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Miasole, Consumer Powerline, and 212 Resources

Rob Day: September 27, 2007, 8:17 AM
Just a few quick notes while traveling on some of the big news items this week:
  • Amidst a lot of recent talk about the impacts of the ongoing polysilicon shortage, high-profile CIGS thin film panel manufacturer Miasole has apparently started recognizing revenues from shipped product, and also raised a Series D round of financing of somewhere in the neighborhood of $50mm, according to VentureWire (GTM wrote up a blurb here).  New investors (apparently there were six) were not disclosed, but previous investors also participated.  The various CIGS manufacturers have been making noise about forward progress for some time now, but this would be one of the bigger pieces of concrete indications of looming mass commercialization.  [As always, whenever I mention Miasole I'm obliged to note that I am a small personal shareholder]
  • Demand response aggregator Consumer Powerline announced a $17mm Series A round of financing, led by Expansion Capital Partners, along with co-investors Bessemer Venture Partners, Schneider Electric Ventures, the New York City Investment Fund, and Vantania Holdings (managed by the Consensus Business Group).  Demand response continues to show a lot of sectoral momentum...
More to follow, including reflections on recent analyst tallies of cleantech investment numbers so far this year...

More info on the NEF European cleantech returns study

Rob Day: September 21, 2007, 7:51 AM
As promised, we asked the smart team at New Energy Finance to provide a bit more information about their returns study that we mentioned earlier in the week. Michael Liebreich, Chairman and CEO at NEF, was kind enough to provide some additional explanation of their methodology, for those interested: "Hi, Rob - Your calculations are correct: the group has put in EUR 283.6m into 129 portfolio companies. It has had exits totaling EUR 390.4m. It is sitting on unrealized value of EUR 339.0m. Total value = EUR 729.4m. The unrealized holdings have indeed been held at book unless there has been a revaluation event. So we have the following: · 53 of the portfolio companies are held at exactly book value. · There have been 15 IPOs and 10 trade sales · 21 have been revalued upwards at subsequent rounds (with at least one external investor). We do not accept self-reported write-ups or valuations based on comparables etc. · 19 have been revalued down, some significantly, some only marginally. This we do either at subsequent rounds, or if companies self-report a write-down · There have been 11 liquidations, with most but not always all money lost It is the group of 21 valued upwards that are driving the unrealized gains. Of these gains, a reasonably significant proportion is held in what are now public equities, to which we give a 15% liquidity haircut, to be on the conservative side. I can’t comment on what proportion of the invested funds went into the exited companies as opposed to the others – the steering committee didn’t choose to release that information. The conclusion of the study was exactly as you understood it: "great returns, but not yet in the bag." Hence the use of the phrase "on track" in various places." Thanks much to Michael and his team for the helpful explanations... Other news and notes: Here's a great interview by Jennifer Kho, of A123's David Vieau... And finally, two interesting market data points on concentrated PV market adoption -- first, 24 gigawatts of CPV projects under development in California? And second, floating solar islands in the Persian Gulf?

GreatPoint, Amyris, and other news

Rob Day: September 21, 2007, 7:42 AM
The big news today is GreatPoint Energy's big financing, as has been reported by VentureWire, PE Hub and others (Earth2Tech has a blurb here). As reported by Jonathan Shieber at VWire, the $100mm round has been led by new strategic investors Citi Sustainable Development Investments and Dow Chemical. Other strategic investors AES and Suncor Energy also participated, along with previous investors (which could therefore include ATV, Kleiner, Khosla, DFJ, and the founders' own GreatPoint Ventures, from a previous $37mm round). It's a great example of how interested venture investors and energy giants are in the potential for coal gasification technologies. Other deals:
  • Biofuel developer Amyris Biotechnologies has announced the completion of a first tranche of a $70mm Series B. DAG Ventures led the round, which also included previous investors Kleiner, Khosla and TPG Ventures. The funding is intended to help the company come to market in 2010 with biodiesel, biogasoline and biojet fuel.  GTM's Rachel Barron has more information about the financing, and as well as Solazyme's debt financing.  Shieber reported on Tuesday that the pre-money on the round was $400mm, and also adds that competitor Synthetic Genomics had previously raised a Series B round of financing from BP and others at a $300mm post-money.  Wow.
  • Solar Power Partners, a solar PPA developer, has raised a $6mm Series A led by Globespan.  The company has 14MW worth of signed projects to date.
Cleantech investors in the news:  When Sevin Rosen pulled out of fundraising their tenth fund a year ago, they broadcast the message that the venture capital model was broken.  Now VWire reports they're re-launching fundraising, but "opening the aperture" to go later stage, and to move "beyond technology investments" (sic) into healthcare and -- relevant to cleantech investors -- energy.  It's an interesting development on one of the most pointed internal critiques of the venture capital industry, and in a small way also points to the way cleantech is getting more generalist VC mindshare these days.

