good day to sit back and enjoy some of the latest stories of interest to come across the wires, starting with a couple of recent deals to note:
  • Targeted Growth, a Seattle bioagricultural company that is developing "gene enhancements" that increase yields for various biofuel crops, has apparently raised $10mm recently, according to this column. The total investment in the company to date is $15mm, and among the investors so far are Investment Saskatchewan and GrowthWorks. Increasing yields by 20%, as is talked about by the company, would significantly improve costs for biofuels.
  • Ocean Power Delivery, a Scottish wave-power technology developer, has raised a $22.5mm round of funding, according to a GE press release (cited on Clean Edge). GE is providing a $2.6mm debt facility and taking an undisclosed amount of equity. OPD is currently delivering machinery for their first commercial contract, in Portugal. Interestingly, this deal also marks another example of GE Technology Lending beginning to take equity stakes again -- thanks to their Ecomagination effort, this trend of venture-stage equity investments would bring GE into the "cleantech VC" club.
  • While we're looking internationally, here's a good article on the growth of cleantech VC and private equity activity in India.
  • Red Herring posted an article recently which cited a study calling into question clean energy technologies on the basis of energy price volatility being lower (relative to some other commodities) than one might have expected. It's good to get away from some of the hype about energy prices -- the effect of oil prices on the market attractiveness of electricity-generating clean technologies, for example, tends to be a bit overstated in the press. However, a few quick thoughts on this study: a) the authors admit that their historical analysis may not have any bearing at all on future volatility; b) the authors also admit that volatility in energy prices may have more relative impact than volatility in other commodities because consumers are more exposed to it (and, I would add, it's probably a bigger part of the overall consumption basket than some of these other unnamed commodities); and finally c) as we've pointed out before, some researchers actually think that prolonged exposure to steady high prices, rather than exposure to price volatility, will force the greatest rate of change. So take this Red Herring article with a grain of salt...

Miartech and Smart Fuel Cell

Rob Day: April 19, 2006, 11:49 AM
  • Miartech, a Shanghai company which appears to be designing energy demand response capabilities into semiconductors intended for consumer products, raised $6mm in first-round funding from DFJ, DFJ DragonFund, and DFJ Element. It's interesting to see DFJ leveraging all three entities on the same deal.
  • German methanol-fueled fuel cell developer Smart Fuel Cell (say that three times real fast) announced a 15mm euro raise from "several renowned European institutional funders." The company's fuel cells are being used so far as auxiliary power on a line of motor homes, and are targeting a broad range of transportation and battery-replacement applications. The company had previously raised 9.6mm euro of funding, from investors including the 3i Group, Pricap Venture Partners, E.I. DuPont de Nemours, and Buchanan Industrial Technologies.

Tuesday links

Rob Day: April 18, 2006, 7:45 AM

Zinc Matrix, ESS and Cornell Capital

Rob Day: April 17, 2006, 5:35 AM
  • Zinc Matrix Power last week announced a $7mm round of financing. Existing investors Intel Capital also participated, alongside an unnamed "private equity" group which may or may not have been a new investor, it's unclear. OnPoint Technologies, which led the company's $9mm October 2004 prior round, didn't participate in this current round. Red Herring has a very good discussion of the company's technology and future plans.
  • ESS, which offers software for corporate EH&S departments, announced an $8mm round of financing, led by Grayhawk Venture Partners and DCA Capital Partners. Unnamed existing investors also participated. The company's software helps companies track compliance with environmental, healthy and safety regulations.

Some thoughts on today’s PE Week Wire

Rob Day: April 13, 2006, 8:38 AM
Dan Primack (the mastermind of the mandatory daily reading, PE Week Wire) had some interesting comments today, regarding a cleantech b-plan contest he judged yesterday:

On Tuesday night I helped judge the semi-finals of a clean-tech business plan competition up in Lowell. Almost all of it was off-the-record, but a few quick observations:

* Lowell is home to Konarka, a VC-backed company that makes flexible photovoltaic materials (particularly for military use). Listening to clean-techies talk about Konarka is like listening to Web 2.0 disciples discuss Google, except without the malevolent envy. It seems that almost every photovoltaic b-plan was viewed through the Konarka lens. Big-market folks like GE, however, were hardly mentioned at all.

* I was on a judging team with Robert Shaw of Arete Corp. He is a clean-tech know-it-all, but in the most literal sense.

* Most of the b-plans involved solar tech, which apparently reflects the larger clean-tech market opportunity. Not wind, biofuels, hydrogen, water, etc. – but solar. This is probably old hat to many of you, but was new to me.

* There were a bunch of clean-tech VCs at the event, and I tried to ask each of them the following questions: “Is there enough clean-tech dealflow to justify the amount of venture capital being allocated to the space???? The unanimous answer was “no.??? Kind of reminds me of China...

It's shocking to hear that people in Lowell like Konarka...

Some other points Dan made were a bit more surprising, at least in light of available data and conversations I hear among fellow cleantech investors... Taking them in turn:
  • Regular readers of this site will know that cleantech dealflow is about a heck of a lot more than just solar, despite the fact that it was the "hottest" (pardon the pun) sector in 2005. In fact, breaking down the Q3 2005 numbers from the Cleantech Venture Network (the most recent available, unfortunately), about 59% of cleantech venture funding in that quarter was energy-related (versus clean water, materials efficiency, etc.), of which a little less than half was generation-related, and of which only some certain portion would be solar related [note: The CTVN was an early investment of my firm]. These numbers are imperfect, but should be at least directionally correct. So at best, we can assume that solar remained less than 25% of total cleantech dealflow in that quarter, probably significantly less. Indeed, anecdotally it appears that in 2006, a lot of cleantech VCs have turned their attention to other areas such as biofuels and clean coal alongside solar. So "cleantech" doesn't equate to solar alone, or even predominantly. Solar is, however, getting the most press attention and has recently seen the most high profile IPOs...
  • Regarding the "larger cleantech opportunity," solar also doesn't excessively dominate. According to Clean Edge's most recent numbers, biofuels were a $15.7B market in 2005, solar was $11.2B, and wind was $11.8B. Clean water technologies weren't tabulated, nor were the other cleantech sectors, but these are not small markets by any means either. Not knocking the solar opportunity at all, but again, regular readers of this site will know that it's not the dominant portion of the "larger cleantech opportunity."
  • Regarding the comment about too much capital chasing too few deals in cleantech... It's a fair question. But if you ask any VC (at least ones not current fundraising) in any sector the question "is there enough dealflow to justify the capital entering your space," what do you expect them to say? "Yes, actually, there's plenty of dealflow, so I invite everyone else to come into my sector." Just saying there might be a bit of understandable self-interested bias in the "unanimous" answer that was heard... As for me, I'll just note that I've been working my tail off lately...
[4/17 update: See Dan's thoughtful response here.]