Tuesday, May 30, 2006

Some recent transportation innovations worth noting

While this site tends to focus on done deals and sectoral trends, it's important to also track developments at the innovation level, keeping an eye out for what's on the horizon in cleantech. Along these lines, it was worth noting a couple of intriguing transportation-related announcements last week:

1. A PV-powered engine for your car? No, this doesn't involve putting solar panels on your car's rooftop. Instead, these researchers at MIT have been looking into the idea of a white-hot filament heated by fuel, along with a filter for the light and a thermophotovoltaic electricity generation system, to provide electric power for your car. It's analogous to some hybrid vehicle designs (so-called "series hybrids") which run a small internal combustion engine (running at constant, and thus more efficient, speeds) simply to charge up an electric drivetrain's battery system instead of directly driving the wheels. Thus, this is essentially a way to enable efficient electric-powered vehicles with much longer range than currently available options by using fuel, instead of batteries, as the primary energy storage. The real innovation here appears to be the use of a filter to only allow useful wavelengths to pass through to hit the thermophotovoltaic device, while others are reflected back onto the filament to heat it up even further...

In the end, these "build a better engine" ideas come down to several factors: a) how efficient is it; b) how reliable is it; c) how expensive is it; and d) how much of a frightful transition would it require for the auto makers, drivers, and the rest of the transportation value chain. (Of course, for investors there are even more factors such as the management team, valuation, etc. But I digress...)

As to the first factor, efficiency, below is a picture courtesy of the DOE showing where the energy from gasoline in your car actually goes -- while only 15% of the energy goes toward doing things you want (making your car go, running the A/C), only about 60% of the energy is lost due to inefficiencies in the internal combustion engine. The rest are lost to other factors (friction, gears, etc.), some of which are resolved by electric motors regardless of the source of electricity (ie: regenerative braking, no power loss during idling, simplified transmission, etc.). So looking back at the claims by the MIT scientists that "in theory... efficiency could be as high as 40 percent or 50 percent", it's unclear how much of an efficiency breakthrough this is, depending upon how system-wide a figure the scientists are looking at. It does seem to add a layer of efficiency loss if you're burning fuel to make light to make electricity. And there are certainly other ways to provide juice for an electric motor.

On the other factors, no moving parts is a plus in terms of reliability, but it's too early to tell how this and the other real-world concerns would affect such an early-stage innovation if it were to be commercialized. This uncertainty is typical, and illustrates the challenges investors face when evaluating promising technologies at an early stage. It will be interesting to track the developments on this one.

2. Direct hydrogen-powered engines? It's a topic that's been talked about before, but this article claims that a company called Hydrogen Energy Center is getting ready to offer this as part of a true "flexible fuel" industrial-scale engine. The company's engines will run on several other fuels besides hydrogen, which is good, because as the article notes, there are a lot of obstacles to the use of hydrogen as a transportation fuel regardless of drivetrain technology. Most notably, there are the usual questions of "where's the hydrogen going to come from," and "how are you going to store enough hydrogen onboard, safely?" As the article notes, direct hydrogen combustion perhaps has the best chance of being useful as a fuel and technology for stationary applications where storage is less of an issue.

But on the topic of hydrogen storage comes this other news of a patent that has been filed around the use of tiny palladium-filled glass spheres as a storage medium for hydrogen, providing safety and density.

Of course, another critical issue is cost. Palladium, while less expensive than some other metals, is still not cheap. How much palladium would be required (and what manufacturing process could be used to cost-efficiently embed it in trillions of glass spheres) is unclear. This is all, of course, on top of a recent Popular Mechanics study showing that, out of all of the available options for powering a car across the country, hydrogen would be the most expensive -- more than 10x more expensive than just using electricity. Perhaps the above innovations will help solve this problem, as the study was based on currently-available hydrogen fuel cell technology (GM's Hy-Wire concept car)...

3. So why not just make electric cars, then? As this article mentions, batteries are a big obstacle. Currently-used nickel metal hydride batteries are heavy. As the article mentions, there's a lot of research being put into lithium ion as a potential alternative. But the ability for rapid charging and discharging is an issue, as is lifespan, as is cost, and as is heat (as any laptop user can attest). Which is why some are pinning their hopes on ultracapacitors instead of (or perhaps in addition to) batteries in vehicles with electric drivetrains. There's even talk of being able to use improved lead-acid batteries for hybrids. Given the obvious large-scale applications if anyone can ever solve the transportation-related energy storage issue, it's no wonder so many cleantech investors are making big bets in this market.

Thursday, May 25, 2006

Synapsense and Energy Innovations

Two deals to note:
  • Synapsense, which is targeting wireless sensors for use in a broad range of applications (we've discussed the applicability of sensors as an enabling clean technology before) announced a $1.5 - 2.0mm Series A led by American River Ventures ($1.25mm) with participation by DFJ Frontier ($0.25mm). Another $500k commitment is "on the verge" of being brought in.

