Stories from the week

In case you missed them, below are some interesting stories from the past week or so:

• Tyler Hamilton has tracked down some interesting info about the Kleiner ultracap startup EEStor, which has been "stealth" for a while. His Clean Break column here also links to his full Toronto Star article on the topic. Ultracaps have a lot of potential to take on batteries in certain applications where rapid charging and discharging is valuable (the highest profile example being electric vehicles). Cost, however, remains an issue around which further innovation is being sought (and, of course, funded).
  

• Here's a good overview of emerging solar technologies from CNet's News.com. Even more fun: Their photo gallery of several emerging applications.

• The next technology you've never heard of that will save the world: Modified high-density plasma toroidal collisions. Start stocking up on heavy water today! “Heat is a particularly interesting discussion since our discovery will reduce waste heat from cars by about 70%... thereby reducing global warming.” The good news is that they're developing a version for your home that will not emit radiation, which is a nice feature. Best of all, and certainly totally coincidentally for the timing of this article, the developers of this breakthrough approach are raising $10m in funding.

• Here's a useful report on the upcoming wave of IPOs (particularly solar IPOs) expected to be coming out of China. 42% of all Chinese companies are planning stock issues? OK, then, we're going to need a lot of new tickers... Regardless, there is a lot of emerging demand in China for clean technologies, in many cases driven by very favorable government policies, so it's not surprising to see a lot of entrepreneurial activity in the field that would attract a lot of outside/ public market investment, and this article does a very good job of exploring that trend.

• Want to win $25M? The folks behind the X Prize are now developing a new effort to inspire market introduction of mass-produced hyper-efficient cars, hopefully providing inspiration and incentive for entrepreneurs and VCs/angels. Start your engines!

• Finally (self-promotion alert), here's some follow-up media coverage of this week's cleantech VC data from the Cleantech Venture Network. It'll be interesting to see if the momentum continues in the first quarter data when that comes out, or if there will be a near-term normalization.

ISE, Concentrix, EnvironmentIQ, Ometric

• ISE, a manufacturer of hybrid drivetrains for buses and heavy trucks, announced a $25M Series B. NGP Energy Technology Partners, Rockport, and Third Avenue Management participated in the round. The round brings total financing to $31.7M to date.

• Concentrix Solar GmbH, which manufactures solar concentrator PV systems, received an undisclosed amount of funding (note: link opens a pdf) from Good Energies, a German solar- and wind-focused VC which has invested in several solar companies to date.

• EnvironmentIQ, f/k/a Camaxys, took in $15M in funding from Fidelity Ventures and Cazenove Private Equity. The company's enterprise software assists corporate Environment Health and Safety ("EH&S") efforts. Apparently this funding represents a bit of a restart for the company, which has gone through a wide variety of financings in the past.

• Ometric, an optical spectroscopy startup that is looking forward to launching its first products soon, took in an undisclosed amount of financing from Sequoia Capital and The Trelys Funds. We've talked about the cleantech applications of optical sensors before. Ometric appears to be initially targeting pharmaceutical quality assurance applications, but one of the appealing features of emerging optical sensor technologies in general is that they tend to lend themselves to a broad range of applications, including environmental monitoring. For an example, take Expansion Capital portfolio company Tiger Optics (self-promotion alert), which has developed a different proprietary spectroscopy solution aimed initially at the semiconductor/ high purity gases markets, but which is developing (and in several cases, successfully selling) applications for automotive emissions testing, atmospheric pollutant monitoring, pharma, medical diagnostics, continuous process manufacturing, etc. When these optical sensing technologies represent true proprietary breakthroughs, they can serve as "platform technologies", enjoying both TCO and performance advantages, with strong growth potential across a broad range of cleantech applications.
  

Cleantech investments skyrocket in 4Q05

Following up on yesterday's cleantech market growth news comes impressive data from the Cleantech Venture Network today, showing that a half a billion dollars were invested into cleantech startups by VCs in the fourth quarter last year. Matt Marshall's already got the scoop (as well as a link to the press release), and he contrasts these totals with total semiconductor venture investments in the same period.

