Monday, October 31, 2005

CropSolution, Vycon and In-Pipe

  • CropSolution, which develops advanced, more efficient herbicides, pesticides, and other agricultural products, has apparently raised a $2.9M Series C round, according to PE Week Wire. This brings the total funding into the company since 2002 to $14.3M. Investors include The Aurora Funds and ATP Capital.
  • Also from the same PE Week Wire column: Vycon, which is developing flywheel technology for energy storage in large-scale applications, has apparently raised a $2.5M Series A. Investors include BankInvest, RWE Dynamics Venture Capital Management, Sumitomo Corp., Cooper Capital Partners and Tridus International -- Vycon has been a division of Calnetix, a technology development company focused on motors and electric components, and it is unclear what the current ownership of Vycon amounts to.
  • In-Pipe Technology, which offers wastewater treatment systems, announced a $3.5M Series A, from "a group of institutional investors". In-Pipe's system combines technology and microbial solutions to move early stages of treatment up into the wastewater collection system, improving the efficiency of operations at the downstream centralized wastewater treatment systems.

Friday, October 28, 2005

Where are you?

According to my limited website traffic statistics, readers of this site come from all over the world, with some strong concentrations in various North American cities. But you may not know who's near you, reading this same page...

For those who are interested, visit the Cleantech Investing map on Frappr, and add yourself. It only takes a second, and you can enter as much or as little info as you would like. It would be interesting to get the visualization of where everyone is, all of us commonly watching the cleantech venture investing space as it continues to develop. And if you enter some contact information for yourself, it may be useful for networking with like-minded folks near you, if that's of interest as well. Just continuing this site's mission of fostering the growth of this interesting space we're in.

Thanks to SiliconBeat and PE Week Wire for pointing me to this fun site on the web...

Atlantium raises $4-5M Series A -- maybe?

[10/28 update: After posting the following entry, we received word that the cited article announcing the raise was wrong on a number of points -- so read it how you will!]

Atlantium, which manufactures UV-based water disinfection systems, is reportedly on the verge of raising a $4-5M Series A, to be led by Pitango Venture Capital, and including VantagePoint Venture Partners, Aurum-SBC Ventures, and existing private investors. Interesting to see this story, which doesn't appear to be based on any announcement from the company or the purported funders, it's unclear who told the online journal about the round... Hence the uncertainty about the final amount of the raise.

Regardless of details, ultraviolet-based disinfection of drinking water is an area that has garnered some attention from cleantech investors, because it is generally chemical-free and can be used closer to point of use, among other benefits.

Tuesday, October 25, 2005

Smart grid: A $45B opportunity

We've talked at length about the "smart grid" before -- the idea that adding intelligence into the electrical transmission and distribution grid (and some lump in distributed generation as well) would help promote energy efficiency, reduce waste in transmission, and prevent outages and brownouts.

Now the Global Environment Fund, a cleantech venture investment firm, has released a very useful study (note: opens pdf) which specifically addresses the subject. Out of the global $81B spend on power grid infrastructure in 2005, they argue, $25B could be addressed by "smart" products. As they point out, transmission spending is already forecast to be greatly increasing in the U.S., since 70% of transmission lines are 25 years old or older, 70% of transformers are 25 years old or older, and 60% of circuit breakers are 30 years old or older -- and we're running out of capacity to begin with. A large bill is becoming due, and smart grid technologies can help mitigate the costs and build a more reliable system in the doing.

The report is particularly useful because it provides an introduction to key customer segments, key technologies, important market drivers, etc. A good primer. Cleantech investors and others who are getting up to speed on the topic should certainly check it out.

Items of interest on a busy Tuesday

  • Regretfully unable to attend the Cleantech Venture Forum in Washington, DC this week. Fortunately, Tyler Hamilton is blogging his notes and thoughts from the Forum, which is quite helpful and great to see. I definitely encourage checking out his site, both during the Forum and beyond, especially for those particularly interested in the Canadian players in cleantech.
  • Speaking of the Cleantech Venture Forum, the organizers -- the Cleantech Venture Network -- have announced that they are projecting that North American investors are going to put $10B of venture investments into cleantech over the next four years. That would represent continued strong growth from the estimated $1.5B in cleantech investments in 2005, and from the $7.3B that was invested over the previous 10 years. Just a further sign of the maturation of the space. Can the "cleantech is underinvested" secret be kept for just a little while longer, please? No thanks to sites like this, of course... I also found this article to be an interesting juxtaposition.
  • Chrysalix Energy, a clean energy venture capital firm, announced the second close of their Chrysalix Energy II fund. LPs in the fund include Delta Lloyd, WestAM, Robeco, Teachers Private Capital, The Mitsubishi Corporation, BASF Venture Capital and Shell Hydrogen LLC and other investors. Chrysalix has broadened their investment focus beyond the fuel cell and hydrogen technologies they originally targeted, while maintaining their leadership position in those investment areas.
  • Finally, it's worth noting the many clean technologies highlighted as part of the Wall Street Journal's Innovation Awards.

