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Codon Devices and other news

Rob Day: December 27, 2006, 8:46 AM
Codon Devices, which has developed a platform for the rapid design and genetic sequences, announced a $20mm Series B led by Highland Partners, with existing investors Alloy Ventures, Flagship Ventures, Khosla Ventures and Kleiner Perkins Caufield & Byers also participating. As with last week's mention of ERA Biotech, one of the potential applications of this technology is in the development of enzymes and other inputs to biofuel production.

Other news and notes: Here are a couple of good overviews of recent discussions around ethanol and clean coal... A local perspective on cleantech venture capital in New Hampshire... Energy Innovations' Andrew Beebe burns his grilled asparagus... Finally, cheers to Blueprint Ventures for a cute holiday video (note the subtle cleantech references).

[12/27 update] Also, check out this very interesting scoop by Joel Makower -- it's a very good example of how the commercial sector is starting to pick up demand for clean technologies even in the absence of major regulatory change...

SAM Private Equity becomes Emerald Technology Ventures

Rob Day: December 19, 2006, 3:55 PM
Interesting news last week that Netherlands-based Robeco has bought a majority stake in SAM Group, a cleantech-oriented "sustainable asset management" firm that was the parent company to SAM Private Equity (a long-time cleantech VC group).

The move seems targeted at public market offerings, since the managers of SAM Private Equity have bought out their portion of the business and re-branded it as Emerald Technology Ventures.

Emerald will take with it 16 staff members and $330mm under management.

Several recent cleantech deals to note:
  • WaterHealth International, which is developing clean drinking water solutions for developing countries, has closed a $11.25mm Series C. PEWW had broken the news of the upcoming round back in October. SAIL Venture Partners "anchored" the most recent $4mm add-on to a $7.25mm equity investment "anchored" by Dow Venture Capital that was announced earlier.
  • Indian electric car manufacturer REVA has raised a $20mm round of financing from DFJ, Global Environment Fund, and Mellon HBV Master Global Event Drive Fund LP. This represents GEF's first investment in India... The company has sold around 1,600 cars so far.
  • At the intersection of biotech and cleantech lies biofuels... ERA Biotech, a Spanish biotech company which claims bioenergy applications (ie: advanced enzymes) for their research, has raised a 1.4mm euro bridge financing. Invertec, Reus Capital Riesgo, Talde Capital II and Uninvest all participated in the financing, alongside several angels. A 5mm Series A is anticipated for 2007.
Finally, "venture capitalists... appear to be ready to stampede into clean technology..." But the NVCA's Mark Heesen worries about VCs being "lemmings" regarding energy investing. Useful cautionary thoughts, consistent with Heesen's past statements on cleantech, but I should point out that according to the NVCA survey cited in the article, 92 percent of VCs expect such investments to increase next year -- it's NOT that 92% of VCs are themselves going to be investing in energy tech, as Heesen says in the "lemming" interview. Also interesting is that the very same NVCA survey says that more than 90% of VCs expect increased investments into China and India next year... but apparently that's not a "lemming" move. In the end, the NVCA survey only confirms what everyone knows by now, that cleantech is one of the fastest-growing venture investment segments. But, growing too fast? That clearly remains an area of ongoing debate...

World Energy Labs and Novazone announce raises

Rob Day: December 14, 2006, 8:26 AM
  • (self-promotion alert) Extremely happy to mention this one... World Energy Labs, which has developed breakthrough analytics for batteries and a broad range of electronic equipment (including fuel cells and other non-storage applications), has announced a $5.4mm Series B led by Expansion Capital Partners. The company's electrochemical impedance spectroscopy-based technology and products promise dramatic improvements in the way energy storage and electrochem devices of all types and flavors are operated and monitored, as well as in quality control during manufacturing.
  • Novazone, which is developing ozone-based systems for the sanitization of drinking water and food/ agricultural products, announced a $7mm Series B led by Chrysalix with participation by existing investors Foundation Capital and Grauer Capital. The funds will be used for working capital and new product development. Novazone is particularly benefiting from the food contamination episodes that have been in the news recently.

