Recent Posts:

Go big (and later-stage) or go home, pt 3

Rob Day: April 25, 2008, 8:12 AM
The updates are coming fast and furious on this topic recently... If you have a chance before it goes to sub-only archives, read the PE Week story on Kleiner's new growth-stage (for companies, spin-outs, etc. with revenue traction already) cleantech fund, which could end up being over $400mm. According to the article, Al Gore and John Doerr have been doing a roadshow with LPs recently. At least one member of Goldman Sachs' Special Situations Group has joined the team already.  The article also quotes a placement agent who hadn't heard of this fund but had been approached by another fund lately with a similar idea. ...and the cleantech investment community continues to go bigger and later. Meanwhile, two deals today to mention:
  • According to VentureWire, Verdiem has raised a $12mm Series F, led by new backers NCD Investors, and including participation by all previous backers: Catamount Ventures, Falcon Partners, Kleiner Perkins Caufield & Byers, Phoenix Partners and Westly Group.

Go big or go home, pt 2

Rob Day: April 24, 2008, 6:32 PM
Today's chatter: After our post earlier this month regarding the embiggening of cleantech venture capital firms, Jonathan Shieber at VentureWire today wrote about the ongoing fundraising efforts among cleantech specialist firms. He specifically mentioned expectations that RockPort will soon close a fund at more than $450mm; NGEN Partners seeking to raise a new fund at $500mm; Element Partners seeking $400mm for their second fund; and the Westley Group seeking $100mm for their first cleantech fund. With the exception of the last one, naturally, in all three other cases these would represent significantly larger funds than their previous efforts. Some deals to mention over the last couple of days: Other news and notes: Interesting article on Coskata's technology... Sorry Vinod, here's the first cleantech Monopoly -- at least it wasn't "Cleantech VC Monopoly", with game pieces like a pair of khaki slacks, a blue sports coat, and a deep rolodex... Finally, a Did You Know: In 2006, the total installed base peak average power output of photovoltaics worldwide was around 1.21 gigawatts.

Happy Earth Day

Rob Day: April 22, 2008, 5:54 AM
While we usually focus on the investment opportunities in cleantech here on this site, today's a day for getting smart and taking some personal action...   Unfortunately, big change isn't easy -- noticed there were just as many cars on the road this morning (including yours truly's, mea culpa) as any other day. So, here are a few easy things you can do today:
  • If you're in the Boston area today, join us at the REBN networking event this evening at Boston University, co-sponsored by the BU Energy Club and @Ventures.  Take public transportation if you can...  Mingle with your colleagues in renewable energy innovation, chat about possible solutions, and then go next door to Fenway to watch the Sox beat up on the Angels.
  • Avoid using your printer whenever you can -- but when you do print, try to reduce your margin size and save paper (not only to save trees, but also the paper industry is the 2nd largest user of fossil fuels).  These kids have taken the idea to Beacon Hill.
It's also a good day to check in on some of the Cleantech Blogger All-Stars -- I've been remiss in pointing out their good thoughts in recent posts, simply due to lack of time, not because they've been taking a holiday...  So time to catch up with:

