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The Key to Greentech IPOs: Government Backing

Posted in Board Of Intellectual Capital, boic, tagged , , , , , , , , , , , , , , , , on July 7, 2010| Leave a Comment »

Here is an interesting article on Cleantech/ Greentech IPO´s from Earth2Tech.

“Electric car maker Tesla Motors officially delivered the biggest venture backed IPO of the quarter, raising $226 million, according to numbers out this week from the National Venture Capital Association and Thomson Reuters. What made the public debut different from some of the other venture-backed IPOs that happened this quarter? Well, among a variety of things, last summer Tesla managed to score a coveted $465 million in loans from the Department of Energy.

The link with Uncle Sam likely helped allay investors fears over supporting a risky company that has yet to make a profit and doesn’t plan on making any profits for the next two years. Tesla isn’t the only greentech IPO hopeful backed by the government. In fact, a large number of the greentech companies that have been gunning for the public market, or have recently gone public, have significant government support.

Take lithium ion battery maker A123Systems. The venture-backed company raised $371 million in its public debut in 2009, which was the largest IPO of the year, and represented about a third of the overall IPO market that year in terms of dollars raised. A123 secured a sizable $249 million grant from the Department of Energy last summer.

Before Tesla, the venture-backed greentech IPO hopeful of the hour was solar panel maker Solyndra, which hosted a speech by President Obama in May. Last year the company won a whopping $535 million loan guarantee from the U.S. Department of Energy, and that loan guarantee translated into a loan from the U.S. Treasury. However, despite the government support, investors’ appetites for solar, and Solyndra’s, IPO just wasn’t there and Solyndra ended up ditching its IPO plans last month, in lieu of raising funding from its current investors.

This week, shortly after Tesla’s IPO, an investor behind another venture-backed and government-supported electric car maker suggested it will also one day go public. That would be Fisker Automotive, and Ray Lane, the Kleiner Perkins venture capitalist and former Oracle executive, said this week that “Certainly we would plan to sell shares in the public market once the Karma is on the road and we have visibility into the revenue plan.” In April Fisker closed a $528.7 million loan agreement that will be used to help the startup launch its luxury plug-in hybrid model and set up manufacturing in Delaware for a line of lower-cost plug-in hybrids.

Smart grid company Silver Spring Networks, which has been planning an IPO for the last six months, might not have direct government support, but the close to $4 billion in funds for smart grid projects from the U.S. stimulus package has been a major boon to its utility customers. The Silver Spring folks told me in an email last year that the funding “will go a long way toward accelerating and broadening deployment of the critical smart grid infrastructure.” Silver Spring is working with stimulus award winners Florida Power & Light, Oklahoma Gas and Electric, Sacramento Municipal Utility District, PHI Holdings (including PEPCO, Atlantic City and PEPCO DC) and Modesto Irrigation District.

Other rumored greentech IPO hopefuls (here’s Earth2Tech’s 10 Greentech IPO Picks) that have some sort of government support include solar thermal developer BrightSource Energy and Smith Electric Vehicles. BrightSource received a commitment earlier this year from the Department of Energy for a $1.37 billion loan guarantee to build out BrightSource’s Ivanpah solar project, which is set to be the first new solar thermal power plant built in California’s deserts in 20 years. Smith Electric Vehicles won a $10 million DOE battery grant last summer, and added $22 million under the same program in March.

Of course, not all of the greentech IPO candidates are under the wing of the U.S. government. Biofuel developer Amyris is planning a $100 million IPO without direct government support. But the odds are if you see a greentech startup hit the Nasdaq it’s got Uncle Sam in its corner.

The reality says a couple things about the greentech industry and the IPO market in general. First the IPO market for venture-backed startups is actually relatively weak right now. A significant amount of companies have actually pulled their IPOs in recent weeks and that extra bit of confidence via government support can help push these plans onto the public markets (Solyndra as the exception).

Another issue is that many of the government loans, grants and loan guarantees given to these greentech startups come attached with a cost-sharing requirement over a certain time frame. To unlock the full extent of the government funding companies like Tesla and Solyndra have to raise their own matching funding, by a certain date, and many are turning to the public markets for that.”

Read the whole article here.

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Could consumer ignorance hurt mobile advertising?