Oorja Protonics raises $5.5mm Series A

Matt Marshall reported today that Oorja Protonics, a developer of alcohol-based fuel cells (perhaps for battery replacement/ mobile apps?), has apparently raised a $5.52mm Series A, led by Sequoia Capital. Matt also notes that it appears to be Sequoia's first sign of joining the cleantech investing community...

Zipcar, Blue Chip Energy, and some news items

Here's a neat article on the possibility of microbial fuel cells... An EBay for ecological investing?... Finally, a useful overview of cleantech, VCs and the China opportunity.

Q1: Another big quarter for cleantech investing

Tyler and Matt have the scoop:

According to the Cleantech Venture Network, cleantech venture investments in the first quarter totaled $513mm, in 67 deals the group identified. It's a small (but validating) increase on Q4 totals, and a whopping 53% increase on Q1 2005 figures.

As should be no surprise to regular readers of this site, energy dominated, with $357mm of the total. And without seeing the data yet myself (will link to it when available), I imagine there are also other energy-related deals that were categorized under other groupings in their survey -- has tended to happen in past such reports.

Just more indication that cleantech, and particularly clean energy, are red hot right now in the VC community.

And, given that overall VC valuations supposedly rose dramatically over the last quarter (now at an average of 64% increase over previous rounds, according to this survey), all this increased interest in cleantech that valuations are probably increasing in our sector as well.

Tuesday, May 23, 2006

Two nifty sites

Here are two interesting sites I stumbled across that are worth checking in with every once in a while (and are now being put in the Cleantech Investing blogrolls):
  • The World Resources Institute (an NGO I used to work for way back when) has a New Ventures program which works to help bring venture capital to sustainable enterprises in developing economies, and they have a website which highlights various companies, partners, and related news. Check them out.
  • Also worth noting is Cleantech Spotlight, which is pretty new, but (according to the author, Nick Allen) looks to highlight a new cleantech company every week. Check it out.
Everyone loves dealgen. Enjoy!

Monday, May 22, 2006

ReliOn's $20mm follow-on, and various followups

ReliOn, the PEM fuel cell manufacturer that was spun out from Avista back in 2003, announced a $20mm follow-on round from their existing investors (from a November 2004 $25mm round). Those investors include Oak Investment Partners and Enterprise Partners Venture Capital, Wall Street Technology Partners of New York, Chrysalix Energy of Vancouver, British Columbia, Seattle's Buerk Dale Victor, and Avista Corp. The total venture capital invested in the company to date is $57.5mm.

Some other follow-ups on previous items:

Thursday, May 18, 2006

Renewable Ventures gets sold, Gridpoint raises $16mm, Mascoma, and much more

It's difficult to keep up with everything in the cleantech space right now. Probably a good thing. Here are some items to note:
  • Renewable Ventures got sold to MuniMae. It's a bit surprising, given that RV (mostly involved in solar project finance) had just finished arranging a $100mm pool of capital back in February. Does this signify the potential beginnings of a period of fund acquisition in the cleantech space, as other investors look for ways to get a jump start on getting into the market? RV continues to recruit and hire, by all reports, so they're clearly still planning to be very active.
  • GridPoint announced a $16mm Series B, led by the Altira Group, and also including Contango Capital Management and Advantage Capital Partners, adding onto a large number of angel investors. We've discussed the company's home energy storage/ management appliance in the past, when they raised $9mm back in November.
  • Since about a dozen folks have forwarded around bits and pieces of the NYT special section on green business today, here's a handy link.
Other interesting tidbits: Sorry, Bob, "Enertech" is already taken. But Bob Metcalfe's post is well worth checking out for his perspective on the possibility of an "energy bubble"... Here's an interesting interview with a silly title... More evidence of large acquisitive players being active in the cleantech market... Here's a link to the pdf of E2's report on cleantech clusters (just for you, Matt Marshall)... Lastly, a solar IPO you may not have heard of...

Monday, May 15, 2006

Catching up...

