Catchups

Recent deals in the news:

• VentureWire reported earlier this week that CoalTek raised a $33mm Series C, led by Lightspeed Venture Partners, with participation by existing investors Braemar Energy Ventures, Draper Fisher Jurvetson, Element Venture Partners, Technology Partners, and Warburg Pincus. There's been a bit of controversy lately over whether coal-related technologies can be considered "cleantech" or not. However one cares to classify it, in the case of CoalTek, Jonathan Shieber reports in VentureWire that "according to the company, the coal it treats has a BTU content that is up to 33% higher than normal coal, while at the same time has 70% less sulfur dioxide content than untreated coal."

• REC retailer Sterling Planet raised a $7mm Series B financing. Low Carbon Accelerator of the UK provided the funding. Sterling Planet supplied green power certificates to the recent SuperBowl. ...And on the general topic of RECs and carbon offsets, here's a very educational give-and-take prompted by a column by Adam Stein of TerraPass (read the comments section as well). For more useful reading on the topic, here's another good article as well.
  

• ACAL Energy, which is developing "low temperature fuel cell cathode" technology, raised GBP1.6mm from Synergis Technologies, Rising Stars Growth Fund, the North East Co-Investment Fund, and the Carbon Trust. The company claims their technology will allow fuel cells to operate five times longer than currently possible.

Cleantech investors in the news:

• CalPERS announced last week that they are committing $400mm to Pacific Corporate Group, with the funds to be specifically targeted to cleantech investments.
  

• Nomura International plc recently announced that Whitney Rockley has joined the firm as Principal of New Energy and Clean Technology Ventures.
  

• The Cleantech Venture Network is starting a new effort called the Cleantech Innovation Initiative, to tackle key transformational efforts. The first such effort? Smart financing solutions for getting more hybrid taxis on the streets...
  

Other news and notes:

• Looking forward to seeing everyone at the MIT Energy 2.0 Conference next weekend!

• Most readers are probably already aware of the critical role of green power issues in the recently announced TXU buyout. For venture-stage investors, the importance is that it demonstrates just how seriously utilities are taking cleantech these days -- these technologies aren't just on the fringe anymore. Wind power, broadband over powerline, clean coal ("cleantech" or not) are all emerging energy technology areas that have played a major role in the transaction...

• The latest on cellulosic ethanol and biodiesel.

• Finally, here's a very thoughtful piece on clean water technology investments, by Neal Dikeman. Out of the various limiting factors he identifies, price is probably the most important one right now...
  

Tuesday tidbits

• Sterling Planet announced a $1M bridge financing from GreenShift. Sterling Planet is a reseller of RECs (renewable energy credits, see a blurb on them here), with utilities and large corporations as their largest customers.

• Keeping his ear to the ground, Matt Marshall at SiliconBeat reported today that Pashu Gopalan, the SVP of Sales & Marketing at Kleiner-backed SOFC startup Ion America, has resigned. With the headline "What's going on at Ion America," Marshall seems to imply that this may have significant implications for the company. But it may very well be simply that Gopalan has decided to move on for personal reasons (as a couple of people I've spoken with have mentioned), with nothing more to be read about IA's prospects.

• Motorola Ventures announced a Series B investment in broadband over powerline technology provider Intellon. We've discussed before why BPL is of interest to cleantech investors.

• This Wired story about a very early solar-hydrogen technology makes for an interesting and entertaining read. Note the mention about how early-stage VCs have already started knocking on Nocera's door...

• This Washington Post story has an interesting take on cleantech and similar investing, talking up the "doing well by doing good" angle. Which brings up an important point. Certainly such motivations are often felt by cleantech entrepreneurs, VCs, and those who invest in their funds. And that leads to the kinds of questions that I and others often get, such as those asking if we are more patient investors than VCs in other sectors, or if we have lower goals in terms of returns to investors. Definitely not. First and foremost, most cleantech VCs I speak with (and including the firm I work for, Expansion Capital Partners) are focused on delivering competitive returns. Since the effort to provide strong returns through cleantech investing most often dovetails with the motivation to add value to society, it does provide "more meaning" (as the quote from John Doerr mentions). But for the most part, as the article describes, for many of the VCs involved or thinking about getting involved in the space, "the shift is as much about helping themselves as it is about helping others." And that's to be expected. The cleantech investing thesis is about identifying critical resource and infrastructure trends that will have negative impacts on the economy and peoples' lives, and investing in technologies that address those trends in some way. It is a lens by which investors can identify smart investments, and in the process promote social and environmental benefits. It is about identifying where market forces and societal needs are both driving toward the same ends. So bear that in mind as you read this interesting article (good mentions of Pionetics and Ion America as well).
  

