Friday, February 24, 2006

Notes from the week

  • Interesting article in the FT on cleantech. Important point (highlighted by the Cleantech Venture Network's Nick Parker) made in the article is that the quality of entrepreneurs across cleantech segments is on the rise, often serial entrepreneurs. Having increasingly strong management teams to back is clearly one of the several encouraging factors in the cleantech market right now for venture investors.
  • The development of trading markets for the emissions reductions created by energy efficiency projects, the renewable energy credits ("green tags") created by green energy projects, and carbon credits overall, will all have important implications for the adoption of clean energy technologies by the private sector, even in the absence of regulatory change. Thus, the subject of this very informative post in Cleantechblog...
  • We always knew that pond scum will somehow save the planet... One has to wonder how this discovery would be implemented commercially. In a system similar to GreenFuel's? Large enclosed wading pools planted behind hydrogen vehicle refueling stations? If it's photosynthesis driven, it's going to require a lot of surface area and access to sunlight...

Cleantech investor news

  • Following up on the well-documented interest by Vinod Khosla in cleantech investing, comes word that Khosla Ventures has officially been launched. Khosla's already spearheaded several compelling clean technology investments, so it will be interesting to see how this focused effort comes along.
  • Norsk Hydro's corporate venture arm is setting up a new ~$60M fund, targeting energy technology investments. You can find a very good overview of their efforts and investments here.

ORYXE raises Series C to $27M

In a round that has been open for some time (or at least was re-opened), ORYXE announced today that their Series C has been increased to $27M with the addition of funding from Paladin Capital Group. ORYXE's fuel additive technology helps users of diesel fuel meet increasingly stringent emissions standards, and is already being offered in Texas.

Existing investors include Ridgewood Capital, Odyssey Venture Partners, and DSM Venturing.

Thursday, February 23, 2006

Perpetuum raises $3.8M Series A

Perpetuum, a UK-based company that is developing MEMS-based micro-generators that turn kinetic energy into power, announced a $3.8M Series A. UK VC Quester put in $2.4M of the round, and Top Technology and existing investor Sulis also participated in the round. Here's an article that has background on the concept.

Tuesday, February 21, 2006

Good renewable energy market data

Some great U.S. renewable energy market data here. Enjoy.

Friday, February 17, 2006

More on PARC and SolFocus

Following up on the previous post regarding SolFocus and Xerox PARC, here are two good columns on the same topic (actually, here and here), with additional information and thoughts.

[Update: For a fantastic resource, see Xerox PARC's videotaped technology speaker series, many of which are on cleantech topics]

PS... On the topic of the broader cleantech investment thesis, there was this story today. "This is the kind of study that should make people stay awake at night wondering what we're doing to the climate, how we're shaping the planet for future generations and, especially, what we can do about it."

Thursday, February 16, 2006

Cleantech company news

A few interesting news items from several cleantech companies have come out over the last couple of days:

  • Xerox PARC and solar concentrator PV startup SolFocus have announced that they're teaming up to develop commercial systems. SolFocus won the grand prize at the most recent NREL Growth Forum. You can read more about the PARC-SolFocus partnership here.
  • The next "Ginger"? Dean Kamen's technology (he invented the Segway, famously) for a cow dung-powered 1kW generator is apparently the focus of an effort by Grameen Phone's Iqbal Quadir to license the technology for use in providing water and power to rural villages. Quadir's startup, Emergence Energy, would then look to raise $30M in venture capital to bring the technology to market. As we discussed back in October, the device is apparently powered by a Stirling engine, and now it appears he's coupled a second device (this time the code name is "Slingshot") which provides clean water, as powered by the waste heat from the generator. Right now each prototype costs $100,000, but the hope is that the price can be dropped to 1-2% of that.
  • Why are investors hot on solar? Because of stories like this. 27x is a nice multiple, especially for an investment held less than 2 years...
  • A final note not related to any particular company: For the many, many, many of you who regularly contact me for thoughts on how to get a job in clean energy, if you're in the bay area on the 23rd, this general-public event seems tailor-made for you. For my own thoughts on the topic, there was this post a while back...

Kleiner Perkins to spend $100M on cleantech

Taking a clear interest in funding clean energy companies and making it official, Kleiner Perkins announced today that they have raised three funds totaling $900M, of which $100M has been earmarked for "greentech" (and $200M directed at pandemics, interestingly). In so doing, they become one of the highest-profile firms to officially set aside capital for funding cleantech firms -- although many of the best-known generalist firms are already also active in the space, of course. It's unclear if KPCB is going to look beyond energy tech in their cleantech investments, but that would seem likely.