Posted in Board Of Intellectual Capital, internet, Investments, Market research, Mobile, mobile 2.0, Mobile Phone Usage, Strategy, Technology, Wireless, Wireless 2.0, tagged , , , , , , , , , on July 6, 2010| Leave a Comment »

By Tony Fish – member of Gerbsman Partners Board of Intellectual and principal at AMF Ventures. Visit his blog at: http://blog.mydigitalfootprint.com

Summary

Virtually unlimited mobile usage tariffs means that advertising is perceived as free from the users perspective, as there is no additional cost of bandwidth to the user.  These tariffs have lead to an unprecedented growth in mobile applications and the emergence of  a new eco-system. However,  “all you can eat” pricing models for mobile have become increasingly risky with the advent of new devices and operating systems from Apple and Google.  With the prospect of a return to a pay per something, users may change their view of “free” advertising and this could lead to a change in behaviour, as they will be un-willing to pay for the bandwidth for the advert.  Whilst this may seam ridiculous to anyone who understands, explaining to the user they have the wrong perception or that this is not the reason for a significant monthly bill, could be difficult.  This viewpoint therefore opens the debate; “Could some selfish business decisions be destroying the mobile eco-system that has just been created and what scenarios are worth considering?”

Unlimited Growth

We have all benefitted from the introduction of unlimited mobile tariffs.  Voice, SMS and data usage has exploded.  Economically it made sense to the operator as they had spare capacity and in reality “unlimited” has caps but these caps are set so high that a user was unlikely to reach them.

Mobiles (smart phones) have evolved and today, web site and applications (inc games) for mobile are now built with an advertising model in mind and with this has come the download requirements of, in some simple cases, banner ads to some thing complex such as video and multimedia.  With network improvement, the ability to deliver a near web experience, advances in connection management and now the iPad, users can find it easy to get close to, or pass their “unlimited” data caps.

Mobile applications driven by adverts work and the application method of delivery made up for a number of early shortfalls in network constraints and mobile web browser capability. However, due to the improved experience and performance of the mobile there are now less reasons for a Brand to have a specific mobile version.  However, in this move adverts are also served in full form from the web to the mobile.  This transition will become more important as Apple looks to force applications to use their own iAd serving technology and analytics.  These forced change are likely to speed up the migration from mobile specific application to webapp – just adding a web address and icon to the mobile desktop and also removes the dependence on apps stores as the controlling point.

So what has changed?

Apple launched OS4 with a 7th temple, which is the ability to deliver a fabulous advertising experience as “most of it sucks”.  The move is to deliver emotion and interactivity as this will help the developer community who want to build advertising revenues in exchange for free apps.  This advertising experience does come at a cost – bandwidth. OS4 also introduces background processing (multitasking), “yippee!” says the developer. However this means that the phone can hack thought the battery really quickly and chat to the network constantly.  Pushed updates become streaming.

Changes to the OS and how much data phones require for a great experience mean that the unlimited data package become very attractive to the user and advertiser as they don’t care about bandwidth, developers love it as they can deliver the real time applications and services they want for mobile. However, for the operators who are already struggling with capacity, this becomes a real headache and introduces value chain conflicts.

Implications

If the operators choose, and the evidence is currently pointing to this fact, to remove from the market unlimited packages, or such a high cap it is perceived as unlimited and lean back towards some form of pay-by-how-much-you-eat model then there could be some significant changes to the market as the users, device and applications guys try to reduce a swing to a doom loop scenario.

Here’s the crunch.  For those reading this we can find arguments why all of the above is not a concern, however, the issue may not be the reality of the situation we find ourselves in, but from the user perception, it could be very real.  If the user believes that there is a cost, irrespective of reality; they may change behaviour!

The simple newspaper headline that reads “Your paying for advertising” is difficult to counter with the argument that informs a user how big an advert is in bytes and that there is a trade for free services.  If the reason for adverts is interactivity and engagement then a technical explanation may not be that useful or that someone is exploiting your data to sell you more.

Behavioural or targeted adverting depends at some level on understanding the user which is an output from the analysis their data – My Digital Footprint.  If users find that the real monetary cost of sharing that data is too high, it kills the input.  If users find that the real monetary cost of engaging with ads is too high, it kills the value.

Given that eco-systems require trusted players who can balance risk and reward together and be reliant on complex inter-dependences; mobile is no different.  However, it would appear that some of the players are trying to play for themselves rather than the community.

