Tuesday, January 31, 2006

Cleantech investor news

  • Investors continue to move into cleantech private equity, with the news today that Paladin Private Equity Partners is going to be launching a new cleantech-focused private equity firm, targeting $200M in total commitments, with Calpers providing a $40M lead. The company will target California-based small- and mid-cap investments.
  • The good folks at Cleantech Venture Network are bringing us a new useful tool, as they announced that the Cleantech Capital Group LLC will begin publishing a Cleantech Index on the Amex. The index will include 75 companies that derive 50% or more of their revenues from cleantech businesses.

Tuesday, January 24, 2006

Cleantech investing -- a view from Israel

This site tends to focus on North American cleantech investing, since that's where yours truly resides, but there is also a lot of rapidly-growing cleantech VC interest in other areas such as Europe, Asia, Israel, and elsewhere.

Today, Jack Levy of Israel Cleantech Ventures was kind enough to add his thoughts and perspective on the current state of cleantech investing in his neck of the woods:

With a remarkable track record in innovative technologies, Israel is widely regarded as one of the leading markets for venture capital investing, but the growing cleantech market is only now attracting attention. As U.S. venture funds raise more capital to deploy in cleantech companies, we expect that more and more will begin to look to deep but uncharted Israeli cleantech innovation for additional deal flow. Most of the Israeli cleantech companies are early stage and not versed in dealing with venture investors. This creates the opportunity, and need, for sector-focused, early stage investors with a strong local presence to develop the Israeli cleantech venture market.

Israel already has its share of cleantech successes along with some promising companies. The successes include industry leaders in geothermal power (Ormat), solar thermal (Solel) and desalination (IDE Technologies). As previously reported in the Red Herring and more recently in Business Week (and this blog), Israel has big plans to leverage its leadership in water technology. Recent reports (Hebrew only) have mentioned a proposal before the government for a five-year NIS 750 million ($162 million) incentive program for the water industry being championed in part by Mekorot (Israel National Water Company) Chairman Booky Oren. If adopted, these initiatives will supplement a robust governmental incubator network designed to support early stage ventures, many of which have already graduated cleantech companies. Israel's leading academic institutions such as the Technion, Ben Gurion University, and the Weizmann Institute of Science, among others, have significant activity in water technology, alternative energy and new materials technologies.

Even with the significant pace of company formation, many established Israeli venture capital firms have remained on the fence regarding the Israeli cleantech opportunity. Some are concerned about the challenges facing cleantech investing in general -- particularly the capital intensivity and longer sale cycles (hence longer time to exits) of many business models. Others are focused on the lack of venture funded Israeli cleantech exits, fewer opportunities for cleantech companies to pilot their technologies locally and the absence of the military as the clear driver of innovation and source of management talent.

Any prospective investment must be closely examined in light of these very real risks. Nevertheless, many early-stage companies that we have met with have scalable business models that are no more capital intensive than many “traditional” IT or communications plays. Israeli companies have historically excelled at rapid fielding of solutions and at taking existing products or processes and improving upon them – an approach which can help mitigate many risks and costs associated with new technology adoption. With this strategy, some companies, such as AqWise, whose AGAR® technology improves the capacity and performance of wastewater treatment facilities, have succeeded even in sectors with notoriously long sales cycles. However, other such product or process improvement approaches may limit the size of the opportunity and need to be diligenced carefully to ensure that any advantages developed are significant enough to build a sustainable business platform. On the plus side, given the global nature of the cleantech markets, and the leadership of the EU and Japan in certain segments, the geographical location and immediate global focus of Israeli startups may prove to be an even stronger asset than in other areas such as software or medical technology.

Perhaps most encouraging to the Israeli cleantech investor, are the managers who have academic or early career backgrounds in relevant areas (i.e. water engineering, electrical engineering), but who as a result of the job opportunities of the past 10-15 years acquired significant management skills and experience in high growth and successful IT, software or telecom companies. Like a returning diaspora, many of these individuals who take leading positions in Israeli cleantech companies are coming back to their true passions with strong conviction and a sense of mission. If they remain mindful of the differences in their new markets, we believe these entrepreneurs will be able to leverage their years of personal experience in high growth companies and help build an Israeli franchise in cleantech as strong as that which exists in more traditional VC sectors. And we look forward to doing it with them.

Israel Cleantech Ventures was founded in November 2005 to establish the leading sector-focused venture capital fund dedicated to investing in Israeli clean technology companies. We welcome any feedback or interest in Israeli cleantech companies; the author, Jack Levy, can be reached at jack@israelcleantech.com.

Thanks, Jack! ~rd

Sunday, January 22, 2006

Two big cleantech fund closing announcements

  • PE Week Wire also reported on Friday (will provide link when available) that DFJ Element has made an interim close of $114M of a targeted $225M fund.
Congrats to both funds! It's very encouraging for the industry to see such LP interest in dedicated cleantech funds.