Accelergy, EnviroTower, Solar EnerTech, Western GeoPower, and GO Ethanol

Rob Day: December 12, 2006, 9:11 PM
  • Accelergy, a catalytic materials discovery and commercialization firm, has closed a Series B of undisclosed size. [PE Week Wire reported today that the round size was $25mm] The round was led by Goldman Sachs, with new investors Sequoia Capital China and Lux Capital, plus existing investors Nth Power, Technology Partners, Mobius VC and Advent International all participated as well.
  • Solar EnerTech raised a $5.6mm private placement ($5.1mm of equity, $0.5mm of convertible debentures). The Shanghai-based solar PV manufacturer will use the funds to help complete their manufacturing facility. Knight Capital Markets participated in the transaction. Also of note, Solarfun, another Chinese solar manufacturer, filed for a $162mm IPO recently.
  • Geothermal project developer Western GeoPower announced the "negotiation" of a C$2.5mm private placement. The capital will go toward their San Francisco-area project at The Geysers Geothermal Field.
  • Paladin Capital Group has led a $145mm debt and equity financing of GO Ethanol, a developer of ethanol production facilities in Ohio ("Greater Ohio" = GO) and surrounding areas. SunTrust, Robinson, Humphrey led the debt portion of the financing.
  • London-based Environmental Technologies Fund announced that their first fund has raised $66mm for deployment into cleantech venture capital. The company claims to be the first European cleantech VC fund backed exclusively by institutional investors, and they are specifically targeting expansion-stage investments.
Other news and notes: Good news for nanotech investors -- a recent survey indicates that consumers are willing to tolerate some risks if it means real benefits... Cleantech investors drawn to the potential investment opportunities in broadband over powerline (BPL) should be aware of this ongoing debate... VCs have taken "a particular shine" to cleantech investments, apparently... Finally, there continues to be a lot of strong talk around various alternative fuels. First, there's this algae vs soybean biofuels "smackdown" (??). Then this argument that a hydrogen economy will never "make sense." Also, there's this interesting interview with Lee Lynd of Mascoma, promoting cellulosic ethanol. But in the end, these are all different ways at achieving the same thing -- moving vehicles around. And cost per mile will be the end determinant, no matter what arguments people make right now ahead of the results.

Quanlight, BioPetroClean, and PowerGenix

Rob Day: December 6, 2006, 11:56 AM
  • Quanlight, which is developing solid-state lighting solutions (specifically, yellow-amber-red LEDs), announced a $1mm Series A from Blackbird Ventures. As part of the investment, Neil Senturia of Blackbird is also coming on board as CEO.
  • Nickel-zinc battery developer PowerGenix announced a $17mm Series C led by the Angeleno Group. Return investors Advent International, Braemar Energy Ventures, Granite Ventures and Technology Partners also participated in the round. Energy storage is a technology area that has been getting a lot of attention by investors lately (here's another nifty example from Time).
  • Cleantech investor updates: MDV has brought on Josh Green as a partner on their energy and materials team. Green will be joining Erik Straser and Marianne Wu on the team.
Other news and notes: Lux Research reports that nanotech venture capital investments should reach $650mm in 2006, but that "exits remain elusive"... (Self-promotion alert) Finally, here's a nice column on general cleantech investing trends.

Q3 cleantech investment numbers

Rob Day: December 1, 2006, 1:26 PM
The Cleantech Venture Network this week released their Q3 tally of sectoral investments, and it was another banner quarter. Almost a billion dollars of investments were tracked by the group in North America, and including European figures it topped the $1B mark.

Interestingly, out of 47 deals tracked in North America, five deals (Cilion, Altra, Ion America, Renewable Energy Group, and Newmarket Co.) made up 60% of the total funds invested. It's a very good indication of what we've talked about before, in that there is a bit of blurring of project finance and traditional VC in the market figures, especially when it comes to biofuels. Cilion, Altra, REG and Newmarket raised their large financings in order to build out or acquire new production facilities... This has implications when thinking about the importance of cleantech within the overall VC industry. The press release points out that the dollars tracked in cleantech was 14% of overall VC investment in the quarter, but that the number of deals tracked was 5% of the overall total VC dealflow. Perhaps the latter figure is a good way to think about the positioning of the sector right now.

Note in the PR that the language is a bit confusing when it states that "Cleantech investment YTD is running 20% behind last year YTD," which apparently actually relates only to European investment totals, according to Craig Cuddeback at CTVN. As the below chart shows, it was actually another up quarter for the sector in North America.

One deal to note: A sensor company, Visyx, has been spawned by Symyx with most of the funding coming from CMEA. The sensors will be targeted initially at monitoring of fluids in transportation applications. Symyx received 37% of the new company in exchange for $400k in cash and the contribution of IP.

Other news and notes: Surveyed cleantech companies expect the AIM to be "more important" than the NASDAQ for the sector -- but does this really imply that AIM is becoming the exit path of choice? The press storyline regarding AIM vs NASDAQ is picking up on the SarbOx obstacles in the US, but the other factor is that such comparisons may not be apples to apples. In many cases, such go-public moves are less of an exit for venture investors than an alternative way to enable follow-on financings from public investors, but with too little float to allow real liquidity for major shareholders. That financing alternative is an important role, but it does mean that comparing NASDAQ to AIM or other exchanges -- without differentiating between the big cap and small cap exchanges they manage -- is a bit tricky. Here's an article on the subject from a while back. It would be interesting to do another similar survey, but also asking specifically about the role of each exchange for investors' exits and returns (and also it would be nice to ask a broader set of interviewees than those attending a single conference in London)...

Also: Israel has an "immediate need" for $210mm of cleantech VC and private equity funds... Neal concludes that cellulosic ethanol might be making progress, but "the jury is still out"... Why is energy storage getting such strong interest from investors? Among other reasons, $74B is an attractive target market size (note: sub. req'd)... Even Matt Marshall would have to admit that there's an impressive cleantech cluster in the Boston area... No, Joel, it probably can't -- but that's one reason it remains a very attractive investment area. So it's not a bad thing... Finally, more info on the recent Zipcar financing.