Scenarios to ponder over coffee

  1. Restrictive – in this scenario the user decides to restrict their use and applications to focus on a few that are a priority and will not experiment or discover.  This could have a significant impact on social media tools and applications.
  2. Blockers – in this scenario the user decides that they are unwilling to pay for the bandwidth and introduces a blocker service to prevent their costly bandwidth being used.  This in turn destroys the fee advertising model and an outcome could be that the user ends up paying for applications.
  3. Selective – in this scenario the operator decides to become selective about which handsets can have unlimited (capped) data plans and which handsets are forced to have a PAYG data pricing model.  This forces users into a choice and device manufactures start to work with the operators to produce devices in tune with the network to gain a competitive advantage.
  4. Side-Load – in this scenario PAYG could lead to more applications being downloaded by sideloading on the PC or by WiFi. If so, developers could be affected in ways that are hard to predict. But it may affect apps being advertised on the device.
  5. Doom loop – in this scenario the operator changes the pricing and this in turn creates all the dis-benefits for the advertisers, device guys, applications developers and users.  Mobile slows and mobile operator valuations dive.
  6. Intelligence – in this scenario the middleware and platform companies work with the operators and seek out methods and processes to compress, reduce, focus, profile and select data and services that should use the limited wireless network, that is expensive.  Can data/ ads be cashed locally on the device and selected as needed or side load them using wifi or other alternative networks, or put on hold until bandwidth cost is not an issue.
  7. Advertising pays for the bandwidth – a somewhat difficult scenario to comprehend, but in this scenario the advertiser takes on the cost of the bandwidth.  However this is full of complex conflicts such as – I want to deliver the best ad, but it costs to much.
  8. No change – in reality – this is not a scenario.

Reality check

Those reading this know that ‘most’ mobile advertising is very bandwidth lean, as it a blend of:-

i)  an invitation with the consumer to interact, normally in the form of a banner. The reality being that for most consumers most of the time, this is likely to be negligible in terms of cost across a month.

ii)  a landing page, which they land on if they click on a banner – again negligible.

iii)  call to action at the landing page, which unless it involves rich media (eg video), is also likely to be small in terms of bandwidth

We know that users respond differently to ads and services on a mobile to the web but it is possible that the Apple OS4 interruption of advertising will be heavier on bandwidth, however, over 50% of iPhone ads are viewed over WiFi (2010) probably driven by speed as opposed to cost reasons. One could postulate that this trend would therefore be accelerated with the re-introduction of pay-as-you-go pricing!

All that said, users are users and their perception is how we need to live our business life – from their view point not ours.  Reflecting on the original question; “could consumer ignorance hurt mobile advertising?”, one could say this is the wrong question and it should be “is the mobile eco-system strong enough to defend itself against selfish desires of certain key players?”

If you would like to chat about the opportunities that digital footprint data brings, especially from the perspective of mobile and real time feedback, please contact me at tony.fish@amfventures.com. The book is free on line at http://www.mydigitalfootprint.com/ or you can buy it direct from the publisher at the web site. There is also a summary and a eReader/ Kindle version.

We hope that our Viewpoint improves awareness, raises questions and promotes deliberation over coffee. We will respond to e-mail, text, twitter or blog comments. http://blog.mydigitalfootprint.com

Kind regards,

Tony Fish

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U.S. Debt and the Greece Analogy

Posted in Board Of Intellectual Capital, tagged , , on June 28, 2010| Leave a Comment »

Article from WSJ.

“An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.

Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

The roots of the apparent debt market calm are clear enough. The financial crisis, triggered by the unexpected default …”

read the full article here.

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Andreessen Horowitz To Win The Foursquare Investor Badge

Posted in Board Of Intellectual Capital, boic, Business models, Economy, FaceBook, google, Investments, Market research, Microsoft, mobile 2.0, Social Networks, Strategy, Technology, Venture Capital, Web 2.0, Wireless 2.0, tagged , , , , , , , , , , , , , , , , on June 27, 2010| Leave a Comment »

Here is a good Techcrunch article about Foursquare.

“A months long fundraising process for Foursquare is in its last stages, we’ve heard from multiple sources, and Andreessen Horowitz looks to be preparing to check-in to Foursquare to take an investor badge.

