Enphase Banks $63M with Help from KPCB, et al.

The microinverter leader has raised more than $107M and shipped 300,000 units to date. Does a move into home energy management lie ahead?

Eric Wesoff June 03, 2010

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Enphase, the leading microinverter firm, just announced the second close of a $63 million financing round with participation from Kleiner Perkins Caufield & Byers (KPCB), PCG Asset Management and other strategic investors.

Paul Nahi, Enphase's CEO, explained, ""We were very over-subscribed this round and were in the fortunate position of being able to choose the best investor."

The first close of the financing round included Third Point Ventures, RockPort Capital Partners, Madrone Capital Partners, PCG Asset Management, Applied Ventures and Bay Partners.

In a solar universe comprising more than 250 early-stage startups, many of them shipping PowerPoints in volume (see Solar Bloodbath 2010), microinverter builder Enphase has essentially created a new market sector and run with it. This approach has won them more funding and strong market acceptance.

We've reported on the many aspirants in microinverters and DC-boost architectures in detail here and here, and we've reported on recent developments at Enphase here.

Enphase, with the help of its manufacturing partner, Flextronics, has managed to ship more than 300,000 microinverters since beginning shipments about two years ago. The wholesale price of the unit is in the $150 range, so that's $45 million dollars in revenue so far and growing fast.

Enphase recently announced a microinverter design specifically for the Ontario, Canada market that will fulfill Ontario's Domestic Content requirement, allowing installers to participate in the Ontario Feed-In Tariff (FiT) program. Enphase's Canadian production line will have a capacity of 100 megawatts (500,000 microinverters) in the first year. The company plans to double this capacity to one million microinverters in 2011.

Microinverters individuate and convert the energy output of each solar PV module into grid-compliant AC power, offering some potential advantages over traditional centralized inverters in energy harvest, system reliability, and ease of installation and design. Additionally, powerline communications enable continuous, remote, per-module monitoring.

In KP Partner Ben Kortlang's words,"Enphase's solution is the future of solar." He added, "Enphase is quickly gaining market share because they offer the only proven, reliable product on the market, and they have a strong balance sheet that allows them to stand behind their customers and their warranties. Enphase will lead the industry's transition from traditional central inverters to microinverters."

So what's next for this fast growing startup? A focus on growth and expansion, sure. The firm has to make sure the reliability story holds up. And in a climate where companies like Tesla, Solyndra, Fallbrook and Codexis can seriously consider an initial public offering -- an Enphase IPO would not be out of the question.

And one more thing to consider: if the microinverter (or centralized inverter, for that matter) already has a communications link and already monitors energy production, how much of a stretch would it be for the inverter and internet gateway to be the consumer's portal to the utility smart grid? Enphase's CEO, Paul Nahi, hinted at the company's grander ambitions in this area at Greentech Media's Solar Summit in April.