In one recent presentation I had the pleasure of attending, the speakers identified that there are about 60 VC funds now actively investing in cleantech.

Thursday, January 19, 2006

NanoGram, Franklin Fuel Cells, and Intelliburn announce raises

  • Speaking of nanotechnology, nanotech process innovator NanoGram announced an $18.7M round of financing, led by Technology Partners, and including existing investors ATA Ventures, Nth Power Technologies, Bay Partners, Harris & Harris Group, Rockport Capital Partners, Institutional Venture Partners and SBV Venture Partners. Harris & Harris also put out a separate PR describing their portion of the raise. NanoGram's technologies have applications in optical, electronic and energy applications -- the latter highlighted by the participation of several dedicated clean energy and cleantech investors.
  • PE Week Wire revealed a couple of unannounced cleantech fundings today. The first is that Franklin Fuel Cells, a developer of solid-oxide fuel cells, has secured $2.32M of an anticipated $10M Series AA round. The second is a $1M Series A funding for Intelliburn Energy Systems, financed by TTI Technologies; Intelliburn appears to be a developer of advanced controls for industrial boilers (e.g., for wood mass, steam-driven power generation).

Tuesday, January 17, 2006

Seattle BioFuels raises $7.5M Series A

Fellow VC and blogger Martin Tobias' Seattle BioFuels announced that they have raised a $7.5M Series A from Nth Power, Technology Partners and Vulcan Capital. The capital is going to be used to take their biodiesel production model nationwide, and to accelerate deployment of new technology.

Nanotech debate continues, solar momentum questions, and Safe Hydrogen

  • As we've mentioned before, there is both great optimism (see posts here, here and here) and great concern about the green and clean potential for nanotechnology. Thanks to Charlie Kireker for pointing out this NPR coverage of the topic, spurred by a recent report by a former EPA staffer. It's a good, brief recap of the ongoing debate, which cleantech investors should be paying careful attention to...
  • Safe Hydrogen, LLC has raised $308k from the Massachusetts Renewable Energy Trust SEED (Sustainable Energy Economic Development) Program. The capital will be used to finish an ongoing demonstration project of the company's hydrogen storage technology, which should be interesting to track, as storage is one of the critical roadblocks to the emergence of a "hydrogen economy".

VCs speak out: Cleantech is the #1 trend

Red Herring's annual panel of five top VCs predicting 2006's "top 10 tech trends" came out, with "More investment in green startups" at #1. VCs participating on the panel included John Doerr, Steve Jurvetson, Roger McNamee, Joe Schoendorf, and Ann Winblad. The panelists also suggested that biological sciences would start to attract a lot more college student interest going forward, given their applicability for both biotech and green technologies. Jurvetson even went so far as to state his opinion that:

“All the breakthrough development in science and technology will increasingly come from bio-derived or bio-inspired origins.”

All this attention, of course, is bringing yet more attention to the space. Business Week, for example, mentions that Doerr's Kleiner Perkins and/or Vinod Khosla are already invested in a few "stealth" cleantech startups (See: Ion America, Miasole, EEStor, Methanotech). Doerr appears to have mentioned that there's a fifth such investment as well...

Friday, January 13, 2006

AgION raises an additional $5M

Antimicrobial materials developer AgION, which raised a $3M Series D from two strategic investors back in September, announced that they have added $5M to the round. The new capital came in from new and existing investors including SAM Private Equity, Prescher Capital, Paladin Capital Group, BASF Venture Capital, and Motorola Ventures. AgION has now raised a total of $45.7M. SAM Private Equity appears to have played a lead role in bringing in the new funding.

Tuesday, January 10, 2006

Market sector catch-ups

Having been pulled away a bit lately, I'm going to lump together a lot of different articles and thoughts that have come up over the past few weeks...


Sewerbots for pulling communication cables through pipes underground. At what point does "water, the commodity" become valuable enough compared to "bits, the commodity" that this technology gets repurposed and adapted to the difficult but overdue challenge of water distribution infrastructure build-out and repair? Meanwhile, there are even bigger unmet needs and "pain points" outside of North America, and they're starting to drive ramped up spending...