European cleantech VCs see 50% IRRs?

Rob Day: September 18, 2007, 5:55 PM
That's the conclusion of New Energy Finance in a new analysis they released today. They studied 129 clean energy investments in Europe by 37 investors and found 15 IPOs, 10 trade sales, 21 up rounds, 19 down rounds or write-downs, and 10 liquidations. All told, they estimated a 54.9% gross annualized return across the portfolio of 129 companies. The study period covered 1998 to the present, and included an estimate of 1.2x valuation on unrealized gains on funds invested. It's a very positive study, certainly, and helps further illustrate why investors are so keen on this sector right now. It's also a very useful analysis -- but it's important to note a lot of caveats involved. The methodology is hard to figure out from the press release alone, but it's clear there's a lot of potential for some data bias (while it's impressive that 37 investors participated, it looks like the study only covered about half of relevant investments; and as well, it appears the study relies somewhat upon self-reported data from the investors). I'd also like to see more information about the way that "unrealized holdings, calculated on an industry-standard, conservative basis, are valued at 1.2 times the total funds invested." It's unclear, but in light of the statements that 35 exits have returned 1.4x the funds invested, and the total estimated gains are 2.6x (1.4x + 1.2x), it seems like there's an implication that the ~75% of funds invested that have NOT led to exits may be assumed to have seen some pretty nice paper gains. We may ask the good folks at NEF to write up their methodology for benefit of readers at some point... Before we all pat ourselves on the back about the healthy returns in this sector, in any case, consider the following: One funding announcement so far this week: Pentadyne has closed on a $14mm round of financing, led by Loudwater Investment Partners. GTM's Rachel Barron reports that the capital will go toward sales channel and product development. Jonathan Shieber at Dow Jones pointed out in CTI that the PR described it as a "recapitalization," and wondered about the company's previously-announced AIM IPO plans. It's unclear from the PR whether existing investors participated in the latest financing, which brought total investments in the company to about $60mm. Other news and notes: Cleantech is heating up in Australia, too... And finally, it's not cleantech, really, but how about $20mm to put a robot on the moon?

Boston keeps heating up

Rob Day: September 13, 2007, 7:15 PM
It's getting to be tough to keep up with all the New England cleantech cluster-building efforts. The latest REBN-East event in Boston was this past week, and was the biggest one yet. A huge crowd showed up to talk renewables, trade business cards, and enjoy the generous hospitality of Foley Hoag -- sponsors and hosts of the event. Dan Primack even showed up... The REBN event took part right on the heels of an MIT Enterprise Forum Energy Special Interest Group panel session that also got a good crowd... good collaborative cross-pollination is what is really driving the regional cleantech cluster efforts right now. And then last night NEEIC held another very enjoyable regional bridge-building dinner (this time between Boston-area and Rhode Island cleantechies). Look out, California... Speaking of which:
  • Woburn, MA based Wilson TurboPower, which has developed an industrial heat exchanger with dramatic energy efficiency benefits, has raised $3mm in angel financing, according to Clean Technology Investor. The company is also working on components for a new microturbine design.
  • GridPoint, the developer of an electricity storage/ demand response appliance for homeowners, has raised a $32mm Series D with participation by Goldman Sachs, Altira Group and Standard Renewable Energy Group.
  • PEWW brought to our attention that Climpact, a French provider of information about the financial impacts of climate change, has raised a EUR 1mm round of financing from Elaia Partners of France.
Other news and notes: Joel Makower writes about Google's innovative approach to financing the emergence of a PHEV industry... This is a terrific idea, directly addressing one of the critical capital gaps in the biofuels innovation path... Government action in the U.S. to address climate change is looking more and more inevitable... Finally, would London really ban cars?

