Those stories about the pending death of green technology investing might have been a bit premature.
VantagePoint Venture Partners, one of the earliest and largest venture firms in green technologies, is raising a $1.5 billion fund dedicated toward late-stage green technology deals, according to sources. The full amount is likely not raised yet. It may take time to raise it, and VantagePoint may not get the full amount. But the firm is raising cash for such a fund, according to sources, and the firm's track record could well pave the way toward its completion.
The idea behind the fund is to help startups bridge the manufacturing gap. VCs have plunked money into hundreds of interesting companies with novel green technologies in the last six years. Over 200 companies in solar alone have received VC funds. Few companies, however, ever get the money to build factories or produce products because of the large amounts of capital required.
Kleiner Perkins in some ways has taken a similar late-stage tack. It jumped into green with startups like Lilliputian (who?). Recently, though, a good portion of its green activity has revolved around putting money into companies like Silver Spring Networks and OPower that had already racked up large contracts. (Since public speculation about Kleiner's exit from green, two new investments have come to light. Go figure.)
The risk is that the money these companies need will even exceed what large funds like this can do. Better to stick to green software.
The capital quandary has caused some startups -- such as Innovalight and Nanostellar -- to adjust their business models so that they don't need as much capital. Others such as SureGrid sell themselves early on to conglomerates such as Siemens, sometimes even before getting VC funds. Unfortunately, many others -- the biofuel industry comes to mind -- fall into a never-ending cycle of fundraising. It's like the seventh circle of speed-dating hell.
VantagePoint so far has invested only in one green company that has gone on to an IPO (Tesla Motors) and one (New Energy Capital) has been acquired. Nonetheless, VantagePoint has put money into a number of companies that appear to be doing well. MiaSole, the maker of copper, indium, gallium, selenide (CIGS) solar cells, seems to have worked out the kinks in its manufacturing process and is boosting its efficiencies. It hopes to hold an IPO next year.
VantagePoint also has investments in Goldwind, the fast-growing turbine maker from China; Trilliant, the smart grid specialist; Ostara, which produces fertilizer from sewage streams; solar thermal developer BrightSource Energy; Premium Power, which claims it has a formula for reducing the cost of flow batteries; and Solazyme, an algae fuel maker that is selling fuel to the U.S. Navy.
But the firm also has investments in Better Place, the high-risk car charging venture, and Mascoma, one of those biofuel companies that seem to be on a never-ending quest for funds. Some such as BrightSource and Serious Materials have also passed the $100 million mark in fundraising.
The portfolio in many ways has been constructed with precision. The firm likes to get an investment in each category. In lighting, for instance, it put money in glo, an LED company; Bridgelux, which makes LEDs and components; Teos, a light bulb company; and Adura Technologies, which focuses on lighting networks. In automotive, the investments span cars (Tesla), charging (Better Place) and batteries (Amprius). In a meeting earlier this year, we asked CEO Alan Salzman if a pattern existed, and he confirmed that yes, the selection process has been deliberate.
The firm declined to comment on this story, citing SEC rules. But here's a video of Salzman from earlier this year.