Back in June of 2010, Vinod Khosla shared his thesis on thin filmsolar with GTM. Solyndra was still in business at the time and thin film solar firms were at maximum hype. (Some of that hype was coming from Stion.)

Khosla gets to test his thesis a bit more intimately now -- as Khosla Ventures has just gained a controlling interest in CIGS thin film solar startup Stion.

According to a spokesperson from the company, Stion has "raised substantial new funding led by Khosla Ventures and it is accurate to say as of today that Khosla Ventures owns a controlling interest in Stion, whereas before it was the largest shareholder but not a controlling shareholder," adding, "Khosla is likely to remain the largest shareholder upon completion of this round, and the company will remain “stand alone” under its current business model albeit with a modified shareholder base."

Stion had previously raised more than $200 million from Taiwan Semiconductor Manufacturing, Khosla Ventures, Lightspeed Venture Partners, AVACO, Korean private equity funds, Braemar Energy Ventures, and General Catalyst Partners. The company was founded in 2006 as Nstructures.

In 2010, Khosla claimed that Stion's sputtering process "produced one of the highest performance thin-film solar panels with significantly less time and money than its competitors. On less than $50 million spent, including capex and pilot lines, they are producing 120 and 130 watt panels, and yielding to 13 percent efficiency, 2 ft x 5.5 ft panels made using monolithically integrated circuits, and have exceptional yields and process distributions."

But Khosla has suggested that Stion's differentiation was its tandem product "that can compete with all the incumbent silicon (not thin film) players by matching the efficiency of silicon cells with the costs of thin film." He added "That upside gives the company “legs” beyond the first few years of sprint, and I think every company needs to have a similar, short term, vector for future improvement. Otherwise, they will be resigned to the world of low-margin bloodbaths in an oversupplied market with few sustainable advantages."

Benny Buller, of Solyndra and later First Solar, had not yet joined the Khosla Ventures team when the Stion investment was made.

Still, Stion claims to be producing 13 percent efficiency modules in its Mississippi plant and shipping more than 5 megawatts this quarter. Stion has also "[d]emonstrated 20 percent efficiency on module prototypes for our Gen 2 “tandem junction” technology; scaling to full-size modules on pilot line in California." Tom Cheyney wrote about the tandem cell and the innovative (though perhaps not cheap) method of matching and mating the differing bandgap materials.

The official statement from Stion:

A newly formed company, backed with substantial funding from Khosla Ventures, has purchased substantially all of the assets of Stion Corporation.  The new company, which will continue to operate under the Stion name, will continue to provide the same suite of Stion products and services without disruption to existing customers.  All of Stion’s employees and management team in both California and Mississippi remain intact.  Operations at our manufacturing plant in Hattiesburg, MS remain unchanged and will steadily ramp to meet customer demand.  The new company will have new funds that will enable Stion to accelerate product shipments from its US factory and scale its next-generation “tandem junction” technology into manufacturing.

It's a complex transaction -- but somewhere along the line it involves an assignment for the benefit of creditors. In the letter to creditors and shareholders, DSI, the assignee, notes that Stion was unable to raise funding over the last few years even with the help of JP Morgan Chase and Agave Partners. There is also a $250,000 transaction in which HETF (guess the acronym) Solar acquires Stion's assets and assumes the secured lender obligations. Presumably HETF is the Khosla vehicle.

Earlier this month we reported on the CIGS solar market in 2013 and the re-emergence of Siva, the former Solexant. 

Khosla got a lot right in his 2010 essay (and a few things wrong) but he warned startups, "Be competitive with silicon cells at thin film costs or be competitive with III-V cells (well over 20 percent) at silicon costs. Then you have a 50/50 chance of making it. But a billion dollars of capital and billion dollars of debt will be hard to pay off."