Viewing posts tagged: "Vc"

The Cream of Europe’s Green Startups to Meet in Geneva Next Week

Michael Kanellos: June 12, 2009, 2:16 PM

When it comes to high tech, Europe is often overlooked.

The U.S. mints most of the world's high-tech startups and pulls in the most venture capital. Asia, meanwhile, dominates consumer electronics and manufacturing and has become a huge market in its own right. Europe has a few giants – SAP and Nokia, for instance – but you don't see the same frentic level of activity. Restrictive university policies regarding tech transfer, a greater emphasis on lifetime employment, and regional competition have hindered the industry. Israel, which geographically is not in Europe, is the recipient of more VC funds than any country that is in Europe. As one Brit told me, Cambridge is one of the best technical universities in the world, and one of the worst when it comes to incubating companies.

Europe also doesn't have the same supply of entrepreneurs, said Bernard Vogel, president of the green investment firm Endeavour Vision.

Additionally, U.S. VCs are often wary about investing overseas. Back in the early '90s, Sven Lingjaerde once told me how he wrote letters to two well-known VCs for them to check out this world wide web thing at CERN, the research agency in Switzerland, in the early '90s. "I don't see how you can make money with [the] Internet," one faxed back. He framed it.

To help get around some of these problems, Lingjaerde and a group of entrepreneurs created Tech Tour a few years ago. Tech Tour combs through a nation, ferrets out the most promising companies, and shows them off to a group pf visiting venture capitalists. It can work. Intel once picked up an Italian company it learned about in a past tour. Vogel helped organize next week's clean tech event.

Next week in Geneva, the organization will hold an event that will be slightly different. Rather than concentrate on one country, it will showcase 25 startups from across Europe and Israel. One company exhibiting will be ReVolt Technologies, a Swiss company specializing in the emerging category of zinc batteries. Other companies will show off ideas for fuel cells, marine power, wind and solar.

The event is sold out but names and other information will emerge, so stay tuned.

Forget a Moore’s Law in Energy, Says VC

Michael Kanellos: June 3, 2009, 11:41 PM

Every week someone at a conference will suggest, "What we need is a Moore's Law for energy." It comes right after someone else asks, "Where is the Google of greentech?"

I thus want to give a big thumbs up to Vivek Mehra, a partner at August Capital and co-founder of Cobalt Networks, for publicly and eloquently stating what some of us have less effectively mumbled for a while.

"There is no such thing as a Moore's Law in energy," he said to an audience at the Smart Grid Innovation Symposium sponsored by the Innovation Center of Denmark (which took place in Menlo Park, Calif.) "The time scales are just different," he added.

Technology will improve, he noted, but not with the same rigorous efficiency that we saw with computers. As a result, investors and entrepreneurs may have to wait a lot longer for a more modest payoff from their investments.

The problem ultimately boils down to the nature of matter and engineering. It turns out that silicon structures can be shrunk at a steady, consistent pace. Back in the 1960s, engineers could shrink the size of transistors by half every year. Now, it takes about two years, but that is being stretched toward two-and-a-half years. Shrinking transistors means that the electrons running through them have a shorter commute. A shorter commute means better performance. If you think about it, Moore's Law is really about urban planning for semiconductors. (here is a fuller article on the subject.) Back in 2003 at an Intel 35th anniversary celebration, I asked Dr. Moore why the observation named after him worked so well.

Well, we got kind of lucky, he said. He listed a bunch of other factors, but I was struck that luck was the first one listed.

Greentech is far different. Biofuel companies mostly revolve around chemistry, so the same silicon dynamics don't apply. Solar cells are semiconductors. However, shrinking their size only decreases the performance: a smaller solar cell has less surface area to capture sunlight.

And if you want to know why there isn't a Google of greentech, think about solar panels for a second. If Google had to come to your house, install large pieces of glass on the roof, and hand you a bill for $30,000 dollars before you conducted your first search, you'd switch to Yahoo.

Smart Grid Finance Rundown: VCs and Congress Rock the Grid

Eric Wesoff: May 5, 2009, 7:30 AM

In 2004, the term “Smart Grid” didn’t really exist – despite the Demand Response successes of now-public firms like Comverge and EnerNoc. 

Fast forward five years and we’ve seen hundreds of millions of dollars of VC investment flow into a wide range of smart grid startups, essentially creating a new market and ecosystem from power generators to home networks. This year has gotten off to a slow investment start but that will change in the coming quarters.

Smart grid technology, investment, and infrastructure must emerge if the states are to meet their ambitious Renewable Portfolio Standards.

