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Happy Thanksgiving pt 2

Rob Day: November 21, 2006, 6:27 PM
Wanted to share the above chart, which was in the most recent quarterly Jefferies CleanTech Review. The color-coded areas are estimated to be more susceptible to significant drought by 2025, given current water supplies and uses. Really helps highlight why, even if energy tech gets all the press attention, water tech may be an even more pressing market need.

Happy Thanksgiving

Rob Day: November 21, 2006, 8:18 AM
Lots of folks who have reason to be thankful for recent checks written and received:
  • Solaicx has taken in $3mm from Applied Ventures. The silicon wafer manufacturer plans to use the funding to help build out a second manufacturing facility. In addition to generally addressing the current silicon shortage, Solaicx claims their process provides significant efficiency gains in silicon production as well.
  • Materials discovery firm Intematix has taken in a $16.5mm Series C led by Crosslink Capital and Samsung Ventures. New investor Presidio STX and existing investors DFJ, East Gate Capital, and Pacifica Fund also participated in the round. The company's materials development efforts are finding applications in solid state lighting, fuel cells, and other clean technologies.
  • Intechra, an e-waste management and recycling company, has taken in a $6.5mm round of financing led by SJF Ventures and including participation from Richland Ventures, Chrysalis Ventures, and Clayton Associates. The financing will be deployed toward a recent acquisition.
  • Austria's IDENTEC Solutions, a developer of long-range RFID technology, has taken in a 10mm euro round of financing led by SAM Private Equity, and also including participation by Sustainable Performance Group, RFID Invest, gcp gamma capital partners, and a private investor. SAM and the other investors are looking for cleantech applications of RFID including asset management approaches to minimize the emissions impacts of transportation.
  • Two other deals highlighted/ scooped by PEWW today: The Beam, an online directory for green building professionals, has raised $5.17mm in a Series A led by VantagePoint Venture Partners. And car-share provider ZipCar has raised a $25mm Series E led by Greylock with participation from existing investors Benchmark and Boston Community Ventures.
Some cleantech investing reading for over the holiday, in case the tryptophan doesn't take full effect: European cleantech investing fell significantly last quarter, at least in dollar/euro terms. Given how much impact a single large round could have on such small numbers, it would be interesting to see what happened in terms of number of deals done, too, otherwise these quarterly ups and downs are hard to parse through to get the big picture... Nuclear is "the greenest of the green"? Not to get embroiled in the debate, but it's important to note -- there is in fact a strong debate about this question... Here's a nice little column about all the cleantech ETFs that have been coming out recently... Short answer: No. The linked column gives a much nicer long answer (of particular note is the fact that oil does not substitute for most clean energy technologies, which are more directly related to electricity generation and use). However, some specific cleantech markets are much more directly impacted, potentially... Here's the most recent Fenwick & West VC terms survey... And finally, a new $150k sustainable energy technology prize -- get those bplans ready!

SunPower buys Powerlight

Rob Day: November 15, 2006, 8:48 PM
As we've talked about for some time now, the solar market is due for some serious consolidation.

While there have been some earlier small moves, today a big move came with the announcement that SunPower is going to be using their healthy market valuation to acquire Powerlight.

This follows on the SunEdison acquisition of Team Solar, and various other vertical integrations over the past year or so. It's very interesting to note Joel Makower's take in the Red Herring article linked above that this represents "Plan B" for Powerlight in their attempts to go public.

Joel has his own take here, and links this announcement to the upcoming Clean Tech Investor Summit. Neal Dikeman also has his take here.

For cleantech investors involved in solar, this may mark the beginning of a phase of exits via M&A versus IPO, a natural progression as the industry continues to mature. As the solar IPO wave potentially crests in 2007, investors evaluating new solar plays will need to adjust their expectations accordingly.

Firefly and Infinite Power; European cleantech VCs in a "choppy" market?