Q2:  $1.7B in cleantech IPOs

Rob Day: September 11, 2007, 6:59 PM
Why is cleantech venture capital suddenly the hottest thing since Disco? Because the exits are starting to happen. While M&A remains the dominant exit path for VC exits in this and other sectors, the Cleantech Group's latest figures, there were 17 cleantech IPOs in the second quarter, totaling $1.7 billion in proceeds. That's nearly double the number of IPOs in the first quarter... The Cleantech Group's numbers also showed that North American cleantech venture investments totaled $843mm in the quarter -- about the same as in Q2 2006. The amazing growth in cleantech VC investments appears to have slowed recently. Is it a pause before a second wave? Or is the recent hype covering up an underlying flatline in activity? Or is it all just a collection of lumpy figures that don't really tell a coherent story because a couple of deals here and there dominate the totals? Time will tell. Although August was brutally busy for many cleantech VCs, and September's starting out even busier (especially for yours truly, so apologies for the sporadic postings), so anecdotally at least, things are heating up once again... Red Herring also had a nice piece looking at the numbers and discussing how VCs are starting to look more into some of the less-fished corners of the cleantech pond. Deals and noteworthy items from the past few days:
  • Virent Energy Systems, which is developing a catalytic process for the production of gasoline from sugars, announced a $21mm Series B, co-led by Stark Investments (a Wisconsin hedge fund) and Venture Investors of Madison, WI. Existing investor Cargill Ventures also participated. The fact that the co-leads of this round were local investors is an interesting development.
  • SynapSense, which offers technology for monitoring and optimization of energy use in data centers, announced a $10mm Series B, led by Emerald Technology Ventures. Existing investors American River Ventures, Nth Power and DFJ Frontier also participated in the round.
  • Solar thermal-based electricity generation startup Ausra announced a "more than" $40mm round of financing. Khosla Ventures and Kleiner Perkins provided the financing, and Vinod Khosla and Ray Lane have taken director seats.
  • UK-based Lysanda has raised GBP 1mm to develop what they're calling "Eco-Log", which you may be relieved to learn is an on-board vehicle emissions monitoring technology. Half of the capital was a venture capital investment by the Sustainable Technology Fund, managed by E-Synergy Ltd. GBP 300k was angel financing.
  • Israel-based Galten, a Jatropha biodiesel startup, has raised $10mm. UK-based Capital Partners led the round.
Other news and notes: Tech Confidential had a couple of very good posts (here and here) covering the AlwaysOn GoingGreen conference, which featured a good group of cleantech VC presenters -- reinforcing the need for sectoral expertise when making early-stage bets in the space... Here's a great update on all the cleantechy goodness going on down in Austin... "No clue" is the clear winner in the "who will win the race for commercialization of algal biodiesel" contest, according to this fun poll from Inside Greentech... Finally, although this came out last month, it's worth reading today.

Don't miss the upcoming Greentech Media webinar on solar financing services:

Wed. the 19th, noon eastern.

