VantagePoint Ventures, a leading VC firm in the Valley, has named former CIA Director Jim Woolsey and equity analyst David Edwards as the firm's newest greentech partners. VantagePoint, which has invested in companies like Tesla, BrightSource, Project Better Place, and BridgeLux, is known for its big rounds and deep bench. Outside of greentech, the VC firm is well known for torpedoing one of its own web companies back in December. The hand to hand combat experience Jim Woolsey picked up in the jungles will serve him well around the deal table. Jim Woolsey is, of course, famous for pulling a dine and dash on me at the MIT Energy Conference last month. I'm guessing the extremely judicious use of his numerous expense accounts is something he picked up while working as John McCain's adviser on security and environmental policy. His appointment at VantagePoint is actually more of a promotion - Woolsey has worked there as an adviser since 2006. Dave Edwards joins VantagePoint from Morgan Stanley, via Charles River Ventures and ThinkEquity. Edwards is a well respected equity analyst who initiated Morgan Stanley's first coverage of the renewable energy sector back in October 2007. His picks have included First Solar and SunPower.

Yesterday Massachusetts House Speaker Sal DiMasi, flanked by Gov. Deval Patrick and Senate President Therese Murray, held a press conference introducing the Speaker's $100 million green jobs bill. DiMasi, speaking at the press conference, said the bill "combines our commitment to jobs creation and economic development with our duty to protect the environment and increase energy efficiency." All good things, right? Certainly the Massachusetts greentech sector, which is "poised to be the 10th largest cluster in the state" (pdf) with 14,400 jobs created so far, needs ongoing support for both economic and environmental reasons. The support itself, which calls for the creation of a Clean Energy Technology Center with a five-year, $65 million fund, $5 million in research grants, a $500,000 per year clean energy fellowship program, and $2.5 million for workforce development, is a sign Massachusetts is ready to get behind greentech in a big way. But did anyone bother to check where this money's coming from? Buried deep in the last page of the proposed legislation is a paragraph stating (pdf) the "state comptroller shall, for state fiscal years 2009 through 2013 inclusive, annually transfer moneys from the Massachusetts Renewable Energy Trust Fund established in said section 4E of chapter 40J in an amount not less than $5,000,000 annually for deposit" in the new program. For anyone not familiar with the Massachusetts Renewable Energy Trust Fund, it's a branch of the Massachusetts Technology Collaborative that "provides financial assistance to individuals and business for solar panels and wind turbines at their homes and facilities." As far renewable energy subsidies go in Massachusetts, the Trust Fund is it. Taking $5 million out the Fund represents a 21 percent annual revenue reduction. The Fund has subsidized 479 projects in the past ten years, adding up to 87,301 kW of installed renewable capacity, with another 149,082 kW of capacity in the development pipeline. While not a large number, it's also nothing to sneeze at. These are projects that likely would not have been built otherwise. So this leads us to an interesting series of questions. Why would DiMasi cannibalize funds from a renewable energy installation subsidy fund to promote green jobs and early stage research? If the amount of funding available to install renewable capacity decreases, won't the number of projects being installed also decrease? And, if that's the case, won't the number of people needed to install these projects also decline? As for all the early-stage research and entrepreneurship receiving grants from this program, what happens when this research matures and the entrepreneurs behind the research start shopping around for ramp up and commercial production? If the Trust Fund is too small to help subsidize these commercial projects, where will all the startups go? I hear California's nice this time of year.