Rob Day: November 13, 2006, 11:17 AM
  • Firefly Energy, which has developed an alternative set of components for improved performance in lead acid batteries, announced a $10mm Series B led by Stark Capital, and including existing investors Caterpillar, KB Partners, the Illinois Finance Authority and the Tri-County Venture Capital Fund. The financing will go toward further product development and other efforts.

Last week’s Energy Venture Fair

Rob Day: November 12, 2006, 10:46 PM

Had the pleasure of attending the annual Energy Venture Fair this past week. It's an interesting pitch-fest where dozens of energy tech startup CEOs come to give 15 minute presentations to potential investors (or, more often than not, each other).

Because about five company presentations go at the same time, it's always fun to see which rooms are crowded and which are not. This year's big winners (based upon the number of investors sitting taking notes) appeared to be anything solar- or biofuels-related, which is really no surprise. But there were some interesting companies present, and a nice breadth of techs and markets represented. You can read about the companies that were selected as "Most Promising" here: Wilson TurboPower, Zolo Technologies, KiteShip, Ice Energy, and Hythane. Neal Dikeman also has a few thoughts on the event.

Very unfortunately, I missed Steve Jurvetson's plenary keynote, which several people I spoke to later said was very good, and only caught the tail end of Tim Healy's (CEO, EnerNOC) rallying-cry speech. But I was able to see most of the investor panel that spoke at lunch on day one, which included Stephane Dupont of the NVCA as moderator, and Philip Deutch of NGP Energy Technology Partners, Scott MacDonald of SAM Private Equity, Pete Higgins of Second Avenue Partners, and Erik Straser of MDV. Some notable statements from the panelists (and as always, having no claim to journalism, note that these are often paraphrased, so names are omitted to protect the innocent):

"In these markets, lifecycle adoption varies. There are opportunities for both grand slams and longer term plays."

"Spend the time to think through the issues and put yourself in your investors' shoes. Get them up to speed and make them comfortable as best you can."

"The absence of information is perceived by investors as bad news. Don't treat your board like they're the IRS, someone to keep at an arm's length relationship."

"We are seeing the top 20% of entrepreneurs in the Valley and elsewhere stopping what they've been doing and coming into these value chains [energy, etc.]. They know how to take risk out in a staged way, how to grow a business in a venture context. We like to see a balance -- know the domain, but it's best not to be so embedded in it that you don't know what aspects of the industry's history to listen to, and what not to."

"I've always found that a CEO who's upfront about challenges, and gives both the pluses and the minuses, is refreshing."

"Really, we invest in the technologist and not the CEO, because we invest fairly early. We need to make sure that there's alignment around the vision for the company, as well as the role for the technologist looking forward."

"In Europe, we're challenged to find entrepreneurial CEOs. There's not as much of a venture-backed, fast-growth culture."

"We look for very deep domain expertise in a founder -- that they're already in their customers' heads, and have knowledge of all of the subtleties that end up being very important when you're trying to get a P.O."

"We catch companies when the technology has moved from magic to science -- it's happened more than once, and it can be controlled. We will typically manage books for the company, and provide other support infrastructure, during the period when the VC is helping to figure out what to bring on board and when. And only when we've figured out the market, the customers, etc., is it time to provide the significant venture capital."

"Add infrastructure as slowly as you can. You can get by with a part-time controller for a while. Focus on what's most important in terms of getting that technology into the market."

"Everyone talks about IP, but few do it well. Maybe there are 15 people in the Valley who write good IP strategy. We try to identify the best strategists for a situation, then engage a litigator to gameplan what's likely to happen -- when you're eroding someone else's margins, they will react."

"At a certain level, IP is irrelevant. You need to execute, and that's how you create an advantage. IP is not a silver bullet."

"Right and wrong doesn't determine legal outcomes. So it's important to have the right team, not patents."
As for me, I would suggest winnowing down the presenting companies a bit so that the event could be truncated to one day. With a two-day event full of repeated presentations, investors naturally come to only one or the other but not both. And that's a big hindrance on the value of networking. Keeping the event to one day would improve the networking for investors, and that would probably bring even more of them out... But overall, a very interesting couple of days in Santa Clara.