Cleantech investors and carbon and RECs (pt 3)

It's been more than a week since the second installment on this topic (and you can find the first installment here), but if anything, it's an even more relevant topic after a week's worth of news developments. After all, as Kevin, a "serial entrepreneur", says in this WaPo column, "The venture capital community's appetite for green-tech deals has skyrocketed since the Supreme Court ruling."

Given the emerging momentum behind carbon and REC markets, and if it's true that carbon credit markets are particularly well-poised for significant growth in the US, what are investors doing about it?

Some are, naturally, investing directly into carbon sequestration-related technologies and startups like Kevin's. And not just into the sequestration technologies, but some investors are also investing directly into some of the financial service companies (see Sterling Planet's March funding announcement) that are looking to take advantage of the development of trading markets for RECs and credits.

Other cleantech investors are figuring out how their portfolio companies can position themselves to capitalize on these markets when they become more developed. In some cases, the venture firms are looking to partner with the financial traders who will eventually be active in these commodity markets, once they reach a viable point. One good example from last year is EnerTech's strategic partnership with Cantor Fitzgerald (note: link opens pdf).

Finally, cleantech investors are drawing their own judgments about how the shifting landscape in carbon credit and REC markets will impact the sectors they are interested in. At a high level, the emergence of a strong REC market favors electricity generation technologies, since that is the primary focus of renewable portfolio standards. On the other hand, the emergence of carbon emissions reductions credits may favor energy efficiency technologies, since the reductions are easier to quantify, monitor and verify than any reductions associated with "green" generation projects that may or may not be cannibalizing "brown" generation capacity.

The short answer is that both markets are developing, as we've discussed. But in the long run each investor's view of the strength of the eventual market for each type of financial product may color their perspectives on the technology sectors that will be looking to those markets as an additional source of value.

Either way, the inevitable emergence of carbon credit and REC markets is a major factor that all cleantech investors are focusing heavily on these days.

Deals announced this week:

• Semprius, a North Carolina-based semiconductor manufacturing process startup, raised $4.1mm in venture financing from Intersouth Partners and Arch Venture Partners. The company's printing approach to semico manufacturing has potential applications in other similar types of devices, such as solar cells.

• Superprotonic, a developer of solid acid fuel cells, closed the first tranche of a $16.2mm Series B round. The round was led by US Venture Partners, and included Dow Venture Capital and existing investors CMEA Ventures, Nth Power, Hydro Technology Ventures, Battelle Ventures, Innovation Valley Partners and OnPoint.
  

• VentureWire also reported that solar test and measurement equipment vendor Solmetric raised a $250k angel round. Such equipment may be increasingly in demand with the implementation of performance-based (versus capacity-based) governmental incentives for solar.
  

Cleantech investors in the news:

• The Cleantech Venture Network announced this week that Q1 totals for cleantech investing were $903mm across both North America and Europe, representing a 16.5% increase versus Q4 numbers and a whopping 42% increase on Q1 2006. In both regions, energy generation technologies were the largest category, with a little more than half of all capital going into that segment of the market. Other coverage this week suggested that European cleantech investments are falling behind U.S. activity. We'll dive more into the numbers next week...
  

• The Keiretsu Forum, a well-known angel investor group, announced the formation of a Cleantech Investment Committee. Early stage angel investors can be a critical resource for new cleantech startups.

• Kleiner's Randy Komisar is predicting billion dollar cleantech IPOs soon. One of the first may be Imperium Renewables, which Venture Wire today reported is gearing up for a ~$1B public offering.

• A couple of smart cleantech investors with some cautionary words about the challenges to investing in the sector and the dangers of the "fad of the month" (er, carbon?), in this article.
  

Other news and notes: For those following the "smart grid" market and its implications for cleantech, the news of IBM's new coalition effort around the technology was another strong validation point... And GM may be taking the old "think locally, act globally" saying to a new level.

Newsweek's Eco-Friendly Companies, plus Aerogel Composite and P21

• In case you missed it last week, here are Newsweek's profiles of "Ten Eco-Friendly Companies," many of which will be pretty familiar to regular readers of this site.

• GreenShift announced a $500k investment in Aerogel Composite. We've discussed aerogels before, with Aspen Aerogels. GreenShift, which previously provided bridge financing for REC intermediary Sterling Planet and has made investments in a number of other cleantech startups, is taking 25% ownership.

• Germany's P21, which is developing stationary fuel cells, announced a 5M euro raise from existing investors Target Partners, Conduit Ventures, and Tech Fund Capital Europe. There appears to be room for a similar investment from a new investor.