But beware. As Stephen Lee, the Senior Technology Executive for Power Delivery and Utilization at EPRI, the Electric Power Research Institute warns: Smart grid players must avoid the hype. “We are at the peak of the smart grid hype cycle. When Obama and Biden talk about the smart grid you know it’s being hyped,” Lee said.


2008 and 2009 Smart Grid M&A

In today’s difficult business environment we expect to see lots more M&A activity and consolidation.


VC Investment in the Smart Grid

Soaring energy costs, an aging electricity grid, national security concerns and government regulation are creating a boom in smart utility meters and the semiconductors that go into them.

Most smart grid investments don’t require hundreds of millions of dollars to create a factory. VCs look at the smart grid market as a capital efficient alternative to the capital-intensive wave of green investments of late.  Additionally the technology of the smart grid – wireless communications, mesh networks, semiconductor integration, and software – is a familiar vernacular to the VC community.

Look for big players like Intel, IBM, Cisco and Oracle to begin vying for a slice of the smart grid pie either through investment or acquisition.

What follows is a detailed list of smart grid VC investments since the first quarter of 2008.


Q4 2008 VC Investment in DR and Smart Grid

Smart metering in the U.S. currently has a low penetration, with ~6 percent of households having installed the technology in 2006. This is set to increase rapidly over the next few years with some forecasts for smart meter penetration to reach close to 90 percent of households by 2012.


Silver Spring’s $15 million investment comes on top of a $75 million Round D raised in October. In a good economy, Silver Spring would be a natural IPO candidate. Even in this economy -- Silver Spring could be the IPO that quenches the IPO drought later this year.

With large-scale contracts with utilities including Pacific Gas & Electric Co. (5 million customers), Florida Power & Light (4.5 million customers) and Pepco Holdings (1.9 million customers), Silver Spring is set to install its devices in millions of meters over the coming years.

Silver Spring’s competitors include smart meter vendors that provide networking and communications themselves – Itron, GE, Landis+Gyr, Sensus and Elster – as well as rival networking providers such as Aclara, Trilliant, Eka Systems and SmartSynch.

Shifting gears away from venture capital in smart grid, here’s a bit of info on legislation in smart grid. 

As testament to the policy shift in energy, today we have federal politicians with the will to advance a bill with “smart grid” in the title.

H.R. 1774, the Smart Grid Advancement Act looks to reduce peak demand and increase the deployment of smart grid technologies.

The bill incorporates smart grid features into labeling so consumers have the information to purchase smart grid capable products.  And the bill takes steps to reduce peak electricity demand. The Smart Grid Advancement Act directs states and load-serving entities to identify peak demand reduction goals based on an aggressive effort to adopt smart grid technologies.  Studies show that when implemented on a large scale, demand response could reduce electric costs by as much as $15 billion annually.

Final Word

The only way we can reach aggressive Renewable Portfolio Standards and exploit energy storage, distributed generation, PHEVs, demand response, and smart meters is through an integrated and intelligent grid.

But the entity we call a “Smart Grid” is more of a theoretical construct than a true engineering problem. In a perfect world we could build from scratch, a self-aware, self-healing, sensor-laden, robust and secure mesh network that allowed dynamic forward pricing to inform customer and utility energy usage and choices.

But in the real world – we are attempting to overlay intelligence on an antiquated legacy network that has many masters and many flaws.  Utilities tend not to move quickly and are slow to innovate. Legislation is slow and imperfect and standards often compete. 

Nevertheless, there is momentum in this field and VC funded startups like Silver Spring and Fortune 500 firms like IBM and Intel are starting to drag the utilities and the grid into the 21st century.


VC Doesn’t Scale

Eric Wesoff: May 5, 2009, 7:00 AM

VC Investment in Greentech 2005–2009

There are a lot of voices of late sounding the death knell for venture capital. The New York Times dusts this meme off every few years. One just has to have a good memory and ignore the nattering nabobs of negativity. They’re usually wrong.

Fred Wilson of Union Square Ventures has a different take. Wilson has crunched some numbers and claims that “VC doesn’t scale.”  He has determined that: “You cannot invest $25 billion per year and generate the kinds of returns investors seek from the asset class,” and that, “The number that the asset class can take on each year is around $15 billion to $17 billion. It's interesting to note that the industry raised $4.3 billion in the first quarter of 2009. That's a good thing. If we can keep it to that level, or less for a while, then we may be able to downsize and get returns back on track.”

Fred is right.

There has also been a sky is falling mentality in the greentech investment sector.  The bubble has burst, project finance money is gone forever, the end is nigh, etc.  These folks are wrong as well. 