The company has delayed committing to new venture capital as they considered buyout offers – negotiations went deep with both Yahoo and Facebook, and possibly Microsoft. The Yahoo discussions ended weeks ago, and Facebook passed on an acquisition earlier this week, we’ve heard.

That means the company is raising that big new round of financing. And a slew of venture capitalists, including Accel Partners, Andreessen Horowitz, Khosla Ventures, Redpoint Ventures, Spark Capital and First Round Capital were all rumored to competing heavily for inclusion despite the $80 million or so valuation, say our sources.

Andreessen Horowitz, despite rumors that they were pulling out of discussions with the company weeks ago over concerns that too much information was leaking to the press, is the last venture capitalist standing. The fact that founding partner Marc Andreessen is on the board of directors of Facebook, a key partner or competitor of Foursquare, may be the factor that put them over the top.

Existing investors OATV and Union Square Ventures will also participate heavily in the new round, we’ve heard. In the meantime they’ve likely already loaned additional capital to the company.”

Click here to read the original post.

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Viacom copyright suit against YouTube dismissed

Posted in Board Of Intellectual Capital, internet, Market research, Marketing, mobile 2.0, Strategy, Technology, Web 2.0, tagged , , , , , , , , , on June 24, 2010| Leave a Comment »

Here is an article from SF Gate.

“A federal judge dismissed Viacom Inc.’s landmark copyright lawsuit against YouTube on Wednesday, a major victory that potentially reinforces legal protections for a wide array of online companies.

The decision doesn’t necessarily spell the end of a legal drama that’s already played out for more than three years, because the New York media giant promptly promised to appeal the decision. If ultimately upheld, it may also make it more difficult for content creators to protect their work in the digital era.

The $1 billion suit was widely viewed as a test case for the safe harbor provisions of the Digital Millennium Copyright Act of 1998. The law states that Internet sites, hosts and providers generally aren’t legally liable for the behavior of their users, as long as they remove infringing or illegal content when properly notified.

In this case, YouTube users allegedly uploaded tens of thousands of unauthorized copyrighted clips from Viacom-owned television shows like “The Colbert Report” and “South Park.” The owner of MTV and Comedy Central sued YouTube in March 2007, arguing that the San Bruno company knew the clips were posted without permission and failed to take them down.

In court filings, Viacom argued that YouTube fueled its meteoric rise by fostering piracy, and cited a series of e-mails that suggested its co-founders were well aware of copyrighted material on the site. Largely because of YouTube’s rapid growth, Google Inc. bought the company less than a year after it was formed for $1.65 billion.

Obligations met

In the 30-page summary judgment issued Wednesday, however, Judge Louis Stanton of the U.S. District Court for the Southern District of New York rejected Viacom’s argument that YouTube had an obligation to remove material because of a “general awareness” that unauthorized content was posted on its site. He said the protections of the digital copyright act aren’t dependent on a publisher monitoring its service, as long as it responds appropriately when notified of copyrighted content by rights holders.

He added that YouTube had met these obligations, noting that when Viacom asked that it take down about 100,000 videos in early 2007, virtually all of them were removed by the next business day.

In granting YouTube’s motion for summary judgment, Stanton essentially said Viacom’s legal arguments were too weak for a trial to proceed.

“In the main, it’s a victory for innovation,” said Jennifer Urban, director of the Samuelson Law, Technology & Public Policy Clinic at UC Berkeley. “It’s a victory for the companies that are creating new kinds of technologies … that allow people to speak and create on the Internet.”

She added that it clearly places the onus on content owners to track and request the removal of unauthorized uses of their works, which is precisely what worries many media companies. Monitoring the Internet for infringing uses of large catalogs of movies, television shows and music is an enormous and never-ending challenge.

“We believe that this ruling by the lower court is fundamentally flawed and contrary to the language of the Digital Millennium Copyright Act, the intent of Congress, and the views of the Supreme Court as expressed in its most recent decisions,” Viacom said. “We intend to seek to have these issues before the U.S. Court of Appeals for the Second Circuit as soon as possible.”

Content partnerships

Since the case was filed, YouTube has entered a series of partnerships with major content companies. It appeased them largely by building a sophisticated tool that detects and identifies copyrighted media.

The Viacom suit covered content on the site only before the Content ID tool was put in place in late 2007. The media company participated in tests of the system, providing thousands of content files, according to documents that were unsealed in the course of the lawsuit.”

Read more here.

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