Quote of the day, courtesy of John Doerr: "Greentech could be the largest economic opportunity of the 21st century."

Tuesday, February 14, 2006

Konarka raises $20M

One of the more visible solar startups, Konarka, today announced a $20M raise led by 3i Group plc, with existing investors Draper Fisher Jurvetson, New Enterprise Associates, Good Energies, Vanguard Ventures, Partech International and Chevron Technology Ventures also participating in the raise. As part of the raise, 3i and Good Energies have taken board seats in the company.

To date, Konarka has raised $60M.

Basin Water files for IPO, and other updates

  • Basin Water, a groundwater treatment company based in California, has filed for a $52M IPO. Revenues for 2005 were under $8M, which gives a sense of where valuations are in cleantech right now...
  • One topic that hasn't been written up much in the press lately is the opportunity for venture investors to get in on wind power technologies, but here's a good overview (self-promotion alert... literally).

Friday, February 10, 2006

Notable stories from the week

  • SmartMoney posted this good interview with Tim Woodward of Nth Power, one of the best-known energy tech pureplay VCs. Worth checking out...
  • Great article on the intersection of cleantech, nanotech and advanced materials.
  • Amusing reads: Herb Greenberg slams ECD (sub req'd). Huge Brita filters for St. Paul, MN? And for those with a particular interest in following the vagaries of oil prices and their impact on the economy, here's an interesting analysis of last year's predictions, and a forecast for this year from an admitted pessimist... "From the very first time I cranked up my oil depletion model in 2003, the events of this year have exuded a bad karma. Although I have fine-tuned my model over a hundred times, the result is always the same. 2006 does not look good." Perhaps "amusing read" isn't the best label...

Thursday, February 09, 2006

Lilliputian raises debt financing

Lilliputian Systems, which is developing micro fuel cells for use in wireless devices, has raised an undisclosed amount of debt from Hercules Technology Growth Capital, a publicly-traded investment group. We last heard from Lilliputian back in November, when it was reported that they had raised $30M from several major VCs.

MBA internship opportunity in cleantech venture capital

Expansion Capital Partners' San Francisco office seeks a current MBA student to serve as a Summer Associate (internship). The Summer Associate will work directly with the Principal and at times with the Partners of the firm to track, develop and evaluate investment opportunities, focusing primarily on deal generation, screening and diligence. This will be a full-time position based in San Francisco's Financial District.

The ideal candidate will have a financial or consulting background and an existing strong knowledge of clean technologies, preferably from experience in an entrepreneurial setting (not just from reading this site's archives!). Applicants should provide a resume and cover letter to yours truly via email.

Wednesday, February 08, 2006

Biofuels: DynaMotive and ASAlliances BioFuels

Biofuels continue to get significant investor attention, with two recent funding completions:
  • DynaMotive completed a $5M raise originally announced in December. The company uses proprietary pyrolysis technology to transform agricultural and forestry waste into BioOil. They recently announced licensing agreements to open two plants in eastern Europe.
  • ASAlliances BioFuels announced they have raised $148M in equity and sub debt to help financing the construction of three ethanol plants in the midwest. The funding consisted of $94M of equity and $54M of mezz sub debt, provided by American Capital Strategies, Laminar Direct Capital, US Renewables Group and Midwest First Financial.

ACS, ClearEdge, and XPV Capital

  • ACS Ltd., which manufactures emissions control equipment for use with vehicles such as RVs and tractors, as well as gensets, announced an undisclosed amount of funding from VenGrowth. The financing was led by VenGrowth's Mezzanine Finance Team and included investments by The VenGrowth Traditional Industries Fund Inc. and The VenGrowth III Investment Fund Inc.
  • Applied Materials' venture group (Applied Ventures) announced a $2M investment in ClearEdge Power, a silicon-based fuel cell startup in Oregon. As part of the transaction, Applied Materials has formed a strategic partnership with ClearEdge.
  • Canada's XPV Capital has announced to their LPs that they are forming a new $50M fund to focus exclusively on early-stage cleantech venture investments. The fund will specifically target investments in air treatment, water treatment, and enabling technologies in clean energy.