Tesla Motors has a couple of problems looming on the horizon. First, the EV company is involved in a handful of legal actions involving IP theft and broken contracts. In February, Magna Powertrain sued Tesla for breach of contract, alleging the EV company failed to pay it for design and engineering work it perform on Tesla's always problematic transmission drivetrain. Tesla sued Fisker Automotive in April, alleging the Other EV Sports Car Company stole some of its engineering designs and used those plans to build its own EV roadster. Earlier this week Fisker filed a motion to remove the case to arbitration in Orange County, arguing the design contract between Henrik Fisker and Tesla contained an arbitration clause barring private rights of action. But this is the U.S., and companies suing the pants off each other is nothing unusual. Tesla's real problem is that its production ramp is about as lame as my family's old dog with leukemia and Addison's disease. After two months of production, the company has only managed to fully complete five cars. Six and seven are in the pipeline, though company predicts a full ramp up by November, two months after its proprietary drivetrain gets delivered. That is, of course, if its able to figure out that pesky Magna lawsuit. So much for a car a week. The problem here is that mass production of such a technically complex vehicle is pretty ambitious - maybe too ambitious, and also incredibly expensive. Especially when you're relying on third-party components, as Tesla is, and definitely when it looks like you might be running out of cash. Did somebody say IPO? With all this mess, what is a girl to do? Tesla's decided to take a page out of the Magnificent Seven playbook and hire itself a mercenary in the form of Larry Sonsini, chairman of the legendary Silicon Valley law firm Wilson Sonsini Goodrich & Rosati. Tesla appointed Sonsini, whose particular skill set involves taking companies public, to its board of directors this week. Tesla chairman Elon Musk said "Larry Sonsini has played a role in building and advising some of the most successful companies in existence today. His guidance will be invaluable." What guidance is that? Most likely one that extricates Tesla from their nasty legal problems, and probably one that guides the beleaguered, over-hyped EV company onto the public markets. Either way, Sonsini's appointment may mean Tesla's gearing up for an old-fashioned Sand Hill showdown. Best hide the women and children.

This past weekend, I was talking about a tech company with a friend of mine. The company in question looked promising, but the exit strategy patently seemed geared toward a quick sale.

“It’s a burger,"? he said. “Born to flip."?

That description will become more common in the world of biofuels. A whole raft of cellulosic ethanol, biodiesel and butanol companies have launched in recent years and gathered hundreds of millions in venture capital. Their processing techniques range from futuristic (getting microbes to convert plant matter into alcohol) to slightly retro (employing the Fischer-Tropsch method once used by the Third Reich to turn coal into tank fuel to convert leaves into liquids).

Established conglomerates, however, are coming to town. Today, DuPont and food/agricultural giant Danisco from Denmark said they will plunk $140 million into a biofuel joint venture. Earlier this year, Chevron and Weyerhauser, the lumber company, formed Catchlight Energy to produce cellulosic ethanol. Daimler, the car maker, and Archer Daniels Midland have also become allies. Oh yes, and Tyson Foods and ConocoPhilips want to turn scraps from the slaughterhouse into biodiesel.

When conglomerates gather, it’s tough for start-ups to survive, particularly in manufacturing. In software, it’s a lot easier. Two or three people can coin a novel application and become a global success through word-of-mouth marketing. Not so in fuel. You need long-term R&D funding, prototyping plants, large refineries, and miles and miles of pipeline connections. The land use planning meetings alone can turn a young college graduate into a bitter, middle-aged man.

Last year, Don Paul, the recently retired CTO of Chevron, estimated that it takes 15 years and $3 billion to get a fuel from the lab to market.

That really narrows down the likelihood of a Facebook of ethanol. Think of it. A prototype plant that produces 500,000 gallons a year can cost nearly $15 million. (the budget for a plant by Mascoma in New York.). A 100-million gallon a year plant can run over $75 million. (Range Fuels.) and 100 million gallons is a drop in the sea. The U.S. consumes over 140 billion gallons of liquid fuel a year.

Fortunate start-ups have already landed alliances or received investments from conglomerates. Coskata, which will make ethanol and other fuel from plant waste and garbage, has linked up with General Motors and Marathon Oil. Solazyme, which cooks algae into a fuel precursor in brewing kettles, has a research agreement with Chevron. Acquisitions in this area will likely become more common in recent years.

So in the future, we will probably see fewer deals where venture capitalists pour tens of millions into a cellulosic ethanol company. Instead, you will see a few million going into companies on the fringes of scientific knowledge that will be flipped while they are still in the lab.