Gaia Power and CellFor

  • Speaking of the "smart grid", Gaia Power announced a $2.25M Series A investment today, led by GHO Ventures (recent space traveller Greg Olsen's investment vehicle), and including the NJTC Venture Fund and the Small Business Technology Investment Fund of the Empire State Development Corporation. Gaia Power's initial energy storage/ backup power products are turnkey systems aimed at both the business and residential markets.
  • CellFor, which produces superior tree seedlings for industrial forestry, announced the completion of a US$32M Series C raise, with a corporate investment from DuPont, and including existing investors ATP Capital, CSFB Private Equity, GrowthWorks Capital, and BDC Venture Capital. CellFor's "naturally-selected" varietal pine seedlings are disease resistant, and provide higher yield and wood characteristics, thus improving efficiency of industrial forestry operations. This is one of those investment areas where "cleantech" is in the eye of the beholder -- readers are invited to comment pro and con.

Energy technology startups are starting to hire again

In one encouraging sign that things are going well in the clean energy space, I've recently seen a few clean energy companies starting to ramp up hiring. Even over the past couple of years of strong growth, such companies have been reticent to expand their teams. It's always a big deal to take on more headcount. But apparently, clean energy CEOs are getting comfortable enough now that they're willing to take on the costs and obligations, and that's an encouraging sign. It also reflects how much new money the industry has taken in lately -- that capital is supposed to be spent expanding management teams, in many cases...

I know a bunch of readers of this site are people looking to get into the industry, so as a reminder, here are some thoughts on where and how to look for positions in the space.

Thursday, October 20, 2005

Thursday tidbits

  • Sustainable Development Technology Canada (SDTC) announced C$42.5M in new funding for a variety of Canadian clean technology companies. Tyler Hamilton of Clean Break has some good thoughts on the news. Earlier today, a reporter asked me why "Canada seems to be so active in cleantech compared to the U.S." Hmmm... Good question.
  • Meanwhile here in the States, mainstream VCs continue to look into "interesting areas" like cleantech. See this article from Red Herring. Is cleantech "muddy water", per the "big fish" quote by Rob Chandra? On the other hand, the article puts the increased VC interest in cleantech in context, given the wide range of other investment areas mentioned, and the fact that "clean technology" isn't even mentioned while energy is only mentioned in passing... Such mainstream VC interest undoubtedly seems more noteworthy to the people inside the industry than to the people currently outside looking in...
  • On the general topic of fuel cell markets and timing, here are some outspoken comments from the President and CEO of PolyFuel. "When," "how" and even "if" remain key questions for cleantech investors looking into various aspects of fuel cell markets, so Balcom's thoughts are interesting to read.
  • Finally, as we often note, there are some fun things to think and learn about in the world of early-early-stage clean technologies. Here's today's fun story.

Wednesday, October 19, 2005

Expansion Capital Partners purchases additional shares of Biorem Inc.

Happy to note amongst the regular cleantech deals tracking that Expansion Capital Partners' Clean Technology Fund II has announced the purchase of additional shares of portfolio company Biorem Inc. in a PIPE transaction. The press release is here. Biorem manufactures biofilter media for use in air pollution control.

Organic Holding Co., Cleantech VC fundraising, and more on In-Q-Tel

  • Organic Holding Company, which offers the Organic-To-Go delivery/ pick-up service, announced a $2.5M Series B raise. The round was provided by Funk Ventures, and brings total capital raised in 2005 to $5.5M.

Monday, October 17, 2005

SmartSynch raises $12M Series C

SmartSynch, which has technology for advanced wireless automated meter reading (we've discussed the topic before here), announced a $12M Series C round. Battelle Ventures (with affiliate fund Innovation Valley Partners) provided the new outside capital in the round, along with existing investors Siemens Venture Capital, JPMorgan Partners, Kinetic Ventures, Nth Power, Endeavor Capital, Lime Rock Partners, Cinergy Ventures, and GulfSouth Capital. The general AMR industry appears to be re-energizing lately.

Technology Review on new solar technologies

Following on the heels of the various news reports last week regarding emerging solar technologies, there's this brief column in the MIT Technology Review. Worth checking out.