Monday, February 06, 2006

A123 raises $30M third round

Lithium-ion battery developer A123 announced today the closing of a $30M third round of financing. GE, Alliance Capital Management and FA Technology Ventures led the round, and existing investors Motorola, Qualcomm, North Bridge Venture Partners, Sequoia Capital, Massachusetts Institute of Technology, OnPoint, YankeeTek and Desh Deshpande also participated.

To date, the company has raised $62M. We mentioned their technology and progress back in November...

Saturday, February 04, 2006

Notes from Palm Springs

If there was any lingering doubt that the cleantech investment space is hot these days, attending this week's Cleantech Investors Summit event in Palm Springs dispelled it. There were well over 200 attendees for this event, and I'm guessing that the upcoming Cleantech Venture Forum in San Francisco will have even more buzz, given its track record...

Some quick thoughts and reactions coming out of the event:

• Ever wonder if there really is a "herd mentality" amongst VCs? Then you should have seen the flight down from SFO to Palm Springs on Wednesday morning. If the plane had somehow flown into a hillside, half of our industry would have been wiped out in one fell swoop. Imagine several dozen i-bankers and VCs, all wearing the industry standard "business casual plus a coat" uniform, all queueing up to get on the same flight, blackberries in hand. And of course, once the plane landed, all headed directly for the Hertz counter -- no carpooling, of course. Yours truly was no exception on any of the above, admittedly. And the flight back on Thursday was exactly the same. On the plus side, it was good to see everyone, both at the conference and on the flights!

• Overheard between two i-bankers on the flight down: "Yeah, we have a PIPE deal going on now in this space, and it really seems to be getting hot, so we thought we'd come down and check it out. Hey, as long as there're deals happening, got to strike while it's hot, right??"

• One of the more interesting speeches, among several interesting talks and presentations, was Don Paul's. As the CTO of Chevron, Don was able to speak to several interesting questions -- where is Chevron putting their R&D and investment efforts, how do they expect to bring new technologies to market, and have we reached "peak oil"? Some notable statements (as always, I'm not a reporter, so these are directionally correct but not 100% accurate):
The fact is, there's a finite supply of oil available. We can argue about when the production peak is... Some argue that we're at the peak now, on the other end of the spectrum you have Exxon Mobil saying it's probably 30 years away. I tend to come down in the middle somewhere, thinking that it's 20 years or so... One implication is that the future of energy is about diversification of energy sources, we're going to need every molecule and electron we can find.

How are these technologies brought to market? Start with someone's good idea, and someone invests some money in developing it. Then it comes time to build a pilot plant, spend $5-10M to build a plant that can produce one barrel per day. But then you want to build a world-scale plant? That will take billions of dollars. We're missing that intermediate step. That's one reason I'm a big proponent of a distributed system with smaller, precision-manufacturing plants closer to end markets. However, because of economies of scale, we still need to aggregate capital, and expertise in manufacturing to six-nines quality levels is also difficult to find.
• One impression from the corporate panel is that large companies appear to be moving back into making direct strategic investments in emerging technology companies (or alternatively, in venture firms with a similar strategic fit), after a bit of a period of retrenchment. As one panelist pointed out, while VCs get a lot of attention for their investments, it's very often the large corporations that end up bringing these technologies to broad market acceptance.

• Heard some pretty clearly expressed ambivalence among dedicated cleantech VCs about all the new attention being paid to the space. On the one hand, those I spoke with clearly welcomed strong cross-segment technology contacts and expertise (especially valuable when the clean technology in question is a cross-over with other technologies), as well as the presence of co-investors with deep pockets. On the other hand, some worried that the space could get too crowded... Interestingly, some of the more broad-based investors also mentioned concern about the rise of cleantech-focused funds:
"The fact that LPs and institutions are now specifically targeting cleantech helps the industry develop quickly... But it's also a challenge -- am I going to pay a 200% markup because I'm up against some new cleantech-focused fund in the market?"
(For myself, I tend to think that cleantech remains a long way from being overcapitalized relative to the huge markets and unmet needs, and thus am in the "welcoming all co-investors with open arms" camp.)

• As always, despite this being a "cleantech" event, panelists' and attendees' interests were clearly focused on energy technology. Also clear was the increased blurring between clean energy and other energy techs, mostly as mainstream energy investors have accepted alternative energy technologies as also fitting into their mandate: "We have invested in many major hydrocarbon sources, most of the major coal basins, in midstream production, etc. With cleantech, we see it as part of that effort."

