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Posts Tagged ‘cleantech’

Here is some interresting pointer around Cleantech and Investments from Techpulse 360.

“U.S. venture firms are taking a more circumspect view of clean-tech investing. Less flash, more focus on profits.

That could lead to more start-ups trying to build businesses with less money.

According to a recent survey, substantial sums of money continue to flow into the industry. Ernst & Young reported Monday that $2.6 billion went into clean-tech start-ups last year, a noticeably more optimistic assessment than last month’s MoneyTree survey, which posted a figure of $1.9 billion. The higher sum suggests VCs were significantly more active last year than may have been thought.

The E&Y work also uncovered a second detail that didn’t show up in the MoneyTree study – which was conducted by PricewaterhouseCoopers, the National Venture Capital Association and Thomson Reuters.  While investment dollars fell 45 percent in the fourth quarter, the number of deals were up – 21 percent to 62. More deals, smaller sums of money per company, more room for profits.

The MoneyTree work found that the number of deals in the quarter fell to 47 and that overall dollars declined 58 percent.

It is hard to know which of the surveys is more accurate. But the prospect of venture capitalists funding more companies at lower dollar values is interesting to contemplate. It suggests funds are seeing clean-tech investing more like they see information-technology investing: put a little money in, expect a lot back.  This prospect may encourage more VCs to take part.”

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Here is an interresting article from Seeking Alpha.

“By Rob Day

Haven’t had much time to go through the various recent cleantech IPO filings, and so haven’t talked about them much. Also just generally hoping they do well, for the sake of the overall industry.

But in a meeting today someone put up some stats that were pretty sobering.

Taking a basket of 4 high profile recent IPOs and filings, the total across the four companies was:

– Trailing twelve month revenues = $319M

– Trailing twelve month EBITDA = -($343M)

– Total venture dollars put into all four companies to date = approximately $1.5B

Like I said, I hope all of these companies do well and grow into great companies. But this type of profile for IPO isn’t the norm. So you have to wonder about it.

Someone today mentioned that they think these companies have to IPO now because they need yet more capital and the private equity world is tapped out. I disagree, I think companies with prospects like these would be able to raise more capital, if not from traditional VCs, then from non-traditional private equity players. Cleantech private equity is down, but far from tapped out.”

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Here is a Cleantech article from Mercury News.

“In other tech revolutions of recent decades, Silicon Valley became the uncontested global leader. The region’s ability to innovate its way to the top in cleantech, though, is far from guaranteed. Competition is fierce and global, with trillions of dollars at stake.

One of the valley’s greatest challenges comes from here. China’s drive to be a dominant power in the emerging global cleantech industry was on display one recent morning on the campus of the nation’s third-largest solar-panel maker, Trina Solar. New assembly-line employees, in an exercise designed to instill discipline, marched military-style around the grid-like campus, chanting responses to a drill leader dressed in army fatigues.

But China’s ambitions in cleantech reach far beyond piecing together solar panels. The central government has committed more than $100 billion a year to green technology research. It also has put in place incentives to create markets for everything from electric cars to rooftop solar water heaters to jump-start homegrown cleantech companies.

Provincial and local governments also are investing heavily in cleantech. Leaders in Jiangsu Province, where Trina Solar is located, are placing big bets on the solar industry, inspired by the municipal government of Wuxi. That Jiangsu Province city financially backed Suntech Power, now a global solar leader.

“China is moving very aggressively,” U.S. Energy Secretary Steven Chu said during a visit to Google’s Mountain View headquarters last fall. “They want to be a leader in this new industrial revolution.”

A group of valley tech executives, including former Intel CEO Andy Grove, recently sent a letter to Chu urging the energy secretary to “sound the alarm bell to make America aware — clearly and unequivocally — of how rapidly other nations, particularly China, are moving on clean energy.

“Unless we move quickly and commit substantial resources on a sustained basis, we risk becoming an energy also-ran, and risk developing a new dependency,” said the letter, also signed by Michael Splinter, CEO of Applied Materials, and John Doerr, a partner at venture capital firm Kleiner, Perkins, Caufield & Byers.

They urge the government to provide financial assistance to clean energy industries, including incentives for replacing polluting power plants with renewable sources of energy.

U.S. is lagging

Currently, only five of the world’s top 30 companies in the solar, wind and next-generation battery markets are based in the United States, according to John Denniston, also a partner with Kleiner.

U.S. government incentives — such as tax breaks and a regulation requiring utilities to buy power from solar and wind energy companies — were slowly eliminated in the 1980s after helping California become a global cleantech leader, said Ryan Wiser, a scientist at Lawrence Berkeley National Laboratory. Around the same time, Denmark, Germany and Spain — whose governments adopted policies and incentives to jump-start cleantech enterprises — were emerging as global leaders.”