Friday, October 14, 2005

Biofuels continue to get project financing -- from VCs

Biodiesel and ethanol continue to attract project financing, with the announcement that New Energy Capital has committed to funding a 55m gpy ethanol plant in Michigan, with total construction costs expected to reach $86M (pdf of the press release is here). This follows similar news from New Energy Capital, Seattle Biodiesel, and others.

What's interesting about this from a venture capital perspective is that several venture capital firms are getting into these biofuel project finance deals indirectly -- by funding the project finance firms. Rustic Canyon and others recently funded US Renewables Group, and New Energy Capital raised $30M from Vantage Point and CalSTRS.

So in effect, these venture capital firms are providing project financing for biofuel facilities. And others are looking at the possibility. It's an interesting development. It reflects the fact that technological advantage isn't necessarily going to be a determinant of project success in biofuels as much as geographic location, capital efficiency and strategic relationships might be. And the way it's happening reflects that VCs may be looking to get into biofuels, but are finding it hard to find technology pure-plays in the space, where they presumably could apply their core competency in identifying winning technologies -- and instead are giving their capital to project financiers who presumably have better expertise in funding "steel in the ground". This, despite the fact that project financing often targets lower returns than venture capital investments aim for. ...Of course, these venture capital firms would likely counter-argue that their expected returns in these particular cases are competitive, and that there are additional strategic benefits to having good exposure to real-world use of energy technologies. No matter what, it's an intriguing development.

An early sign of a growing trend of indirect investing by cleantech VCs? Or a technology-specific solution that won't be applied in other cleantech market segments? These investments raise some interesting questions.

[10/25 update: US Renewables Group has made another investment, acquiring Bottle Rock Power Corporation, a geothermal operation. These project plays, as noted, go beyond biofuels.]

Thursday, October 13, 2005

NP Photonics raises $2M Series A2

NP Photonics, which has advanced optical-fiber sensor technology, announced an additional $2M investment in their Series A2 led by Shepherd Ventures (pdf here). This brings the total A2 raise to $7M.

Optical sensing technology, often drawing from breakthroughs developed originally for telecom purposes, are having increasing impacts on clean technology applications. Some new-technology optical sensors are being used to detect contamination in environmental conditions, manufacturing conditions, natural gas pipelines, etc. Others, such as the fiber-based sensors that NP Photonics are developing, are being used in a wide range of cleantech and non-cleantech applications -- on the cleantech side, for example, fiber-based strain detectors are being used to measure "sag" conditions on powerlines to predict outages, and to monitor underground storage tanks for leaks. There are other applications that are not directly cleantech-related as well. So optical sensors are a good example of the kind of platform technologies that are increasingly crossing across and into clean technology investing areas -- other examples would include M2M communications and manufacturing-focused software.

A few updates

A couple of updates on previous discussions:

Energy prices, "Peak Oil", and cleantech investing

People often ask about the effects of high gas and oil prices on cleantech investing.

The idea is that many emerging clean energy technologies (solar, fuel cells, etc.) are still higher cost than incumbent fossil fuel-based technologies. And thus, as the cost of clean energy technologies continues to come down, any significant rise in fossil fuel prices only accelerates the market attractiveness of clean energy.

It's not quite that simple. Oil-based fuels aren't the comparable across all clean energy technologies. For solar, for instance, a more appropriate comp would be natural gas and coal-fired electricity generation. Oil prices are not entirely linked to those prices.

Nevertheless, cleantech investors are unsurprisingly very interested in the long-term trajectories of energy prices, and the most visible such prices are oil. Some subscribe to the idea of so-called "Peak Oil", that the production of oil is peaking and will decline, in the near term. While energy demand is unlikely to fall, if fossil fuel production goes down, the energy production must come from somewhere, and new energy technologies are a likely beneficiary. Along these lines, the ongoing debate between oil optimists and peak oil advocates (read parts one and two) is important to follow.

But cleantech investors also need to watch more than just oil prices as they think about the long-term viability of energy tech investments. Natural gas prices have also been rising as well. And new coal generation capacity has been lagging demand, at least in the U.S. But for how long? Or will increasing emphasis on policies to address climate change permanently raise these prices as well?

The point being, it's possible to envision scenarios where energy prices continue to rise in oil-based energy markets (e.g., transportation), but fall back again in natural gas and coal-based energy markets (e.g., grid electricity). Or vice versa. Or where both rise permanently. Cleantech investors need to make their own judgements and be ready for any number of possibilities.

[10/14 update: I received the following good thoughts from another cleantech investor who asked to remain anonymous:

"People seem to think that because the price of oil is high that this benefits alternative energy companies and technologies across the board, but that's not true.