Some assorted items of interest from the past week or so:

John Doerr really, really, really likes cleantech/"greentech." And so do I (self-promotion alert -- I particularly enjoyed the highlighting of Tiger Optics, one of Expansion Capital's portfolio companies, check them out). And so does Mark Huang of GE Commercial Finance (update: another self-promotion alert, mentions Agile Systems, another one of Expansion Capital's portfolio companies, check them out too). All joking aside, all three aforementioned columns do a great job of highlighting some of the current debates and discussions going on in the cleantech VC community:
  • How do you define "cleantech" in the first place? The latest PWC Moneytree survey data for Q1, for example, seems to have cleantech deals scattered across a lot of different categories (batteries under "Electronics/ Instrumentation", energy efficiency technologies under "Telecommunications", and of course a hodgepodge under "Industrial/Energy", etc.). Not picking on PWC Moneytree, it's actually a good illustration of the simple fact that "cleantech" remains in the eye of the beholder, as we've discussed here before.
  • What kinds of investment periods should be expected in cleantech? Is the impact of regulations and policies greater in this investment area than in others?
  • Is the solar space getting too crowded? Whether it is or isn't, what's next?
Toward that last question, there has been a lot of talk in the cleantech investment community over the past few days about the very successful IPO of Basin Water (up to $17 at time of writing). Does this mean VCs will now get serious about water tech? Also: The results from the Ignite Clean Energy contest were announced -- no surprise, three solar startup winners out of five total prizes. Guess Dan Primack was right after all. (Red Herring profiled top prize winner Stellaris for those interested -- more info here, too).

Meanwhile, in other news:
  • Another biofuels project got financed -- Galveston Bay Biodiesel, in a Series B by Contango Capital Management and Chevron Technology Ventures;

Wednesday, May 10, 2006

Just for fun

Here are a couple of fun items of note:

  • Using viruses to build the battery of the future? That's what some researchers at MIT appear to have been working on. Besides the intriguing virus angle, the article also serves to illustrate how much effort is being put into figuring out how to make batteries store more energy per weight. Lots of creative thinking in energy storage out there right now, and lots of investors interested...
  • ...And what more fun way to apply energy storage technology than in a souped-up electric-powered race car like the WrightSpeed. 170mpg (equivalent), but be honest, is that really why you want to take a test drive? I've seen the car in person (no test drive, alas), and it does look like fun...

Tuesday, May 09, 2006

SolarCentury and a new cleantech index on the NASDAQ

  • SolarCentury, a UK-based developer of rooftop solar systems combining both thermal and PV, completed a ~$10.3mm round of financing. VantagePoint Venture Partners led the round, which also included existing investors Scottish and Southern Energy. A conversion of $2.6mm of debt into equity was part of the round. The company reports they doubled revenues over the past year to nearly $30mm.

Israel Cleantech, UPC Wind, and solar follow-ups

Friday, May 05, 2006

Current Communications, BEN, Blue Ridge Numerics, and Prenova

Several energy efficiency-related deals over the last couple of days, including a couple of broadband-over-powerline (BPL) plays:
  • Current Communications announced a new $130mm third round of financing. New strategic investors include TXU, GE, EarthLink, and Sensus Metering Systems. Existing investors EnerTech (majority owner), Google, Goldman Sachs, Hearst, Duke Energy, and Liberty Associated Partners also participated. TXU is busy rolling out BPL using Current's systems, and EarthLink is the retail internet partner. Current last raised $100mm in their second round of financing less than a year ago. Clearly a lot of big players are making major bets on BPL becoming a "third pipe" into the home -- and as an enabler of two-way communications for metering and energy-using devices, BPL (and its simpler cousin "powerline carrier" or PLC) can help "demand response" and other cleantech applications gain more market traction.
  • Another BPL-related company, Broadband Energy Networks (BEN), which is connecting to BPL networks with energy management applications, announced they have raised $2.5mm of an anticipated $3.9mm Series A (the RH article is pretty confusing on the numbers, however, so this total could be wrong). 21Ventures provided $1mm in funding, CEO and Founder Lawrence Silverman provided $1.5mm, with $1.4mm still open in the round.
  • Energy management software/ solutions provider Prenova announced an inside round, which appears to have been less than $2mm (based upon the company's 2003 $15.5mm round and details in this press release -- note, opens a pdf). Existing investors include Frontenac, River Cities Capital Fund, and Austin Ventures.

Wednesday, May 03, 2006

Innovalight, Iogen, Ovation announce raises

Busy last couple of days:
  • Innovalight, which is developing silicon ink-based solar PV technology, announced a $7.5mm Series B, led by Harris & Harris. Existing investors Apax Partners, ARCH Venture Partners, Sevin Rosen Funds and Triton Ventures also participated in the round.
  • Iogen, which is developing technology to produce cellulosic ethanol from agricultural waste, took in $30mm in financing from Goldman Sachs. The company had previously raised significant capital ($20mm from the Canadian government, $100mm in "internal funding and funding from strategic partners" from Petro-Canada and Royal Dutch/Shell). Some indication of valuation is given by the fact that Goldman's stake is a minority ownership. Iogen is planning on breaking ground on a commercial plant based upon their technology sometime next year, with production beginning in 2009. The Red Herring article linked to above also has a nice description of the funding challenges facing capital-intensive new technologies like Iogen's...
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