Energy efficient buildings, demand response, and overcoming the barriers

Rob Day: September 7, 2007, 7:04 AM
The best way to make a kilowatt-hour available isn't green power generation. It's to have not used a kilowatt-hour somewhere else in the first place. Energy efficiency is the greenest power source. And it can be among the most lucrative as well... Energy efficient building technologies (mostly lighting, HVAC and controls) have been getting a lot more attention lately, particularly when it comes to automation and general "smart building" approaches (which would include the on-site implementation of demand response-enabling equipment). On this site we've discussed the sector often and described why the economics of many of these technologies can often be quite strong (such as 1 to 2 year payback periods). And yet, while the market for these technologies is growing quickly, it's not growing quite as quickly as one might expect. Why is that? There are four major obstacles to implementing smart building technologies. First of all, there is the physical challenge involved in any retrofit of equipment. In the past (and still mostly true in the present as well), a smart building system has meant hard-wiring up a lot of equipment to be able to talk to each other. The air conditioner unit has to talk with the central or off-site decision-making server. The thermostats have to feed into the system as well. If lighting is being adjusted, every light fixture has to be wired. All this wiring is tough to do when the building's walls are already up. Fortunately, wireless machine-to-machine communications technologies are getting to a point of cost-effectiveness where hard-wiring may not be as necessary. Leading "smart building" technology vendors are taking a system-level approach to this problem, bundling M2M comm networks in with their smart sensor (ie: thermostat) and smart energy load (ie: lights and HVAC) systems. But that's still developing, and for now, smart building technologies are a much easier sell in a new-build situation than in a retrofit. The problem is, that's a much more limited market. Secondly, ownership is often a problem. In many office spaces, the occupant is not the owner. And when it's a multi-tenant building, like a big office tower, the occupants may not be sub-metered so that they can be separately billed for their energy use. At one point earlier in my career, when I was with the World Resources Institute, I took on the task of planning how our organizational headquarters could implement a lot of energy-saving changes in equipment and the like. The problem was, we occupied just two floors out of eight or so. And all the tenants were billed their portion of the overall building electricity bill according to square footage, not according to actual electricity consumed. So the economic justification became very tough for me, in that if WRI spent our own money to implement energy savings in our own space, we would only get to enjoy about one-quarter of the electricity bill savings that we enabled. This is just one personal anecdote, but it explains a lot of the challenge in the commercial buildings (ie: office buildings) part of the market -- the building owner isn't incented to put in energy efficiency technologies because they're just passing through the electricity bill to the tenants, and the tenants aren't incented to put the technologies in because they don't get most of the cost savings. Easy sub-metering and outsourced billing services would help a lot with this problem. Thirdly, in the industrial buildings part of the market, the problem is that the loads aren't simple and the potential buyers are naturally skeptical. Industrial buildings account for nearly one-third of the electricity consumption in the U.S. But unlike commercial buildings, where 85% of the consumption is in lighting and HVAC, industrial buildings are factories and manufacturing facilities and the like. All sorts of very different capital equipment, powered by electric motors, make up the energy load. And so the challenge of connecting with and controlling the various loads is a challenge by itself. Then, add on the fact that the facility manager is going to naturally be very sensitive about any change that might potentially impact production at the facility. Take demand response as an example: dimming the lights a bit and letting the air conditioner cycle down a bit during a demand response event is one thing in an office building, it won't really affect anyone's productivity, but to affect the biggest pieces of equipment in a metal foundry or a manufacturing facility is a different equation. So it's not just technically harder, it's harder to make the economic argument as well when you have to consider potential lost productivity, and thus industrial sites have been much slower to sign up for demand response programs than office building owners have been. Fortunately this is also changing as entrepreneurs focus on the problem. Forgive the blatant promotion of one of @Ventures' portfolio companies, Powerit Solutions, but this case study from Trojan Batteries' use of Powerit's technology is just a really good illustration of the overall potential for making smart building technologies accessible to industrial facility managers, with low disruption and strong economics. Fourth and finally, Joel Makower points us to a compelling study that was recently released (although I couldn't download the study itself this morning, so hopefully that link is getting fixed today...). And it shows that perception gaps are a big obstacle. Potential buyers of energy efficiency technology appear to significantly over-estimate the likely costs of energy efficient building approaches, by more than 300%. That would definitely make it tougher to get buyers interested. So there's a big role for an industry voice that is really still not yet developed -- there are some strong smart building industry groups out there, but they tend to be more internally-focused than big marketing-focused efforts. Local governments, national environmental groups, and other related groups would be well-served in promoting the visibility of available building energy efficiency technologies (and particularly the strong economics they can provide).