Recent Posts:

Recent deals

Rob Day: May 28, 2009, 10:34 AM

Here are reported cleantech venture deals from the past few weeks, showing that things are still a bit slow but the money is starting to flow into a more diversified mix of sectors:

  • GreenRoad, a vendor of fleet driver safety and fuel efficiency monitors, has raised $15mm in "growth funding", led by DAG Ventures and including return investors Benchmark Capital, Virgin Green Fund, Amadeus Capital Partners and Balderton Capital.
  • OutSmart Power Systems, a developer of commercial building energy efficiency systems, has announced a $2mm seed round from Bainco, Clean Energy Venture Group, and Manifold Products.
  • Micro fuel cell developer UltraCell announced a $3.8mm insider round, from existing funders BASF Venture Capital GmbH, OnPoint Technologies, Espirito Santo Ventures (ES Ventures) and Miami Valley Venture Fund.
  • VentureWire reported on a few fundings that have been discovered through Reg D filings:  Arxx Corp. (green building materials) has raised $3mm of a targeted $4.3mm round; Infinia Corp. (solar) has raised $14.1mm of a targeted $50mm debt/rights financing;Tendril Networks (smart grid) has raised $19mm out of a targeted $30mm equity raise; and Renewable Fuel Products (biofuels) has raised $145k.
  • Wind developer OwnEnergy has added to its Series A with new financing from Clearpoint Ventures and GoGreen Capital.
  • Biogas plant developer has raised a EUR60mm round of financingTCW Group, Inc led the round, alongside existing investors Altima Partners, Green Partners, Halcyon and Ludgate Environmental Fund. also raised a EUR10mm mezz debt facility with Ecofin.
  • Germany's P21, which is developing fuel cell for backup power systems, has raised a EUR10mm round of financing led by Yellow&Blue Investment Management, alongside existing investors Target Partners and Conduit Ventures.
  • Madrone Capital Partners has led a $22.5mm round of financing into solar micro inverter company Enphase Energy.  New investor Bay Partners also joined the round, which included existing investors Third Point Ventures, RockPort Capital Partners and Applied Ventures.
  • It's not a cleantech deal, but still, I thought this report by Cooley Godward (note: opens PDF) was very much worth highlighting, since it does a great job of illustrating the dramatic downtown in venture capital valuations over the past few months, across all stages.  Entrepreneurs, take heed...

Other news and notes: If you haven't seen it already, it's well worth reading Joel Serface's piece on his year as an EIR at NREL...  Finally, while the WaPo editors are down on the Chevy Volt, this column by Michael just made me jealous!

Memorial Day and clean energy

Rob Day: May 26, 2009, 10:57 PM

For all US based readers, welcome back from the Memorial Day weekend.  It's not just a 3-day weekend, folks.  It's a day of remembrance and thankfulness, first and foremost. 

Insofar as cleantech issues impact that, Ian writes passionately about the link between supporting clean energy, supporting energy independence, and supporting our troops.  I would add that it's also important to recognize the role that the US military has played in supporting the development of clean technologies.  The military needs renewable distributed generation technologies badly.  They have been major supporters of technology developments in everything from advanced motor design to sensors to biofuels to wind power.  DARPA grants have been valuable for several companies I've backed and evaluated as an investor.  In many ways the Department of Defense has been a second Department of Energy for some time now.

Andy Bochman here in the Boston area has been writing a good blog on energy tech matters related to the DoD.  Check it out.

A deals update will be coming soon...

What capital efficiency?

Rob Day: May 21, 2009, 11:08 PM

Had the pleasure of moderating a very interesting panel at Boston University today on smart grid and energy efficiency, including representatives from the State of Massachusetts, NSTAR, GE, BU, and Millennial Net.  Lots of optimism about ongoing pilots and smart grid roll-outs.

And of course, here in this column we've talked quite a lot recently about how the cleantech VC community seems to be much more vocal about targeting capital-efficient energy efficiency and smart grid investments these days.

Except that I took a look at the details in the Q1 2009 Cleantech Venture Monitor (another great job by Cleantech Group's Brian Fan and colleagues), and there's no evidence yet of such a shift.

In their tally, solar remains the big dog, at almost 35% of all cleantech venture dollars in the quarter.  That's just barely down from the ~38% it captured in Q1 of last year, for example. 

Biofuels and transportation (not exactly the poster children for capital efficient investment areas) continue to be other big targets for VC dollars, at ~10% and ~20% respectively. 