The Innovation Cycle and the Commercialization Cycle

Rob Day: April 21, 2008, 6:53 PM
Looking forward to seeing everyone at our REBN-East networking event at Boston University on Tuesday night. As a topic for discussion, I'll throw this thought out there: Had the pleasure of visiting NREL last week as part of a productive trip organized by the New England Clean Energy Council. There, I and around a dozen other VCs from the Boston area were presented to by several of the Lab's researchers in areas like solar PV, biofuels, energy storage, etc. It was a good opportunity to once again peak "under the hood" at a DOE energy lab, to get a quick overview of some of the world-class research being done there. It was necessarily a brief overview, but one thing that came through for me loud and clear (yet again) was how short the Innovation Cycle is in many of these sectors. Yes, each innovation in an area like solar is often the result of years of difficult research. But with so many efforts underway in parallel (at NREL and elsewhere), the results mean that every year there's a new bright idea for how to eke out more electricity from available solar resources (for example). New materials, improved manufacturing techniques, more effective components... In many cleantech sectors there's a backlog of these kinds of innovations, as the ideas languish uncommercialized in the labs and the literature, awaiting visionary entrepreneurs and investors. But in some of the more investigated sectors, investors are quick to jump on the latest innovation out of the various centers of research. Breakthrough innovations funded last year are trumped (on paper, at least) by this year's funded innovations, and they'll all be trumped by next year's funded innovations. Meanwhile, we're all still waiting on many of the innovations from several years back to be fully commercialized. Continuing to pick on the solar sector as illustrative example, we're all still waiting for many of the promised thin-film manufacturers to fully hit the market. That's not to cast doubt on those players, it's just a lesson in how long the Commercialization Cycle is for these technologies. So the questions for Tuesday's REBN-East event are these: 1. Put on your "green cluster-builder" hat -- what could this disparity between the Innovation Cycle and the Commercialization Cycle mean in terms of key roles for public policy? 2. Put on your VC hat -- what could the disparity mean for investors? Speaking of cleantech clusters: The NECEC has launched a new Fellowship Program to help experienced entrepreneurs from outside the industry to gain familiarity with clean technologies and launch the Next Big Things. Check it out! Deals from the past week (-ish):
  • Grid-scale solar energy developer eSolar has raised $130mm from Idealab, Oak Investment Partners, and They plan on building a demonstration plant later this year. Back in January we passed along word of Google's $10mm investment -- no word on whether this new investment figure includes that or not.
Cleantech investors in the news: Other news and notes: Interesting article on something we've talked about before -- the project financing challenge in cleantech... Seattle-area VC firms "chided" over their relatively low cleantech investment amounts... A good article illustrating how "green collar jobs" are being targeted for economic growth... But on the other hand, some argue that the lack of strong technical talent in the sector is a continuing challenge... Dallas points us to an update on the peak oil argument... GTM puts out their updated Top 10 startups list -- apparently the unstated 7th criterion is how much effort the company puts into PR (full disclosure: @Ventures portfolio company Powerit is mentioned)... Finally, some tips on green choices consumers can make, from the recent NYT "Green Issue" (full disclosure: @Ventures portfolio company M2E Power is mentioned).

Cleantech VC investments down in Q1

Rob Day: April 15, 2008, 11:24 AM
Over the past week or so we've gotten a couple of data points indicating that VCs are pulling back a bit from the cleantech sector, or at least from some of the hotter sectors in the space. The Cleantech Group pointed to a big drop-off in Q1 cleantech VC totals in North America, Europe and Israel -- from $1.6B in Q4 down to $1.25B last quarter. They note that the Q1 total still represented a 42% increase on 1Q07 totals, but still, that's a more than 20% decrease in dollar totals from Q4, which itself was down from Q3. The drop-off was mostly led by (in)activity in North America, where dollar totals fell from $1.23B in Q4 to $873mm in Q1. Importantly, the pull-back was even more pronounced in terms of numbers of deals done in North America, where Q1's 50 rounds was significantly down from Q4's 72 deals. What this means is that, while activity was down, investors went more to later stage deals, and indeed it's probably indicative that the global average deal size in Q1 was $15.8mm, up from $10.3mm a year ago. That suggests a big shift toward later-stage investing. The Cleantech Group release notes that the pull-back was led by lower investment levels in solar and biofuels, but it's worth noting that those two categories still led all others. Dallas Kachan speculates that the biofuels activity is partially explained by a switch from corn-based to cellulosic ethanol investments. All of this was then echoed in yesterday's tallies from New Energy Finance, which came up with somewhat similar global cleantech VC totals. NEF made a particular point of showing how "private equity" (meaning all private equity except venture capital, presumably) was heavily down in the sector, while VC was up year on year. They suggest that the credit crunch is having a double-whammy effect on non-VC private equity and public markets: The credit crunch makes buyouts, etc., more difficult, and the broader effects of the financial crisis have closed the IPO window. However, M&A activity surged in the sector, from $3.5B in 1Q07 to $7.7B last quarter. That's a huge jump. So apparently the turmoil in the financial markets hasn't yet dampened large corporate interest in getting into the sector. Furthermore, NEF follows the Cleantech Group by pointing out that late-stage VC "saw a big increase." They suggest that VCs are filling in while the private equity and IPO opportunities remain shelved. So what about that health care bubble that no journalists talk about when they're all worried about how $873mm is far too much money to invest into the trillion-dollar energy, water, and materials markets? Well, they're seeing big declines in that sector as well, but the average deal size remains high at $18.6mm. Still bubblicious... for now... Joking aside, the general impression is that cleantech investing is roughly following the overall VC category, with a general slow-down but not collapse in activity. All in all, our "third scenario" prediction still seems to be on track. In other news:  Maybe they should settle it with a drag race.  Is there a Fast and Furious sequel in the making?  Tell you what, whichever one is first to provide me with a 3-month loaner will get my vote.

