The official line coming out of the National Venture Capital Association about the zero IPO story is that Sarbanes Oxley is to blame. In a damage control press released titled "IPO Drought Creates Capital Market Crisis for Start-up Community" the NVCA argued 57 percent of venture capitalists surveyed said that excessive capital markets regulation was to blame for the falling number of venture-backed IPOs. In the same survey, 77 percent said that "skittish investors" were the problem, while 64 percent said the "Credit crunch/mortgage crisis" prevented venture-backed companies from coming out on the public markets. Still, the NVCA reserved the bulk of its ire for Sarbanes Oxley - a securities regulation law enacted in the wake of Enron, WorldCom, Adelphia, and a host of other financial accounting scandals from the late 1990s and early 2000s. These corporate fraud cases cost the U.S. economy billions of dollars, shook public confidence in the capital markets, and, in combination with the growth of capital markets elsewhere, aided in the mass migration of capital out of the U.S. Critics, such as the U.S. Chamber of Commerce, argue SOX's presumably byzantine structure adds additional complexity and cost to public company accounting requirements. They advocate repealing a number of SOX previsions, including the much reviled Section 404, which mandates the establishment of internal auditing committees to document company financial controls. By and large, though, SOX was necessary to restore trust and certainty in a dysfunctional securities market largely bereft of both. With today's press release, the NVCA has placed itself squarely in the Chamber's court. NVCA president Mark Heesen argues, "we need to put regulators, legislators, presidential candidates, and the private sector on notice that this situation represents a serious problem that will have long reaching economic implications." The press release states, "the NVCA has been advocating for Sarbanes Oxley reform for several years as the cost for small companies to go public has risen dramatically under the law." One of the primary arguments against SOX is that drives companies away from the U.S. capital markets and into the arms of foreign competitors in London, Hong Kong, Frankfurt, and elsewhere. In fact, one of the Chamber's key pieces of evidence for why SOX has negatively impacted the U.S. capital markets is that the number of IPOs in the U.S. has dropped from 507 in 1999 - in the brief pre-tech bubble window, in the heart of the financial accounting scandals, and a full three years before SOX was enacted - and 235 in 2006, while the number of IPOs listing in the leading foreign exchanges has skyrocketed. If we follow the Chamber's logic, the lack of venture-backed IPOs in the U.S. markets would be primarily attributable to the fact that these companies were driven away by the cost of SOX and decided to list on other exchanges, like the AIM. This was, however, not the case. Maybe it's time the Chamber and the NVCA stop playing SOX for a red herring and start focusing on some of the larger problems affecting the economy, such as "skittish investors" and the "Credit crunch/mortgage crisis."

Rumors are buzzing because of a report on AutomobilWoche (Auto Week) that electric car company Tesla Motors would supply batteries and other parts to Daimler. Tesla had in 2007 formed a group to sell batteries, but then it temporarily shut it because of problems it was having getting its first cars out of the factory. Tesla won't confirm whether they have a deal with Daimler, but Tesla Chairman Elon Musk told me in February that the company wanted to get back into the business of selling batteries and powertrains for electric cars to other manufacturers. An annoucement would come in the second quarter of 2008 and parts might start going to suppliers in the first part of 2009, he said. The second quarter just ended so an annoucement might come soon. The company is still within the grace period. You can read more here. I completely forgot I wrote this until the rumors from AutomobilWoche. God, I'm getting old. In February, Musk also said that the company would have a prototype of Whitestar, the sedan, done. Yesterday, it talked about its new factory but didn't trot out a prototype.

Talk about your power burp. The Department of Energy, Sandia National Labs, and a host of municipal utilities in the Midwest are in the midst of designing a compressed air generation plant in Iowa. The plant is expected to be operational by 2012 and produce 268 megawatts of power or 50 hours of power storage. That could enough to save a municipal utility $5 million a year. It works like this. Air compressors force air into underground caves. When power is needed, the air gets released to power a turbine, which generates electricity. The air compressors can run on fossil fuels or wind power. The technique uses about 50 percent of the natural gas that a normal natural gas power plant would use, so greenhouse gases would be cut there. Powering the compressors with wind turbines would of course generate even fewer greenhouse gas emissions. More importantly, the power generated from the turbines at night could run the compressors. Wind turbines tend to be somewhat active at night and utilities don't know what to do with that power since few people are awake to use it. Storing night energy in caves gives them an opportunity to generate cheaper power during peak times. VCs, by the way, are hot for storage. Industrial battery and flywheel companies like Deeya have received investments in recent months. Solar thermal plants are investing in molten salt facilities that can store heat. Two compressed air facilities exist: a 17-year-old facility in McIntosh, Alabama and a 30-year-old plant in Germany. Both of these are in salt domes. The Iowa facility will be in an aquifier. The DOE and Sandia are also inspecting sites in Ohio. So if it's so good, how come it's not more popular? Power was cheap until a few years ago. Thus, no one was really motivated to do this. Building a compressed air facility requires extensive geological surveys. One small, select leak and that playground built over the site is swirling around in the air like a balloon.