Mascoma, Luz II, Norsun, NIL, and other news

Rob Day: November 12, 2006, 9:45 PM
  • Mascoma, which is developing cellulosic ethanol production technology, is expected to announce a $30mm round of financing on Monday, led by General Catalyst Partners, and including Khosla Ventures and Flagship Ventures (we've previously mentioned a smaller amount than the $9mm it's now known these two firms invested earlier this year), Kleiner Perkins and others. The funding is going to go toward a pilot-scale plant, and Samir Kaul mentions that he is expecting commercialization in 2008.
  • Not sure how we forgot to mention this one, but hopefully better late than never: John Woolard of VantagePoint Venture Partners has joined centralized solar plant startup Luz II (no website yet) as CEO, and the firm has raised an undisclosed amount of funding from VPVP. The firm apparently already has a 500 MW power purchase agreement in place with PG&E, and is aiming for
  • Norsk Hydro has invested $23mm in Norsun, a Norwegian producer of monocrystalline silicon wafers. The company may also expand into other related businesses. Pre-money valuation was at least $23mm on the investment.
  • Two cleantech-related funds getting started up: In Europe, Capricorn Cleantech Fund of Belgium has done a first close of 26mm euros, and is looking for the fund to be 75-100mm euros when fully closed. Initial LPs include PMV, Electrabel, and MRBB. And in Texas, TXU is going to devote $200mm to a corporate venture group that will look to invest in alternative energy technologies. (Both of these were mentioned by PE Week Wire last week)
Other articles worth checking out from the past week: Is this really how Kleiner got into "greentech"?... Here's an interesting article on how China's environmental issues will drive cleantech venture capital... The Acumen Fund has an interesting venture-philanthropy model... Yet more interesting info on lithium ion battery techs... $100mm going into fuel cell projects via the DOE... In terms of tracking underlying energy market trends, this is a fascinating article... Finally, with all the interest in algae-derived biodiesel, these girls should be prepared for a deluge of VC business cards!

It’s been quiet lately…

Rob Day: November 6, 2006, 2:29 PM
At least in terms of public pronouncements of cleantech deals. Is the industry taking a breather? Or, as several fellow investors have mentioned to me recently, are deals increasingly going stealth in the space, as competition heats up for deal access? Certainly seems like the latter scenario has some truth to it, given talk we've heard about various deals that aren't being publicly announced. But of course, journalistic scoops are the business of other sites, VentureWire and PE Week Wire, and not the purpose of this site...

So that having been said, here are some news items and tidbits from recent public announcements and articles:
  • Boston-Power Inc., a developer of advanced lithium ion batteries, has raised an $8mm Series A led by Venrock Associates and Gabriel Venture Partners. The company had previously raised angel/management seed financing. The company joins A123 and Li*On in the lithium battery space, among others.
  • The business of climate change: We didn't mention the recent Stern Review out of the UK, which attempted to put a dollar (pound?) figure on the overall future economic cost associated with climate change, but it was sobering news. Joel Makower puts it nicely into perspective. It also once again helps make the case for a strong economic value proposition for climate-friendly technologies and businesses -- not least of which, of course, would be technology-enabled energy efficiency, which we've discussed before, and which can provide winning economics even today, without any necessary market shifts. It furthermore helps make the case for the continued development of carbon emissions credit markets, as private market-based solution schemes proliferate and mature, even in the absence of regulatory change. We've talked before about how the development of such markets will be another big impetus for adoption of clean energy technologies (and thus a nice value accelerator for cleantech investors). Hence, it's very interesting to note that Morgan Stanley is planning to invest $3B in greenhouse gas (GHG) emissions credits and related businesses over the next five years. The GHG credit market is starting to come together...