Better Place closed a $350 million Round B round led by HSBC Group. That's a lot of shekels and a lot of kronen. 1.85 billion Kronen and 1.305 billion Shekels to be exact.
The press releases have been, well, released, analyst calls have been attended and snappy videos viewed. It ranks as one of the largest cleantech deals in history with a pre-money valuation of $900 million. And as Rob Day notes, that doesn't include the money that flowed into the company's regional subsidiaries in Israel and Australia.
Commercial launch is now targeted for 2011 for the bold electric-vehicle / charging-station / battery-swap / electricity-selling start-up.
Investors include HSBC, Morgan Stanley Investment Management, Lazard Asset Management, Israel Corp., VantagePoint Venture Partners, Ofer Hi-Tech Holdings, Morgan Stanley Principal Investments, and Maniv Energy Capital, et al.
Anthony Bernbaum, Global Head of Special Opportunities at HSBC, on the $125 million investment that gains the conservative bank 10 percent of Better Place:
- "Our expectation is quite frankly that within two years, Israel and Denmark, as the first two launch markets for Better Place will demonstrate that the business model works both technically and commercially. We expect governments to visit that, to see that. Frankly we think there will be a race to copy it."
- "One of the absolute beauties of BP is that it allows for the build-out of infrastructure to make electric cars a success without significant, maybe any, government funding and without consumers making a great sacrifice...it's not a technological leap, it's a business model leap."
- "Where we think it's not so early stage is that the technology is well built-out. And commercially it's well built-out. And its period to potentially having very material revenues and profitability is quite short."
So the focus to start is on Israel and Denmark.
Investor Alan Salzman of VantagePoint adds, "In places like Denmark they've a had a differential put in place on their taxes to recognize the incremental cost that a combustion engine puts as a burden on the society and on the roads relative to an electric vehicle."
Try that in the U.S.
Challenges -- Infrastructural
Michael Kanellos addressed some of Better Place's challenges in this article.
According to Monday's media call -- BP is looking to install between 15,000 and 20,000 charging stations in both Israel and Denmark in the near-term. This is a vast reduction from earlier numbers.
The company has built more than 1,000 so far. It's a start. But it will take money, a favorable tax and policy framework and public willingness to go nationwide even in as small a country as Israel.
The structure that Better Place proposes will work better in certain places and certain applications: small nations, island nations, non-income-polarized socialist Scandinavian nations. And it could work well for automobile fleets - Better Place's biggest customers in Israel will be fleet buyers. The firm has already signed deals with 50 "vision partners" that will take a total 35,000 cars.
Think taxis and delivery vehicles. But those are the vehicles that put on the most miles and might be the ones that tax the charging system and battery "switch-stations" the most.
Challenges -- Cultural
America created such automotive apogees as tailfins, the Edsel, the Corvair, and more seriously the Ford Mustang and The Judge. We are a car-based culture and just as horse-thievery was a hanging-offense - we don't like people messing with our cars.
Half of the rock-and-roll canon and arguably the first rock-and-roll song is an ode to the automobile. Going to a drive-in and procreating in a Renault EV is just not going to be as much fun.
It is no accident that Better Place is not running lots of pilot programs in the U.S.
That's Why It's Called Venture Capital
Shai Agassi, the Israeli-American software executive who founded Better Place in 2007 is lauded as a world-class salesman. He recently said, “We've demonstrated that our network is deployable."
A venture investor colleague of mine had this to say in an email exchange:
- Everyone thinks the idea is bogus, until they hear/meet with Shai. So there is something to be said for a charismatic and visionary CEO in fundraising, that's for sure.
- If they can convert niche markets with limited space, limited populations, etc. (Israel, Hawaii, and Denmark) into EV markets, then they can use the learnings to determine a strategy for the masses (US, Europe, China, etc). But one might complain that it seems like an awfully expensive way to learn...
Building an electric car company and a charging infrastructure takes big bucks and big balls. It is a beautiful and audacious bet. And no one sees this as being their last funding round.
The money piece is a difficult but not impossible part of the puzzle. Changing people's minds and attitudes when it comes to their personal transportation might be a little harder.
There is the suggestion that this firm could be a Google or Netscape-type market disruptor. Maybe. But even a dominant role as an urban vehicle, as a fleet vehicle, as a delivery vehicle lets Better Place win big in a niche market. A trillion dollar niche market.
One More Thing
The electrons going into that EV will come from coal, natural gas, and nuclear for decades to come.