It's scale up time for the Quercus Trust.
The somewhat secretive venture firm is not currently placing new investments, said founder David Gelbaum in an exclusive and somewhat rare interview. Instead, the firm will concentrate on putting more money in the existing companies already in the portfolio to build them up.
Considering the scope of the trust, that's still a mammoth job. The firm has around 40 to 45 companies in the portfolio, he estimated, and most are early stage companies. The company has during various times in the past held stock in public companies and it has walked away from at least one small, privately held company. (Disclosure: we counted 48 earlier from SEC reports and press releases. Even with 40 companies, Quercus would have one of the broadest portfolios of any green tech VC firm.)
Some portfolio companies have also endured rocky times. Solar cell make DayStar Technologies, for instance, has swapped CEOs a number of times in the past two years and struggled to generate sales. A downturn in the Quercus portfolio forced Gelbaum in late 2009 to curb charitable donations.
To the end of scaling up the companies in the portfolio, Gelbaum today announced earlier today that he will step in as the CEO of Entech Solar, which makes a skylight device that combinessolarthermal and solar photovoltaic technologies. The company, formed out of merger of two other companies, has designed its product but is not selling it yet. After it unveiled its device and new strategy in January 2009, Entech had to lay off employees and retrench.
"One of the beauties of Entech is that it doesn't use a lot of capital," he said. Entech harvests the solar cells and other components to produce its somewhat unusual module. "It is more of a working capital business."
Solar will likely continue to occupy a central part in the company's portfolio. In fact, Quercus initially got into greentech by investing in solar. "In 2006, I started with publicly traded companies. No one knew who I was," he said. Besides Entech, the firm also has a stake in eSolar (a solar thermal company that has landed two major deals in India and China) Cool Earth Solar (concentrators for solar cells) and others.
Right now, Quercus only has one biofuel investment-BlueFire Ethanol, which recently landed $81 million in DOE stimulus funds to help it build a 19 million gallon a year plant. It used to have a position in LiveFuels, the algae producer. The firm has an investment in GridPoint Energy, the smart grid specialist, but the one thing Gelbaum mentioned about the company was that it recently picked up a solar installer.
"I'm very bullish on solar. The costs are coming down and a lot of money is going into research," he said. "In 2006 I decided it was time for me to do something new. Solar made the most sense.
"The (green tech) industry will be competitive with fossil fuels one of these days on its own," he added.
The firm also has a novel waste heat company-the company's equipment harnesses waste heat, boils water, and uses the resulting steam in a steam turbine to produce electric power. And, to his credit, eSolar and BlueFire have experienced an upswing recently. BioPetroClean, another Quercus company, has also received investment funds from Dow Chemical.
Gelbaum denied that he was overextended. With 40 plus investments, the firm has more investments that most other greentech firms. He works with David Anthony of 21Ventures to find and manage the companies. Occasionally, the two will incubate companies from a paper in a scientific journal. "It is a matter of paying attention. The main thing is to get a CEO," he said.
And why has Gelbaum-who made millions from stock trading algorithms--been so silent? "I've tried to keep a low profile. I didn't see any reason not to," he said. "But I don't consider it a low profile anymore."