Unsurprisingly, first quarter greentech investing was down. That makes sense if you’ve been paying attention to current events. But second quarter investment in greentech is already showing signs of a rebound and has gotten off to a roaring start with about $500 million in greentech VC invested in April alone.

Renewable energy, green and cleantech, ecologically sustainable technology and investment is at the beginning of a 20-year boom and there are going to be ups and downs along the way. Get used to it.



Indian Firm Invests in Green Power Projects

Matthew Weinberg: April 6, 2009, 9:51 AM
The Indian company Green Infra has set a goal of having 500 megawatts of renewable energy in its portfolio by 2012. Wind energy will stand for 300 megawatts of the clean power investment while small-sized solar power projects will generate 100 megawatts. The rest will come from biomass and small gas-based projects. Green Infra is promoted by IDFC Private Equity Fund. The new green power project will need an investment of Rs 3,000 crore, according to Projects Today, the Indian projects database Website. But the investment will also be supported by various Indian Government incentives. As a commercial player in this field, Green Infra can benefit from concessional import duty on certain components of wind electric generators, excise duty exemption, get ten years’ tax holiday on income generated from wind power projects and benefit from an accelerated depreciation and loan from the Indian Renewable Energy Development Agency (IREDA). According to the Ministry of New and Renewable Energy (MNRE), India has had a total of 26.95 billion units of electricity generated from wind power projects during the last three years. On the same note, MNRE has fixed a target for the whole country of 10,500 megawatts coming from wind power by 2012, according to The Economic Times. And the incentives from the Government are crucial to the development. "The robust growth in the country's wind power generation is largely driven by the incentives provided by the government to companies which set up wind power farms," said Santosh Kamath, KPMG Advisory Services' Associate Director, to The Economic Times.

Slimed, Pt. 1: Biofuels and the Aquatic Species Program

Eric Wesoff: April 2, 2009, 8:02 PM

Scores of firms, startups and Fortune 500 companies alike, are working on algae-based biofuels.  Hundreds of millions of dollars have been invested.  And so far, maybe a few thousand gallons of algae oil have been produced. The question is: Can algae be economically cultivated and commercially scaled to make a material contribution to mankind’s liquid fuel needs?  The jury is still out. Ghosts of NREL Algae Programs Past The basement of the marine biology department at the University of Hawaii has a hallway lit by a dim incandescent bulb.  At the end of the hallway is a cardboard sign with the faded letters “ASP�? written on it.  A creaky door leads to a dank-smelling room crowded with beakers and algae scientists, milling aimlessly.  They share the same slightly green tinge and defeated look. This is the last remains of the Aquatic Species Program or ASP. These letters are spoken in hushed reverence by today’s crop of phycologists, NRELians and algae-fuel entrepreneurs. The Program identified hundreds of algae species that could potentially be farmed and cultivated for their lipids -- lipids that could be converted to biodiesel and used to wean the U.S. from its dependence on foreign oil. The Aquatic Species Program was launched in 1978 by president Jimmy Carter to explore the potential of algae as an energy source. About $25 million was put into the program until it was shelved by the Clinton administration in 1996.  They never found the "lipid trigger." The echoes of that program reverberate in today’s algae fuel renaissance. Why Algae? On paper, algae is perhaps the perfect feedstock for biofuels. It grows in a wide variety of climates. It can be used to mitigate carbon dioxide. The liquid fuels produced by these single-celled creatures are only one of their byproducts, and potentially not even the most valuable. Cosmetic supplements, nutraceuticals, pet food additives, animal feed, and specialty oils for human consumption may well fetch higher per-gallon prices. The tantalizing quality of algae is that some algal species contain up to 40 percent lipids by weight.  And therefore, according to some sources, an acre of algae could yield 5,000 to 10,000 gallons of oil a year, making algae far more productive than soy (50 gallons per acre), rapeseed (110 to 145 gallons), mustard (140 gallons) jatropha (175 gallons) palm (650 gallons) or cellulosic ethanol from poplars (2,700 gallons). More optimistic data from less informed people indicate the theoretical biodiesel yield from microalgae is in the range of 11,000 to 20,000 gallons per acre per year. But according to Dr. John Benemann, a cantankerous algae consultant whose research is widely cited in the field, the realistic potential production level (despite claims to the contrary) is about 2,000 gallons of algal oil per acre per year. VCs and Algae Farmers “VCs cannot come in here and just harvest ripened fruit, this is not shovel ready technology,�? said  Dr. John Benneman. Considering the immense technical risks and daunting capital costs of building an algae company, it doesn’t seem like a reasonable venture capital play.  And most if not all of the VCs I’ve spoken with categorize these investments as the longer-term, long-shot bets in their portfolio.  But given the size of the liquid fuels market, measured in trillions of dollars, not the customary billions of dollars, it makes some sense to take the low-percentage shot. These firms are going to continue to need capital.  According to Jennifer Fonstad of VC investor, Draper Fisher Jurvetson: “The current strategy of many of these companies has been to turn to the government stimulus plan – this is the risk capital we can rely on today.�? A Few Conclusions We need lots more time and more money Technologists tend to overestimate what can be accomplished in two years and underestimate what can be accomplished in ten to twenty years.  Algae as biofuel looks more like a ten to twenty year project.   DARPA is betting on three to five years, VCs are betting on three to five years, the algae roadmap from DOE takes a decade. The scope of the algae to large-scale biodiesel effort is more along the lines of the Manhattan Project or the Apollo moon shot, which cost $24 billion and $360 billion respectively.  A $25 million Aquatic Species Program or $300 million in venture capital is not going to get it done.  It will take tens of billions of dollars and decades. All of the process steps need to be addressed In the words of Courtney McColgan of DFJ, "There are many pieces to the algae puzzle that seem like afterthoughts, but are actually crucial to the economics -- co-products, nutrients, harvesting, drying, and conversion technology. System design and algae strain (which seem to be the focus of most discussions) are important, but not the only components." Algae producers admit that there’s a massive difference between growing large, consistent quantities of algae versus growing it on a fish tank wall. Standards for growth, strain selection, breeding, genetic modification, water extraction, oil extraction, and oil refining have yet to be established. Set realistic expectations for the technology Exploit near term, intermediate technology deployment opportunities such as wastewater treatment. Cost constraints restrict consideration to the simplest possible devices, which are large unlined, open, mixed raceway ponds. And finally a word from our favorite curmudgeon… "Engineering studies do not conclude that we can or will actually be able to produce algal oil/biodiesel. They conclude that the R&D to develop such processes can be justified, at least until it can be demonstrated to be impossible," said Dr. John Benemann.