And where is "smart grid"?  At under a 5% share.  In the Cleantech Group's methodology, energy efficiency investments tend to be spread across a number of different categories, but even the "green buildings" category garnered only ~10%, about the same as in Q1 2008.

Will we see VCs start to put their money where their mouths are in upcoming quarters?  We'll just have to wait and see.


The next wave of cleantech investing:  Getting beyond energytech

Rob Day: May 20, 2009, 11:19 AM

We had a great REBN-Boston event last night at the Warner Babcock Institute for Green Chemistry.  John Warner spoke about his journey into the field of green chemistry, and about the need for green principles to be integrated into chemistry methodologies -- not just for health and environmental reasons, but for profitability reasons as well. 

You can read some of Warner's thinking on the subject in an old interview here.  For example, Warner mentioned last night that DuPont spends $1B per year on research and development -- and $1B per year on regulatory compliance related to their products and processes.  The problem, in Warner's view, is that chemists are never trained in areas like toxicity and environmental impacts of the chemicals they work with and create.  So it's no surprise, therefore, that it becomes so expensive to deal with the waste and toxicity of the chemicals at "the end of the pipe".  Instead, if processes and products were designed with green principles and lessons in mind, up front, we could see more effective, cost-competitive and safe chemicals and processes right from the start.

This isn't just a pesticides and chemical additives issue.  Such chemistry-based design decisions are at the heart of other cleantech sectors like thin-film solar, water treatment, membranes, agriculture, etc.

It's a great example of the next wave of cleantech:  Everything else beyond energytech.  While climate change, energy independence and energy supply concerns have elevated energy technologies thus far in the cleantech pantheon, we continue to see looming natural resource shortages in other areas like water supplies, agriculture and food, and basic materials/ commodities.

It may not be this year, but at some point those other markets are going to develop to the point where they will be ripe for innovation and rapid adoption of alternative technologies.  And methodologies like Green Chemistry may help spur such innovation, in proprietary ways that VCs love to see.


The “Next Big Thing” in cleantech investing could be really… well, big.

Rob Day: May 18, 2009, 9:17 PM

With the economic downturn that hit in full force last fall, many cleantech VCs' minds made a pretty big shift away from capital-intensive solar, EV and biofuels investments, and (to the extent that checks were still being written) toward relatively more capital-efficient smart grid and energy efficiency bets. 

Regular readers of this column will know that I've been beating the drum for these kinds of investments for a while, for market and investment model reasons.  But it's sure true that they look that much more attractive in an environment where exits are a long way off and LPs aren't putting capital into new funds -- capital-efficiency looks better when capital is scarce, naturally.

However, as a (hopefully not temporary) sense of stability starts to return to the marketplace (and even accounting for the more bad news undoubtedly yet to come), many investors are starting to dream big again.  In the spring, a VC's fancy lightly turns to thoughts of radically reinventing the electricity industry, as it were.

Two strong potential candidates for the Next Big Thing in cleantech venture capital are nuclear and carbon capture and storage.

I've spoken with numerous VCs recently who are looking for innovative ways to play in nuclear power.  Bets have already been made by VCs in small-scale nukes, hot fusion, and technologies related to big-scale nukes.  The hope is to find a low-cost solution that is practically zero carbon emissions and also provides reliable "base load" power.  So in other words, the hope is for a lower-carbon replacement for coal power.  The challenges are also significant, however, not least of which being time to market for any new innovations, as this interesting article illustrates.

With the recent news that the DOE will be putting $2.4B into carbon capture and storage, and its inclusion in emerging climate legislation, it's also clear that CCS will be leaned upon as a hoped-for way of making our existing coal-fired generation infrastructure less impactful on the atmosphere, while still preserving its value as low-cost baseload power.  So in other words, the hope is for a lower-carbon "fix" for coal power.

These will be challenging sectors for VCs.  Like solar and EVs and biofuels, they are capital-intensive and, insofar as new tech development is concerned, face a long path to market readiness.  And unlike solar and EVs and biofuels, success will very often require getting major buy-in from the notoriously slow-moving utility industry and regulatory bodies.  But the government dollars could help with that.  And the market for anything related to baseload power is huge.  And we live in interesting times.  So these two controversial technology areas could well end up being the focus of a lot of investors' attention over the coming months.