• Matt Simmons, author of "Twilight in the Desert," is a really smart guy who gives a very entertaining and highly educational presentation about the timing of peak oil, and its implications for our economy. But I couldn't help thinking about "Expert Political Judgment" while he was talking, as visions of foxes and hedgehogs ran through my head...

All in all, it was a very worthwhile event (although I unfortunately had to miss major portions due to other work needs, and to catch that last direct flight), and it will be great to see everyone again at the Cleantech Venture Forum in a few weeks!

Let's talk peak oil and politics...

We're going to break an unwritten rule around here and mention a couple of highly contentious topics, "peak oil" and politics. Why are these topics generally off-limits on this site? Because while these are important topics for cleantech investors to keep in mind, they're covered very well by a lot of more knowledgeable authors elsewhere, and this site has always sought a "big tent" approach to the topic of cleantech investing -- it's a compelling investment area regardless of your political persuasions.

That having been said, this week saw these issues thrust front and center for cleantech investors, thanks to the State of the Union address ("America is addicted to oil"), the Cleantech Investors Summit (a broader post on the event is coming soon) where "peak oil" was a highlighted topic, and other media coverage that came out this week involving prominent investors. So let's take a look at a few such stories of note this week:
  • The President's now-famous line that America is addicted to oil, and his pledge to "replace 75% of our oil imports from the Middle East by 2025," certainly seems to have gotten a lot of attention (thanks in part to that line having been purposefully leaked earlier in the day, priming the media to grab onto it). At the event this week in Palm Springs, a common refrain was investors joking (?) about making big bets on ethanol now. But let's keep everything in perspective. A 22% increase in Federal spending on energy technologies is helpful, but is not going to make a huge near-term difference for many cleantech markets. And goals to be achieved in 20 years don't often lead to 3-7 year investment window impacts, such as many VCs care about. But on the other hand, it's a very important statement to hear the President make publicly, it is a strong signal of government policy direction going forward. And it will encourage the trend of large companies starting to act, regardless of current government policy, to get ahead of climate change issues. All of the above is why cleantech investor and entrepreneur reaction seems to have been pretty mixed. Readers of this site are invited to provide their own thoughts and comments...
  • The "peak oil" hypothesis has also gotten a lot of attention lately in the cleantech investor community and elsewhere. For those not familiar with the idea, "peak oil" is the theory that global oil production has, or soon will, reach its maximum levels, due to its finite supply (note: this doesn't say oil won't be available, just that it will be higher cost due to limited availability). As the CTO of Chevron, Don Paul, puts it: "Our economy is based around the idea that capital is expensive and energy is cheap. What happens when that gets switched?" The important thing for cleantech investors to take away is that, with some continued pushback, the concept appears to have been broadly accepted now, and the key question is no longer "if" but "when". Are we at peak oil now? Or will it be 20 or 30 years from now? And is it right to focus on peak oil, or should we also be thinking about "peak natural gas" and "peak coal", and what timings should we be considering for those? Even though venture investors tend to think about things in 3-7 year time windows, these are important questions to think about. Those looking for more information should check out the Energy Blog and Peak Oil News, as well as a number of books on the topic, such as Matt Simmons' "Twilight in the Desert". Readers of this site are also invited to discuss this topic, leave your comments below...
Okay, enough on those topics.

Getting back to topics more central to this site, it was interesting to note this Q&A with SunPower's Tom Werner (note the mention that he expects SunPower's silicon-based technology to achieve price parity with fossil fuels within 5-10 years), and given all the attention being paid to energy topics these days, it was also great to see this discussion of clean water technology -- its sometimes easy to forget, given all the hullabaloo, that cleantech investors care about clean water, clean manufacturing, advanced materials, and other investment areas that will be advantaged by emerging natural resource trends, not just energy generation technology.

[2/4 update: Big news, re: Tom Werner's Q&A from above, about Shell Solar selling off its silicon-based solar PV business this week. Note that they're holding onto their thin-film business...]

Wednesday, February 01, 2006

Brief sector updates on solar and nanotech; Poseidon raises $610k

  • Nanotech investments doubled over the last year, according to Small Times, with a major portion of investments going to later-stage companies (does this mean that exits are being delayed?).
  • Noticed that Poseidon Resources, a water tech project developer, recently raised $610k, according to a brief mention in this article. For more information on Poseidon, check out this article, or their website.
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