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Here is a good VentureBeat article.

“Now that 2009 is over, we can add up the numbers on how much venture firms invested in startups during all of 2009 — and, well, it was a lot less than in the past. Over the course of the year, VCs invested a total of $17.7 billion in 2,795 deals, the lowest total since 1997, according to the MoneyTree Report from the National Venture Capital Association and PricewaterhouseCoopers.

On the bright side, the worst hit came from numbers that we’ve already reported on, since investments really plummeted during the first half of this year. Funding went up in the third quarter, and more-or-less held steady in the fourth. The amount invested went down from $5.1 billion in the third quarter to $5.0 billion in the fourth quarter, but the numbers of deals went up from 689 to 794. So VCs were making smaller bets, but they placed more fo them. Another reason for optimism: There were more seed and early-stage deals in Q4 than in any other quarter this year, so new ideas are still getting money.

Two of the industries we spend a lot of time covering at VentureBeat took a big funding hit in 2009. Internet-specific companies received $2.9 billion dollars, down 39 percent from 2008. Cleantech fell even further to $1.9 billion, a decline of 52 percent. Meanwhile, VCs put more money into biotech ($3.5 billion) than any other sector, and even then, biotech saw a 19 percent drop from 2008.

NVCA President Mark Heesen acknowledged the drop in a statement released with the report, saying, “The venture industry had no choice but to slow the investment pace in 2009.” But he also offered an optimistic view of the year to come.

“Now that the economy has begun to show signs of improvement, we expect to see dollars flow more freely back into those sectors that offered the most promise before the recession began — clean technology, life sciences and IT,” Heesen said. “The seed and early stage pipeline needs replenishing across all industries and the health of the startup community in the next decade will be dependent upon more robust first-time financings. 2010 should be the year to begin that process in earnest.”

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Here is a prediction posted by Peter Nieh from Lightspeed posted at Renewable Energy World.

“Lightspeed has invested across several cleantech areas, including solar (Stion), biofuels (LS9, Solazyme), clean coal (Coaltek), LED lighting (Exclara), and energy storage (Leyden Energy, f/k/a Mobius Power). Here are some of our cleantech predictions for 2010:

1. There will be increased availability of equity, debt, and project finance capital, along with an increased flight to quality.

Despite 2009 being a slow year for venture capital firms raising funds (Q3 featured the fewest number of VC firms raising money in 15 years), the cleantech category appears to have drawn continued commitments.  Several domestic firms raised large cleantech-focused funds earlier this year.

Internationally — from China to Singapore, India to South Africa — a number of local venture and private equity firms are now raising multi-hundred million dollar funds to target cleantech investment.  As such, the global pool of equity capital targeted at cleantech will be greater in 2010, as investors continue to look at the sector as a source of investment opportunity.  The emergence of the debt markets from the depths of the fallout from late 2008 and the growth in capital flows from an improved stock market should also increase the availability of debt, tax equity, and project finance capital.

Despite the rise in availability of capital in 2010, investors will likely remain cautious.  We expect a larger share of dollars to go into emerging leaders and high-potential portfolio companies, as the number of new companies funded in first-time investments grows more moderately.  Larger funds may preserve capital to make more substantial bets in later-stage, “winner’s circle” companies.

2.  Massive project deployments and manufacturing capacity growth will be undertaken, as winners and losers become more apparent.

In 2010, we expect a number of prominent VC-backed cleantech companies to be tested, as they emerge from R&D and initial customer acquisition and move into full-scale production and/or deployment mode.  Some companies will rise to market leadership, while others may fall, as the myths and reality of their technology, competitive edge, and ability to scale come to light.

The “shakeout” will likely impact the sectors that have seen the most investment in recent years, such as:

  • Solar: Many up-and-coming solar manufacturers have made bold claims about their capabilities.  As these companies start to ramp their manufacturing capacity, their validity of their claims on efficiencies, yields, cost economics, capital efficiency, and field reliability will become more readily apparent.  Companies will find it much more difficult to “scale first, optimize later,” as pressure on cash reserves increase significantly.
  • Smart grid: As some of the massive project deployments with nationwide utilities roll out, whether new technologies can truly scale to millions of endpoints cost effectively and reliably will become clearer.  The utilities will also better judge the extent of the value created by the deployed networks and how far it extends beyond advanced metering into areas like demand response, distribution automation, and network management.

3. Momentum in plug-in hybrids and electric vehicles to continue, as a greater variety of vehicles starts to arrive to market.  Electrical storage will be the key enabling technology.

