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Posts Tagged ‘Silver Spring Networks’

Article from GigaOm.

In contrast to the findings of a research note on Tuesday that says Silver Spring Networks could soon shelve its IPO, I’ve been hearing that Silver Spring is actually getting ready to finally go public within the next four weeks, a year and a half after filing its S-1. A delay that long between filing and finally trading is not ideal, but it’s not unheard of for companies to wait through difficult market conditions, particularly as they negotiate pricing.

Beyond discussions I’ve had with sources, in Silver Spring’s latest S-1 Amendment the company notes that longtime investor Foundation Capital now says it plans to purchase $12 million worth of stock at the IPO price, following the IPO, in a private placement. If Silver Spring was planning to shelve its IPO it probably wouldn’t be negotiating this detail with its investor, and also wouldn’t continue to update its S-1 every quarter (it would just withdraw it).

Solar installer SolarCity’s investors used a similar tactic when the company went public last year to try to create interest from Wall Street. SolarCity investors Elon Musk, Draper Fisher Jurvetson and DBL Investors, agreed to buy up about a third of the Solar City float the day before trading, and that helped it get out and pop on its first day. Bankers could take it as a good sign that Foundation Capital is looking to buy up even more shares of Silver Spring.

Silver Spring has continued to grow over the years, despite the fact that selling smart grid networks to utilities is a pretty difficult low margin business. If you only look at Silver Spring’s GAAP revenue and net income it doesn’t look all that amazing, which is what this analyst did. The company hasn’t ever had a positive net income, and it recorded revenue of $147 million for the nine months ended Sept 30, 2012, which was down from $176 million from the same period in 2011.

But if you look at the deals that Silver Spring closed in 2012, and the amount it billed its utility customers for, it actually had a decent year last year. The company recorded billings of $219 million for the nine months ended Sept 30, 2012, up from $183 million for the same period of 2011. Billings are how much Silver Spring invoiced its customers, and they are considered deferred revenue until they can be officially counted as revenue. It had its highest gross margin yet on those billings of 34 percent. The company has a total of $473 million in deferred revenue as of the nine months ended September 30, 2012, and about $60 million in cash for the same period.

That’s the problem with selling gear to utilities. The deals and the sales cycles take a really long time to negotiate from a trial to a commercial deal, and then a long time to see through to the end. We’ll see how comfortable Wall Street is with looking at both its GAAP and non-GAAP financials when it comes to interest in the IPO.

Silver Spring Networks has networked 13 million smart grid devices, and has contracts to network more than 22 million total. The company has a total backlog of $745 million in product and service billings.

Now, we’ll see if over the next four weeks, Silver Spring is able to negotiate and get enough interest to price its shares at the valuation it wants. But from what I’m hearing it’s starting to aggressively try to do just that.

Read more here.

 

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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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Here is some IPO news from SFgate.com

“Codexis Inc., a Redwood City startup that makes designer enzymes for pharmaceuticals and biofuel production, sold its shares for the first time Thursday on the Nasdaq exchange, the first of what could be a flurry of IPOs this year from Bay Area clean-tech companies.

Codexis shares opened at $13, the low end of the $13 to $15 range predicted by the company last week, and closed at $13.26. The initial public offering brought Codexis $78 million.

After a drought in clean-tech IPOs last year, several green companies have already announced their intention to go public, and many more are thought to be waiting in the wings. Codexis’ premiere, therefore, was closely watched in the industry, even as analysts cautioned against reading too much into it. One IPO isn’t enough to gauge investors’ appetite for clean-tech stocks.

“There’s definitely a hunger – I’m not sure that people are starving, though,” said Joel Makower, executive editor of GreenBiz.com. “There’s a lot of temptation to read into the first clean-tech IPO of the year, but I don’t think this tells us much.”

Tesla Motors, the Palo Alto maker of electric sports cars, has also announced its intention to go public. So has Amyris, a biofuel startup in Emeryville, and Solyndra, a Fremont firm whose solar panels look like fluorescent light tubes painted black. IPO rumors have swirled around BrightSource Energy in Oakland, which is developing large solar power plants in Southern California, and Redwood City’s Silver Spring Networks, which makes hardware and software for smarter electrical grids.

The pent-up interest in IPOs isn’t confined to clean-tech startups. Five other companies – with products ranging from software to pharmaceuticals – premiered Thursday, making it the busiest day for IPOs since November 2007.”

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Here is an optimistic article from earth2tech.

“Is 2010 the year of the greentech IPO? Well, a whopping 19 green companies have announced IPOs since September, according to a report from Bloomberg New Energy Finance, and none of those have sold shares yet. And that’s just the companies that have announced that they’ll IPO — not including companies that are widely thought to file and go public this year (like Silver Spring Networks.) In total, greentech companies plan to raise $9.6 billion worldwide in 2010, “more than triple the total value of IPOs for the industry in 2009,” reports Bloomberg New Energy Finance.

Green IPOs were already up slightly last year over 2008, according to the Cleantech Group. That was thanks to lithium-ion battery maker A123Systems’ (a AONE) $371 million IPO in late September (the largest IPO in the U.S. last year) and the massive $2.23 billion IPO of China Longyuan Electric Power Group in the fourth quarter of 2009. But up until A123Systems’ public debut, green IPOs (and most IPOs) were relatively stalled last year.

However, the post-A123Systems boost seems like it already occurred in the fourth quarter of 2009, when there were already 18 green IPOs, totaling $2.9 billion. And the first quarter of 2010 saw a drop in green IPOs to 13, totaling $1.5 billion — China accounted for the majority of transactions, with eight offerings. As the Cleantech Group put it:

[T]he number of high profile companies registering to go public in the U.S. in late 2009 and early 2010 failed to translate into the volume of IPOs that many predicted, with only three North American cleantech IPOs in 1Q 2010.