Solar continues to get all the attention these days. But will the looming polysilicon shortage throw a breaker on the party? Expect a lot of early-stage investor interest in both silicon production technologies and any emerging solar technologies that minimize or eliminate the use of silicon altogether (ie: thin films and concentrators), and a major uptick in market share for such 2G solar technologies in 2006 (albeit from a really small base level). In the meantime, the solar land rush continues apace, and now the emerging-markets aspects are finally getting mainstream attention. It makes sense -- it's always been strange that the U.S. would play such an important role in supplying solar technology to the rest of the world without being the top consumer itself, especially when other regions are increasingly dominating electronics manufacturing in other sectors, and especially when there's already a lot of experience manufacturing products that use solar technology. This is one reason why even U.S. solar manufacturers are rapidly moving their own manufacturing overseas (see this link, too), to get closer to end-markets and lower costs. As emerging technologies become better commercialized, and innovation starts to take a back seat to manufacturing efficiencies, expect this trend to continue.

But while solar gets all the attention, other clean energy technologies are making their own progress. The ever-knowledgeable Tyler points out that the North American wind market is going gang-busters... but has the industry jumped the shark from a venture investor (i.e., proprietary and scalable technology) perspective? Probably not (there are definitely still intriguing innovations being developed and thus perhaps another VC investment wave yet to come), but it is somewhat telling that a lot of the financing activity these days in wind power is on the project side.

And, lest we forget, investor interest in fuel cell developments (terrific SOFC primer here) and storage markets and timing the hydrogen economy and biofuels (note: pdf) and energy infrastructure continues to grow apace -- they just haven't been getting the press lately.


Not by and of itself "clean technology," as we've talked about before, but with significant overlaps (see here, too), nanotech continues to attract significant capital. But as the linked article points out, only 9% of venture-backed nanotech startups have achieved exits to date. This is probably a sign of the early stage of the industry as much as anything else. But sooner or later investors are going to need to see more exit activity... Expect pressure for M&A exits to increase as investment periods draw to an end. Or, if the IPO market picks up, a mad rush...

Prism Solar, SensorLogic, Blacklight Power

  • SensorLogic, which provides software solutions in the M2M communications space, added $4.67M to its own re-opened funding round (now totalling over $15M). The referencing article also has some interesting commentary on the M2M market.
  • Blacklight Power, which has been getting some press lately, has apparently raised $50M. ...I'm not at all sure what to say about this, except to note that clean energy technologies continue to be hindered by the fact that the first question investors often have to ask themselves isn't "will the customers buy it" or "is it a compelling value proposition," but the even more basic "does it work?" Even if the answer is often "yes," it's one reason why it can be rewarding to focus on post-revenue investments in the space...

Friday, January 06, 2006

SDE, Azuro, Zensys, Velocity, and other notes from the week

A few minor notes this week from the world of cleantech investing:

  • Israeli wave-power firm SDE put out a press release announcing they're looking to do a public listing. The title also mentions they're looking for additional funding, for those interested...
  • Azuro, which has developed solutions to reduce the power consumption of semiconductor chips -- re: portable devices -- announced a $9M second round of funding, led by Miramar Venture Partners. Existing investors Benchmark Capital and TTP Ventures also participated "fully". The total amount invested in the firm so far is now $13.3M. While an example of a classic IT investment, the energy efficiency angle is also of interest to cleantech investors, a demonstration of the overlap cleantech markets often experience with other investment areas.
  • In another example of "cross-market" technologies of interest to cleantech investors, mesh wireless technology provider Zensys announced a Series C investment by Cisco. The company's systems are being targeted for use in networking home appliances, but the general mesh wireless market can often be applied toward the remote automation and control of sensors and devices for use in various cleantech applications (e.g., indoor air quality monitoring, energy device automation, factory automation, etc.), something we've discussed before. Zensys has now raised approx. $45M.
  • The launch of a new regional venture firm, Velocity Venture Capital, was announced this week. The seed- and early-stage investor, targeting Sacramento-area technology startups in software, communications, and clean technology, will be about a $20M fund.
  • I was waiting for an official press release to make the mention, but none have been forthcoming since the PE Week Wire mention a couple of weeks ago -- Rockport Capital Partners has reportedly closed on $155M in commitments for their next fund, targeted at $250M. Very encouraging news for the industry, and many kudos to Rockport.
  • In case you haven't heard about the upcoming Clean Edge and IBF Clean Tech Investor Summit, it was recently announced that SunPower CEO Tom Werner will be one of the keynotes at the event.

Monday, January 02, 2006

Year end thoughts: Final fun stories of 2005

  • There appears to be a lot of activity these days among emerging Israeli cleantech investors. Here's one article that provides some insight as to why...
Happy new year to all, and a hearty thanks to those who've come to this site over the past few months. I hope it's been useful for those who have been interested in learning more about the investment side of this rapidly-growing space; it's certainly been terrific to make connections with many of you through the site. Readership has continued to surprise and grow, it's a sign of how exciting things are in the industry right now. Special thanks to those who've left some very thoughtful comments and reactions on the site. Best wishes to all for a happy, prosperous, and clean 2006.
Unique visitors to dateLocations of visitors to this page