Blog of Intellectual Capital

Here is a article from the VC blog at WSJ.

“At The Wall Street Journal’s ECO:nomics conference in March, famed venture capitalist John Doerr declared the clean-technology industry needs a “Netscape moment” – an IPO listing that will capture the public’s imagination and usher in a slew of other companies through an open gate to the public markets.

Several clean-tech investors were looking to solar company Solyndra Inc. as perhaps such a breakthrough. But the fact that Solyndra – which exceeded $100 million last year and has been selling panels briskly – couldn’t pull of an IPO, raises the question of what comes next.

The maker of thin-film solar panels, the first renewable-energy recipient of federal loan guarantees, cited “adverse market conditions” for its decision to pull the IPO. The move will make expansion more difficult for Solyndra, which will require hundreds of millions of dollars in capital to reach its goals.

Rather than persuade public-market investors to buy in, Solyndra opted to once again turn to its private backers for more cash, selling $175 million in secured convertible promissory notes to undisclosed existing investors. The company has already raised $970 million in equity from these backers, the second highest total ever among venture-backed companies.

A tepid IPO market is some reason to blame for Solyndra’s withdrawal. Public investors haven’t exactly embraced unprofitable, risky plays like Solyndra this year, no matter how promising. While Solyndra is selling its product and expanding, mounting losses and an auditor’s going concern statement in its IPO filing didn’t make anything easier for the Fremont, Calif.-based company.

Public investors may also be skeptical whether Solyndra can match up with publicly traded First Solar Inc., which also sells thin-film solar panels and is considered a trail blazer for the industry by many venture capitalists.

“First Solar is preventing the tech [solar] companies from going public,” said Stephen Chin, analyst with UBS AG. “None of these start-up companies like Solyndra, Nanosolar, have scale or large capacity. I think that’s the biggest hindrance. First Solar is hard to compete against,” he added. UBS owned more than 1% of First Solar shares as of end of May, according to a disclosure statement.

Indeed, Solyndra’s manufacturing costs are high at $4 per watt for the fourth fiscal quarter ended Jan. 2, 2010. First Solar, on the other hand, plans to have costs of 78 cents per watt by the end of this year. Solyndra appears to be selling at a loss, too, as its average selling price for the full year ended Jan. 2 was $3.29 per watt, down from $3.75 per watt a year earlier.

“If the more you sell, the more money you lose,” you can’t make that work, said Kevin Landis, portfolio manager for Firsthand funds, which have a stake in another solar CIGS company SoloPower Inc.

First Solar plans to have annual production capacity of about 2 gigawatts at the end of next year, compared to 300 MW promised by Solyndra. Its panels use copper indium gallium diselenide, or CIGS, as the semiconducting material, which has higher potential efficiencies than First Solar’s cadmium telluride.”

Read the full article here.