But the green IPO bonanza that Bloomberg is expecting will specifically be targeted at renewables. The report says 12 of the 19 companies that have announced they will IPO are wind and solar firms. In particular Italian utility Enel SpA plans to sell a minority stake of its renewable energy unit Enel Green Power for $5.4 billion by the end of 2010, Chinese wind turbine maker Xinjiang Goldwind Science & Technology Co. plans to raise $1.5 billion in Hong Kong, British solar energy producer Engyco is looking for $1.4 billion, and Spanish Renovalia Energy SA could be looking for $300 million.”

Read the full article here.

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Here is some interresting thoughts from CNET.

“With investors getting smarter and start-ups getting bought, the mood is brightening in green tech. But the high-profile companies seeking to go public this year have some industry watchers talking bubbles.

For proof, investors point to the spate of planned initial public offerings, including electric car maker Tesla Motors, solar company Solyndra, and biofuels maker Codexis. Smart-grid company Silver Spring Networks and biofuels maker Amyris are rumored to be on deck.

Long-term trends may favor innovative green companies, as concerns about energy resources and the environment grow. But that doesn’t mean this year’s leading companies can navigate the complex regulatory and financial environment to become successful companies, said Jack Robinson, founder of Winslow Management, which focuses on environmentally oriented public companies.

“Valuations seem to be ahead of themselves,” Robinson said. “Some of the people [in venture-backed green-tech companies] don’t have the history and don’t understand the pitfalls that need to be addressed from a technology, market, regulatory, and political point of view.”

An example of a company he considers highly valued is lithium ion battery maker A123 Systems, which went public last September. In addition to raising $371 million, it raised the hopes of many other young energy companies.

Investor Rob Day of Black Coral Capital did an analysis of four recent IPO filings in the green-tech area and was concerned when he found that their unofficial revenue numbers were far below the amount of money put into them.

Nonetheless, even early misfires don’t mean investors should write off the whole sector. The high-profile companies that have filed to go public aren’t the best indicators of what’s to come as many other companies could raise funding through private equity sources, rather than tapping the public stock market, Day argued.

“My worry is that if these IPOs are perceived later on this year as having been unsuccessful, it’ll once again set back the entire clean tech venture industry, because of the example it sets in terms of lack of (financial) exits,” he wrote.

Netscape moment ahead?
Even with the worries over financial returns for investors, there’s a reason that IPO hopefuls have gotten as far as they have. It’s widely recognized that Tesla Motors and Solyndra, for example, have developed innovative technologies. Tesla’s $109,000 Roadster has become a darling among the well-heeled and its planned Model S sedan, priced at about $57,000 before tax credits, has legions of fans even though it won’t be built for two more years.

Solyndra has developed a solar collector designed specifically for flat commercial rooftops. In its first installations, the company touts how quickly these collectors, which use curved thin-film solar cells, can be installed, which brings down the overall system cost.

As with many green-tech upstarts, though, both companies have big-time challenges. Solyndra and Tesla borrowed hundreds of millions of dollars from the U.S. Department of Energy to build manufacturing facilities and they face powerful competition, in the form of incumbent automakers and low-cost Chinese solar panel producers.”

Read the full article here.

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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.”

Read the full article here.

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Sounds to me like Tesla is going public. Here is some coverage on the topic from The GreenBeat blog at WSJ Online.

“Rumors are swirling today that Tesla Motors is seriously considering an initial public offering sometime soon. The talk has been tracked to two anonymous sources, who say the six-year-old company could cash in big on the battery-powered car trend before electric and hybrid models from companies like General Motors, Mitsubishi and Nissan make it to market.

Tesla has officially denied the prediction, calling the IPO chatter “rumor and speculation.” That said, going public in 2010 would give the San Carlos, Calif. company several distinct advantages. First, it would solidify its position as the electric car player to watch. It’s already been casually anointed as the leader by industry observers and the Department of Energy, which granted it $465 million in stimulus funds in its first round of low-interest loans for advanced transportation projects. Second, it could use the sale to raise money to get its hotly anticipated Model S sedan out the door by its 2011 due date.

Tesla is one of several cleantech companies anticipated to go public as soon as next year. When A123Systems shocked the market with its blockbuster IPO in late Sepember (its share price jumped 50 percent on opening day), many analysts, including the Cleantech Group, said that the biggest public offerings in 2010 will probably come out of the green sector. In addition to Tesla, solar system maker Solyndra — which received $535 million in loan guarantees from the DOE in March — and smart grid communications provider Silver Spring Networks have also been named as likely candidates.”

Read the full article here.

GigaOm also covers this topic saying:

“Last Friday, buzz about an imminent IPO for electric car startup Tesla Motors hit the Interwebs, courtesy of two anonymous sources familiar with the plans who spoke with Reuters. As in several previous stories about its possible plans for a public offering, the company has declined to comment.

But if and when Tesla goes through with its long-discussed goal of going public, it could be the biggest and possibly the first public offering for a U.S. car company since Ford Motor’s IPO more than 50 years ago. The event will also offer a glimpse at the role IPOs will play in the nascent green car market — is the classic venture capital model (invest early and find a big exit in the form of an acquisition or an IPO) viable for this sector, or will a green-car IPO be more about feeding big capital needs and branding?

Hopes for a Google-like moneymaker in cleantech (Google took only $25 million in venture capital to make millionaires of 1,000 employees and billionaires of its two co-founders in a wildly successful IPO) have already started to fade for some in the sector. Stephan Dolezalek, managing director of VantagePoint Venture Partners, which has invested in Tesla, told Reuters in September that public offerings now serve more as “financing events” for alternative energy and other cleantech startups rather than a way for investors and founders to cash in on equity.”

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