Nearly every major carmaker claims it will launch a plug-in hybrid electric vehicle (PHEV) or all-electric vehicle (EV) some time between 2010 and 2013, as concept cars start to become production models.  Notable target launches for 2010 include the Chevy Volt and Nissan EV-02.  Numerous startups will also look to enter the market, despite the challenges in raising the funding needed to compete in the automobile industry.

Another trend to watch in 2010 will be an increased focus for fleet operators to consider adoption of HEVs and PHEVs, as the industry looks to rebound from the downturn and retire more of their aging fleet.  Adoption will still be early, but sustainability initiatives and new emissions regulations should help.

The key enabler for the HEV and PHEV revolution will continue to be the battery technology.  While established companies like Sanyo, LG, and Hitachi are all attempting to adapt their lithium-ion battery technology for the automotive market, limitations with traditional chemistries have made it difficult for a clear victor to become apparent; startups have an opportunity to disrupt the market and become alternatives for OEMs.

For example, Leyden Energy (formerly Mobius Power, a Lightspeed portfolio company) is bringing to market Li-ion batteries that offer the high energy density that is critical for EVs, while providing a high degree of safety and long cycle life over a wide operating temperature range.  We expect there to be some healthy competition and progress made here in 2010.

4. 2010 could see several public exits from some of the emerging leaders; consolidation, M&A, partnership, and JV activity expected to grow

With the IPO markets opening a crack in mid-2009 after nearly a year-long drought among VC-backed companies, investors appear cautiously optimistic about some public offerings in the cleantech area in 2010.  We expect that IPO demand in this sector will be driven by factors like the success of the A123 offering (although the stock has come down 35% from its high and stabilized at where it opened in September 2009) and the scarcity of quality cleantech public companies.

Consolidation and vertical integration in areas like solar and biofuels will continue – many involving distressed companies that can no longer support the high cost of their assets and debt load.  A number of solar M&A deals were announced in 2009, including First Solar acquiring Optisolar for $400 million and MEMC acquiring SunEdison for $200 million.

A number of biofuels companies have been active in the last couple of years developing strategic partnerships and joint ventures in order to speed up their market entry.  LS9 and Solazyme (Lightspeed portfolio companies), for example, have teamed up with established giants like Chevron, Proctor & Gamble, and the U.S. Navy to further their development efforts.

We expect to see these types of transactions and relationships to continue in earnest in 2010, as large companies seek ways to tap into startup innovation, and startups seek ways to scale up in more capital-efficient fashion.

Peter Nieh is Managing Director and a founder of Lightspeed, covering the areas of cleantech, software and the Internet. He has twelve years of venture capital experience and seven years of operating experience. Prior to Lightspeed, Peter worked in business development and product marketing at General Magic, a startup that before the emergence of the Web pioneered the development of e-commerce and electronic media services by partnering with the world’s largest telecommunications service providers and consumer electronics companies. He also managed Acer’s portable PC business in North America, where he launched the company’s first laptop and notebook PCs. Before Acer, Peter was a strategy consultant at Bain & Company where he worked predominately with high-technology clients on product, sales and distribution strategies. While an undergraduate at Stanford, he worked at Apple Computer, where he helped to develop the power management system for Apple’s first portable computer.”

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Here is an article from earth2tech.

“Will 2010 be the year for greentech IPOs? When lithium ion battery maker A123Systems successfully debuted on the Nasdaq back in September, there was much speculation that the move would ready the market for a following of greentech IPOs. The notion seemed over-enthusiastic then, but three months later solar power startup Solyndra has registered for an IPO, which will likely happen in 2010, and we’ve heard rumors that Tesla is plugging away at its S-1 (Reuters also reported an upcoming Tesla IPO).

Then there’s Silver Spring Networks, which just raised $100 million and looks like it’s getting to that stage where it’s too big to be acquired but will need more financing to compete in the smart grid infrastructure market. Silver Spring isn’t commenting on any IPO rumors, but it is clearly one of the best candidates in the greentech world. If these three — Solyndra, Silver Spring and Tesla — do go public in 2010, it’ll make investor Steve Westly look like a pretty solid market forecaster — he predicted in May that these three would go public by early 2010 and he’s already good for one out of the three.

Out of any of the venture capital investment sectors, greentech has the most bullish outlook in 2010 from a VC standpoint. According the National Venture Capital Association, more than half of a group of venture capitalists surveyed predicted that clean technology would see higher investment levels in 2010. According to a report by PricewaterhouseCoopers, venture capital investing in cleantech already rebounded sharply in the third quarter of 2009 to $898 million in 57 deals, up from $475 million in 49 deals in the second quarter of 2009.