There’s more bad news to come

Rob Day: May 14, 2009, 2:16 PM

With the news today that GreenFuel is shutting its doors, it's a good reminder that there is a lot of bad news yet to be seen in cleantech venture capital. 

A lot of high-profile startups have high cash burn and unclear follow-on financing prospects, because they raised big money at big valuations in the past and since then the world has changed and fewer big money / big valuation deals are getting done.  Many of those companies have over the past few months been put into a slow-down mode and maybe have received bridge financings and the like.  All of which helps them stick around, but also doesn't completely address their growth needs, in fact it might hinder their ability to grow going forward.

Meanwhile, although there's been a rally on Wall Street and some encouraging signs, the overall consensus of economists seems to still be that it'll get worse before it gets better -- the trajectory is improving, but is still down.  And with some potential for new bad news, of course.  There's been a bounce of sorts early this year as everyone digests the company sales and VC deals backlogs caused by absolutely nothing happening in the 4th quarter.  But things are still very slow relative to where they were a couple of years ago.  And so it will be hard for these struggling companies to right the ship in this economic environment. 

Thus, expect more bad news over the next few months.  But hopefully with an increasing amount of good news as well...


Powerit and other deal updates

Rob Day: May 5, 2009, 10:19 PM

It's always fun to see how the mainstream journalists over-react to the latest short-term numbers, and how their editors feel compelled to over-dramatize every headline.  Thus last week we saw an article in the NYT with the headline "Clean Tech's Future Dims as Financing Drops Off."  Taking the very worst of the Q1 numbers we discussed a while back, the article literally asks:  "Has the green bubble burst?"  And paints a picture of cleantech funding drying up in the aftermath of a "hype cycle" and entrepreneurs being left out to dry.


As we've discussed, the quarterly numbers are significantly down, but at a rate pretty comparable to what happened to venture capital overall.  The whole economy came to a crashing halt, after all.  It's not easy times for entrepreneurs, but it's not like there aren't deals being done (in fact, see below).

And what bubble in the first place?  Was there a solar bubble?  Most probably -- as we've talked about here for a while now, the solar sector got frothy in 2007-2008, as the quotes in the article reflect.  Was there a corn-based ethanol bubble?  Definitely.

But to simply declare that there was a "green bubble", as if solar and biofuels made up the entirety of the investment opportunities in the sector?  I don't know any investors arguing that sectors like water, energy efficiency, agriculture, etc. are over-capitalized.  At least not yet (stay tuned). And smart investors have always had a broad view of what "cleantech" (or whatever phrase they prefer) means.  So a bit of unnecessarily breathless reporting.

But what else would we expect from an industry with such a dim future as print newspapers?

So let's take the opportunity to mention all the deals from the past few weeks:

  • Extremely pleased to report that Powerit Solutions, a Seattle-based vendor of automated smart grid solutions, has raised a $6mm round of financing led by Siemens Venture Capital, and including new investor ArcelorMittal's Clean Technology Fund, alongside existing investors @Ventures and Expansion Capital Partners.
  • Altira led with $10mm of a $30mm round for EPS Corp., an ESCO / energy intelligence services provider.  Existing investors NGEN and Robeco also participated.
  • Nanomaterials startup SDCmaterials, with emissions control and other cleantech applications, has raised a $14mm Series B (note: pdf) led by Invus Financial Advisors and including existing investors Emerald Technology Ventures, BASF Venture Capital and individual investors.
  • Demand response / energy efficiency service provider CPower (fka Consumer Powerline) has raised a $10.7mm Series B led by new investor Mayfield Fund, and including existing investors Bessemer Venture Partners, Expansion Capital Partners, Schneider Electric Ventures, New York City Investment Fund and Consensus Business Group.
  • Carbon capture technology developer Powerspan announced new financing of "over $50 million" (note: pdf) from new investors George Soros, Tenaska Energy, Inc., AllianceBernstein LP, and Persimmon Tree Capital LP, and returning investors NGEN Partners LLC, The Beacon Group, The Tremont Group, RockPort Capital Partners LP, Calvert, Angeleno Group, Fluor Corporation, and FirstEnergy Corp.
  • VentureWire reported that Crystal Solar raised a $10mm Series A in July of last year, from Oceanshore Ventures LP, Scatec Adventure LS, SIIF SARL of France, and David Bostwick.
  • LED cooling company Nuventix has raised $4mm to close out an $18mm Series C originally announced in July of last year.  Braemar (at $3mm) and Uniquest ($1mm) provided the new financing.