  • This is a small excerpt from the April issue of the Greentech Innovations Report which dives deep into the algae pond.  You can subscribe to it here.

VC Bargains Ahead

Matthew Weinberg: March 26, 2009, 3:26 PM
What drives green innovation in a time of financial crisis? Ira Ehrenpreis thinks now is a better time than ever for companies wanting to invest. The Wright brothers managed to fund their project and by doing so defined a century of flying. The military was their first buyer. Now, we're in the beginning of the century of cleantech, and the industry is turning to the government stimulus package to get things rolling. There are similarities between airplane construction in 1909 and cleantech development in 2009. At least according to Ira Ehrenpreis, General Partner of Technology Partners. Today he spoke to the visitors of Think Green, the ThinkEquity conference on cleantech and alternative energy, taking place in San Francisco. Ehrenpreis was not the only one pointing out the potential of investing during times of crisis. Kevin Surace, CEO of Serious Materials, agreed. "VCs are still writing checks, but at a lower valuation. If you have money and you can write checks I think it will never be cheaper than this. VCs are investing at a quarter of the value compared to just two years ago, " he commented during one of today's panel discussions. Kevin Surace accused the big U.S. building and construction companies for being too slow to innovate, hanging on to old technology and materials that's been in the market for decades. "The old guys aren't going to do anything. The size of our own research and development team is larger than any of the U.S.-based construction companies. They look at R&D as overhead. We would never cut R&D," he said. Keith Gillard from BASF was eager to defend himself, however, he admitted that most of the research and development is taking place in Europe. "BASF is one of the old guys, but we spend billions of euros every year on R&D, including construction materials. Even though the new guys have the ability to innovate, you should not count the old guys out." he said. "Much of the materials we're competing with was introduced to the market in 1890 to 1950," sighed Don Young, CEO of Aspen Aerogels. With the stimulus package from the Obama administration focusing on renewable energy, we're living in a time when governmental influence on the market increases. But government money isn't just handed out to anyone with a cleantech project in their back yard. You need to know where the decision makers are and how to reach them. Also, the people investing aren't your average VC. Suddenly state officials, schools and city representatives are on the other end of the table. And they're aiming for energy efficiency. "When you choose a window, it needs to be the best return on investment. We find ourselves writing programs for the cities, and then bid on them. Lot's of work, but without question there's a chance to get a lot of money from the stimulus package," said Kevin Surace. "There have been some landscape changes out there. Some buckets of money we've been chasing have moved," said Keith Gillard.