The IPO market in general is also looking better to VCs. VCs surveyed by the NVCA are predicting “a mild improvement” in the number of venture-backed IPOs overall in 2010, with 74 percent of respondents saying they think there will be more than 20 IPOs in 2010. However, according to this Reuters article, greentech companies’ offerings represented only a small portion of the overall U.S. IPO market in 2009, ranking fifth by dollars raised in 2009 in the IPO market, and accountng for 8.5 percent of issuance by companies going public in 2009.”

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Here is an excellent blog entry from Mind The Bridge.

“The American Recovery and Reinvestment Act, passed last February 2009, pours over $65 billion into renewable energy, energy efficiency and greentech financing of which 6.5 billion for R&D. It is a real “Green New Deal”: The most significant effort in public spending in science and technology after the launch of the Apollo Program. And «it only costs the equivalent of a couple of months in Irak» as a blogger commented on the New York Times website. A big part of these dollars is already profiting Silicon Valley start-ups and research centers, which are leading the way through future technological development.”

It continues…

“The most important incentives deployed by the Stimulus Package are the following:

  • A large sum for energy efficiency, including $5 billion for low-income weatherization programs; over $6 billion in grants for state and local governments; and several billion to modernize federal buildings, with a particular emphasis on energy efficiency.
  • $11 billion for “smart grid” investments.
  • $3.4 billion for carbon capture and sequestration demonstration projects (also known as “clean coal”).
  • $2 billion for research into batteries for electric cars.
  • $500 million to help workers train for “green jobs.”
  • A three-year extension of the “production tax credit” for wind energy (as well as a tax credit extension for biomass, geothermal, landfill gas and some hydropower projects).
  • The option, available to many developers, of turning their tax credits into direct cash, with the government underwriting 30 percent of a project’s cost.

For more details, I found the DSIRE database very useful to navigate the complex space of federal and state incentives for renewables and efficiency.”

In Silicon Valley, the following companies are eyeing these funds.

“Renewable Power Generation : Thin Film Solar photovoltaic
Solyndra is the first company to receive an offer for a U.S. Department of Energy (DOE) loan guarantee within the Stimulus Package. Solyndra, a Fremont, California-based manufacturer of innovative cylindrical photovoltaic systems using thin film technology, will use the proceeds of a $535 million loan from the U.S. Treasury’s Federal Financing Bank to expand its solar panel manufacturing capacity in California. Also in the thin-film sector, Heliovolt is looking into the Stimulus Package for the development of its technology and production capacity. It is a CIGS thin-film PV panel manufacturer that uses a fraction of semiconductor material used in traditional silicon cells, significantly slicing costs while at the same time achieving performances comparable to traditional silicon cells.

Transportation: Electric Cars and Biofuels
Tesla Motors, Inc. is awaiting word on a $350 million loan application to the Department of Energy that would allow the electric carmaker to build the Model S sedan, which is expected to cost $57,400. Tesla is a Silicon Valley automobile startup company focusing on the production of high performance, consumer-oriented battery electric vehicles. In the biodiesel space, Aurora Biofuels uses proprietary technology developed at the University of California at Berkeley, to produce biodiesel feedstock from microalgae. Based in Alameda, California, Aurora’s technology achieves yields that are 100 times higher and at significant lower costs than traditional bioethanol production methods.

Energy Efficiency:
Serious Materials, a leading sustainable building materials company based in Sunnyvale, CA, announced that it fully supports the American Recovery and Reinvestment Act energy efficiency provisions. “We are already opening plants to meet the Recovery Act demand and hiring what may be hundreds of workers this year.” The company’s products such as SeriousWindows and SeriousGlass can reduce heating and cooling energy costs by up to 50%. Under the Recovery Act, homeowners can receive federal tax credits for “qualified energy-efficient improvements,” which include windows, doors and skylights. The new tax credits are for 30% of the cost of eligible products up to a limit of $1,500.

Efficiency of Infrastructures: Smart Grid Management Systems
Lumenergi, Inc., a Newark, CA based start-up is emerging rapidly in a space populated by large corporations. Lumenergi manufactures advanced and price-competitive dimming electronic ballast for fluorescent lighting that, combined with a proprietary lighting control system, is able to achieve energy savings in the order of 70%. In addition, Lumenergi’s system is Demend Response ready, allowing utilities to save energy at peak loads. This provides a huge opportunity as lighting accounts for 23 percent of all electricity consumption in the U.S. and 50 percent of electricity used in high-rise buildings. Coupled with rebates and grants that are increasingly being offered by utilities or state energy offices, Lumenergi estimates that a customer could get a return on their investment in only two years.

With billions of dollars from the Recovery Act flowing into smart grid investments, pushing utilities towards efficiency, and funding energy efficiency retrofits of commercial and governmental building, Lumenergi and other technology start-ups in Silicon Valley are getting organized to make the most out of federal and state funding.”

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