Someday, downtown streets may be lit with bulbs the size of a Tic Tac. Luxim, a lighting start-up in Silicon Valley, has released a lamp--the elegantly named LIFI STA-40-01—that delivers as much or more light than a standard street light. The trick is that it consumes less power. The new lamp cranks out 120 lumens per watt. Top-end LEDs provide around 70 lumens per watt. High-intensity discharge (HID) lamps, which you see on light poles today, get about 90 lumens per watt. HIDs are also quite large, which means a heavier street light or spotlight. The bulb at the center of Luxim's lamps is only a centimeter or so long. It looks like a Christmas tree light. You can pick up the whole lamp with your hand. The company has talked about putting its LiFi lamps inside cathedrals and other public spaces to replace architectural lights. The lamp also lasts 30,000 hours, longer than HIDs, so the repairmen don't have to replace them as often. The company, which has received over $60 million in venture capital from Crosslink Capital and Sequoia Capital among others, initially concentrated on providing lamps for rear-projection TVs. With projection TVs fading away, the company shifted to tackle the larger, and potentially more lucrative, market for commercial lighting. Although it doesn’t get as much attention as solar or biofuels, lighting is expected to be one of the growth markets for green tech. Approximately 22 percent of the electricity used in the U.S. goes to lighting, according to an oft-quoted statistic from the Department of Energy, and light sources weren’t designed for efficiency. Incandescent bulbs only use around 5 percent of the energy fed into them for light: the rest gets converted into heat. (That’s why Easy Bake ovens work.) Light-emitting diodes are already replacing neon signs and some public light fixtures. LED maker Cree, for instance, is currently working with several cities to convert garages and municipal buildings to LEDs. Other LED companies to watch include Luminus Devices, a Boston-area company that landed $72 million recently, and the stealthy Kaai. Like LEDs, Luxim’s lights cost more than incumbent solutions, but the company (like LED makers) says the difference can be made up in lower replacement rates, lower maintenance costs, and lower power bills. Both LEDs and Luxim’s bulbs can also be remotely controlled by sensors to crank the amount of light coming out of them up or down, depending on foot traffic and other factors. How does Luxim’s bulb work? Energy is pumped from a puck into a small gas-filled chamber. The gas gets heated up, turns into a plasma and emits light. Crazy, eh? Check out this cinematic masterpiece for more.

The IPO market for greentech companies has always been a little spotty. Between 2005 and 2007, only five greentech companies listed on the NASDAQ, "raising an average of $77 million each and reaching average post-IPO valuations of $245 million." First Solar, which raised $400 million in its 2006 IPO, has so far been the great success story in greentech exits. With American VCs literally killing each other to fund greentech companies, investing $3.43 billion in the first three quarters of 2007 - up roughly 50 percent in 2006, the nagging question of how far the tide can rise before it lifts all the boats remains. How will VCs, who typically expect a 10x return over a five to seven year investment horizon, squeeze $34.3 billion out of a relatively tight exit market? Will there be a killer amp? Will there be a greentech Google? The answer is a little murkier that many have expected. A primary difference between greentech and, say, the web or telecom, is that with greentech we've got a defined endpoint: to disrupt and revolutionize the global energy infrastructure. Simple, huh? The company or companies or sector that wins out and becomes the Next Big Thing will need to build products that are easily integrated and accessible, satisfy demand in a major market, and can get by without requiring a vast restructuring of policy-backed incentives, subsidies, or consumer habits. In short, the Next Big Thing might not be what we need. Instead, we may need to look for The Silent Killer. Who among you aspires to rise to the level of heart disease, radon, or cooties? The hope is that all of the big deals announced in the recent past, including Heliovolt's $101 million, Project Better Place's $230 million, and the $250 million+ raised by perennial favorite Bloom Energy over the past years, will come to fruition this year. Surely IPOs from any of these companies will generate investor interest, big returns, and more than a few new Ferraris in the Valley. In fact, the NVCA and PricewaterhouseCooper have gone out on a limb, naming 2008 the year "cleantech comes of age." But do these companies satisfy all of our Silent Killer criteria? Not quite.

Big time greentech funds are popping up faster than mushrooms after a spring rain. Last week the John and Al Show announced they were raising a $400 million "Green Growth" fund aimed at late-stage "private and public investments as well as . . . carve outs and spinouts." Other $400 million+ funds include the soon-to-close RockPort kitty ($450 million), the second coming of Element Partners ($400 million), and a $500 million piggy bank from NGEN Partners. Today's Wall Street Journal calls out Russell Read, the soon-to-be former chief investment officer of the $244 billion CalPERS fund, as the new face in the greentech investment jungle. Read will depart CalPERS on June 30 to begin raising capital for his own fund, which "will cover investments ranging from early stage deals to project-development-stage companies." And there's more... The same WSJ article has Riverstone Holdings LLC picking up $500 million for its mammoth $4 billion greentech fund and Hudson Clean Energy Partners grabbing $300 billion for its own $1 billion fund. Maybe I should say "fund" one more time. Fund. If all these high rollers make good on their targets, we can expect $6.75 billion moving into the greentech space over the next few years from six individual funds.