MIT Energy Conference and other events

Rob Day: April 14, 2008, 4:52 PM
Very much enjoyed attending the MIT Energy Conference this past weekend. It has become the best of all the student-run conferences on energy technology, attracting attendees from all over the world, and is also one of the better networking opportunities for cleantech VCs on the east coast. They always seem to get some interesting speakers (last year it was Jeff Immelt, this year John Doerr and Jim Rogers), and hundreds of attendees. Doerr gave his usual stump speech (receiving some good natured ribbing later by Rogers and Bob Metcalfe), mixing some inspirational thoughts, some examples from Kleiner's own greentech activity, and some plain talk during Q&A. For example: over the past 3 years, Kleiner's seen 1,500 plans, met with 150 entrepreneurs, done 50 visits to research labs, and put $250mm into more than 30 startups. The foci are "the 3 C's: Cars, Coal and Conservation." Fisker, Bloom Energy ("It's been seven years so far, and I think it will be 9 until they are fully commercialized"), Miasole, Amyris and RecycleBank were all highlighted, as was California's AB32. [as always, note that yours truly would make a terrible journalist and likely got quotes wrong] Some of the best moments came during Q&A:
  • "Clearly we need a national cap-and-trade for greenhouse gases."
  • Refering to the fact that federal government R&D into clean energy per year is less than one single day of Exxon's revenues: "These numbers are so low, they're almost criminal."
  • In response to the inevitable "bubble" question: "We do not have overinvestment against the scale of the problem."
  • In response to a question about how to make it profitable to stop deforestation and agriculture-related GHG emissions: "I don't know."
Later, Jim Rogers of Duke Energy gave a highly entertaining talk (after a hilarious intro by MIT's Ernie Moniz -- former ruggers out there will be amused to learn Rogers is a former hooker) on the challenges facing Duke while managing the challenges he fully acknowledged face us on climate change. What came through loud and clear was Rogers' commitment to energy efficiency as a primary energy source -- he went so far as to argue that "decoupling" policies are not enough because they only make the utility ambivalent about whether to go with energy efficiency efforts or energy generation capacity in order to satisfy growth in demand, and so instead utilities should be able to treat efficiency as a "production option" and get additional revenues for it. It was a very good effort to help the audience see things from Roger's chair, and to pragmatically engage on the issues. Some notable quotes:
  • "It's a 'bet the company' bet to build a nuclear plant." The cost of nuclear power is going up like the cost of everything, and all costs are going up dramatically.
  • "Sequestration's no walk in the park."
  • "We need urgency, not panic."
  • "If we have the price of carbon right," all but two of Duke's existing power plants will be retired by 2050.
  • "We need an economy-wide cap-and-trade," but not an auction for the rights, which would essentially be a carbon tax, which could result in a consumer revolt. (However, Jim did favor a "surcharge on electricity" to fund more DOE research, so I guess the real issue is making sure that the coal-heavy utilities don't carry too much of the burden -- at some point, Jim and I will have to talk about tax shifts...)
  • Upon taking a sip of his drink, "It's not water, it's vodka. When you build coal plants, you need vodka."
Both Doerr and Rogers gave nice reasons for their commitment to addressing climate change: Daughters and grand-daughter, respectively. It was also very entertaining to be invited as a member of the "press" to attend the adjacent press conference for the big announcement that MIT and the Fraunhofer Institute are teaming up to launch the "MIT-Fraunhofer Institute for Sustainable Energy Systems." German foreign minister Frank-Walter Steinmeier was there alongside Massachusetts Sec. of Energy and Environmental Affairs Ian Bowles, so lots of scribes and photogs... and one highly amused VC.   Yours truly's self-centered entertainment value aside, this launch is a big deal and yet another good sign of the major efforts being undertaken to help build the cleantech cluster here in New England. More info here. A very good conference overall, a must-attend next year as well. Two other events to keep in mind:


On the west coast, make sure to come out to the next REBN event -- REBN will be hosting a happy hour next Wednesday, April 16th from 6:00pm - 8:00pm. It's been some time since our last event, so try not to miss this excellent opportunity to network and talk all that's clean and green. Our membership has exploded in the last year, so I expect a great turnout. These events will be more regular in the future, so if you can't make this one, there will be another just around the corner. Wednesday's event will be held at MR at 560 Sacramento St (between Sansome St & Montgomery St). There will be drink specials and plenty of opportunity to mingle. No need to RSVP, just come and enjoy. Thanks to all who responded with interest to volunteer helping to put these events and others together. We received an overwhelming response and have assembled a great crew to deliver content and activities on a more regular basis.


In the Boston area:

Join your Boston-area cleantech colleagues at the next Renewable Energy Business Network happy hour:

April 22nd, 6:30PM

REBN-East’s Earth Day Happy Hour Location: The BU Pub (click for details, map and directions) 225 Bay State Road Boston, MA Co-sponsored by @Ventures and the BU Energy Club

Odds and ends at the end of the week

Rob Day: April 11, 2008, 5:47 PM
A few things of potential interest...
  • A good tool for all you cleantech VCs and Founders out there: Joel Moxley, an EIR at Northbridge, came up with a pretty useful prior-art search engine, PriorSmart. Check it out.
Deals from the past week:
  • Evolutionary Genomics, which is developing biofuel feedstocks with improved yields, has raised a round of financing (amount undisclosed) from Altira Group.
  • Jonathan Shieber at VentureWire wrote today that AMR developer Silver Spring Networks has raised an additional $17.4mm in what appears to be an insider Series C extension (with members from existing investors Foundation Capital, Edison Electric Institute and JVB Properties participating). The original Series C was previously reported to be $40mm, last year.
  • Brighter Planet, an online clean energy services and info provider, raised a $3.2mm Series B.  Crow Hill Ventures led the round.
Cleantech regional updates:  Here's a good article on all the various efforts around the U.S. to create new cleantech clusters...  And then I thought this recent comment by Tim Chapman (who writes the Clean Ventures blog focusing on UK cleantech investing) was worth elevating for everyone -- his response, after I had previously mentioned an article lamenting the dearth of venture capital in his neck of the woods:
That Independent story on the UK VC scene is a little overblown - 3i’s been doing next to nowt in the early-stage space for years, so their recent announcement just confirmed what everyone knew. Established firms move up-market - it’s always happened, and will continue to do so. Anyway, 3i’s not symptomatic of the UK market - they’re adamant they’re a global player, so the move should say as much about the global market as the domestic. The figures show an increase in seed and early-stage deals, at least up till 2006, for the UK and Europe. It’s not as active a market as in the US, but it’s still in relatively good shape. Interestingly, a fair few low-end investors I’ve spoken to say that the problem isn’t in VC supply, but in demand - there’s barely enough quality early-stage businesses to take the money that’s currently in the market. Maybe that says something about the appetite for risk, or quality of entrepreneurship, but I don’t think lack of VCs is the problem.
Thanks much, Tim. Finally, it's not really about the venture capital side of things, but I thought this interview with David Kurzman of Panel Intelligence was interesting.