In the energy sector, there are separate commodities, which are not fungible: oil, natural gas, and eletricity.

The price of oil does not directly affect the price of electricity - only 2.5% of electricity in the US came from burning oil in 2004 - whereas 50% came from coal and 18% from natural gas.

Therefore, adoption of solar PV does not depend on the price of oil but on a) the retail price of electricity and b) government incentives and mandates (buy-downs, RPS)."]

Wednesday, October 12, 2005

Mark Anderson's notes on Solar Power 2005

I mentioned a couple of days ago that Mark Anderson of AltEnergy Stocks was going to be blogging his notes and impressions from the Solar Power 2005 conference in Washington, DC. But it's worth specifically noting his take on the venture investing panel that took place. Worth checking out.

And on the same topic, here's yet another well-done article on "why solar is hot right now" (no pun intended), this time from Wired News.

Monday, October 10, 2005

A couple of interesting articles

For those who like to ease into their Mondays, here are some recent articles of interest to cleantech investors:

  • The Arizona Republic put out a good article on cleantech investing over the weekend, including some good quotes by several cleantech investors, and some interesting company profiles. (Free reg. may be req'd)
  • The Alternative Energy Blog did a nice overview of the current state of alternative energy investing in European markets.
  • CleanEdge has a nice column on nanotech and solar (continuing the discussion from this site)... Organic solar technology still sounds far away ("four to five years") for venture investors who often have 5-7 year investment horizons, but you never know who might be able to accelerate it... [10/10 update: Here's more news about a different breakthrough regarding flexible solar technology out of UCLA, which sounds like it's at a similar stage as the Wake Forest breakthrough... Clearly, solar is getting a lot of research attention these days and will continue to drive down the cost curve over time... rd]
  • And finally, in news that's now a bit dated (apologies), a recent study gave evidence that companies with strong environmental performance are given a higher valuation by investors, perhaps (slightly) signalling better exits and exit multiples for cleantech investments -- both in terms of IPOs and in terms of acquisitions by large, established companies moving in these directions.

Thursday, October 06, 2005

What's the code name this time?

Nothing as mysterious as "Ginger" this time, but famed inventor Dean Kamen has now set his sights on cleantech with a Stirling engine-powered water purification device that's discussed in this MIT Technology Review article.

A prime example of a general trend that experienced entrepreneurs and managers from other technology industries are increasingly focusing their next efforts on clean technologies -- an encouraging sign for cleantech investors.

Solar Power 2005

Not able to make the Solar Power 2005 conference in DC, but it looks like Mark Anderson (AltEnergy Stocks) is going to be taking notes, for those interested. Last year's conference was certainly informative and useful, so I'm glad to be able to get Mark's thoughts and reports...

US Renewables, Bion Environmental, Miox

Three deals of interest, that lie outside of strict VC activities:
  • US Renewables Group, a project finance firm that is building and managing a portfolio of renewable energy generation assets (e.g., landfill gas, biomass, geothermal, small-scale wind and solar), announced a first close of $80M in a round led by Rustic Canyon Partners. The ultimate size of the fund is expected to be $250M. The funding by venture capital firm Rustic Canyon is similar to Vantage Point's investment in New Energy Capital. In both cases, venture capital firms investing directly in clean technologies are also looking to put money at play in the project finance side of clean technology, a critical and somewhat unmet need in the industry. Will these investments in project finance provide VC-level returns? Perhaps, perhaps not, but either way these VCs are probably also looking at the additional strategic value of a close relationship with a project financier in their industry.
  • Bion Environmental Technologies, which offers technology for the remediation of animal waste from large-scale agricultural operations, announced a $1.9M convertible debt offering. Bion Environmental (Pink sheets: BNET) thus also triggered conversion of existing debt into common shares. Investors were undisclosed.
  • Finally, in another example of the many varieties of private equity involved in cleantech investing, last week water purification technology firm Miox was bought out by an investor group led by Entrada Ventures, with participation by Flywheel Ventures, existing investors, and others. "A controlling interest" was acquired for $16M of debt and equity. Last year Miox had $7M in revenue. Principals from Entrada Ventures are also taking senior management roles with the company, and -- having served the role of "male praying mantis" for Miox -- Entrada will now cease to exist.

Wednesday, October 05, 2005

Article on alternative energy investments by VCs

Nothing earth-shattering or new to anyone who reads this site regularly, but note the decent Dow Jones article here describing the increased interest by VCs in alternative energy, particularly solar. Complete with the now-standard overly-early reference to "whispers" of a "bubble"...

Also note the amusing typo, "Nonosolar".
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