These results show a huge uptick in VC activity in cleantech sectors, a 60% increase on fourth quarter numbers from 2004, and an 18% increase on 3Q05 figures. The numbers show that cleantech grew to 10% of all venture investments in the quarter. Sure, one can go back and forth on the specific figures (and the Cleantech Venture Network does a terrific job with an inherently impossible task), but the directional answer is clear -- these results simply put some numbers down to back up the clear trend toward more and more VC investments in clean technologies.

Here's the AP newswire story.

Clean energy on the rise -- $40B in 2005

Clean Edge put out their annual report on clean energy markets, and even to those expecting to see strong growth, the results were surprisingly good. According to their study,

"Global wind and solar markets reached $11.8 billion and $11.2 billion in 2005 -- up 47% and 55%, respectively, from a year earlier. The market for biofuels hit $15.7 billion globally in 2005, up more than 15% from the previous year."

Fuel cell markets remained relatively small, at $1.2B (as they describe it, "primarily for research contracts and demonstration and test units"), and their 10-year expectations for the market have retrenched somewhat (this year's 2015 forecast is the same as last year's 2014 forecast).

Overall, Clean Edge expects the market to increase 4x from $40B in 2005 to $167B over the next ten years -- a 15+% annual growth rate. Last year's survey suggested a 10-year CAGR of around 20% in these markets, but over the last year they've grown 33%, so things are moving faster than even Clean Edge had perhaps expected. (Interestingly, it appears they expect the growth of the wind power market to slow down considerably in the out years, but perhaps I'm reading too much into the 2004 vs. 2005 numbers)

Also, released in conjunction with the market report, Nth Power and Clean Edge released their annual survey of clean energy investing by the venture community. Unsurprisingly, that was also up -- to $917M, which they report is up 28% (although last year's announcement said 2004 totals were $520M). They peg the clean energy portion of the overall venture capital market at 4.2%, up from 3.3% last year by their calculations. The number of deals they identified went down from 81 to 84, but it looks like they may have boosted their 2004 deal numbers retroactively with more deal inclusion, so perhaps that will happen again this time.

Interestingly, the mean deal size went up from $8.4M to $10.9M, while the median deal size only increased a little bit from $6M to $6.5M. Which suggests a few bigger deals really drove the increase in total investment this year. But it's tough to tell with the shifts in 2004 numbers (the differing calculations of clean energy investment figures by various groups is something we discussed last year as well). It's all a bit confusing, but the basic storyline is the same -- more VCs are investing in clean energy.

Of course, solar was the highlighted investment sector. We'll have to start making more of an effort to talk about the other cleantech sectors beyond energy and solar in particular, even if that's all anyone writes about right now...

Kudos to Clean Edge and Nth Power for good, helpful reports.

The Carlyle Group embraces green energy

More evidence of the trend of generalist investors getting into cleantech investing: Founder and Managing Director David Rubenstein told attendees at a private equity conference in Germany that the firm intends "to be much more active in the wind, power, solar energy, biomass and geothermal areas." The article describing his speech also mentions that Carlyle will be raising a private equity fund to specifically focus on renewable energy infrastructure. Rubenstein's statements probably relate primarily to the firm's later stage investment activities, but there's reason to believe this approach will extend into the firm's early-stage investments as well.

In any case, as later stage financial investors get more active in cleantech, it improves the possibilities for M&A exits and for project financing for venture investors' portfolio companies. The cleantech "ecosystem" continues to fill out nicely...

Various news items

Busy week, so excuse the laundry list of news items of interest:

• Seattle Biofuels' Martin Tobias and others have formed the Northwest Energy Angel Group to fund regional clean energy startups. Two articles cover the group here and here. Will this signal the beginning of a trend of other regional cleantech-focused angel groups? The role of angel investors in cleantech is a topic we've touched on before.

• Amen, Bob.

• Following up on the recent stories about Kleiner devoting more capital to cleantech investments, here's an interesting interview.
  

• Here's a good overview of alternative energy investment opportunities, courtesy of Joel Makower. On that topic, the Cleantech Capital Group's Cleantech Index now is officially trading -- put ticker ^CTIUS into your stock tracker...

• Matt Marshall spotlights ethanol...

• Finally, a couple of interesting columns on solar. First, a good catchup on the industry by pundit Peter Fusaro. Secondly, a report that the looming silicon shortage is driving M&A in the industry. Fast-moving trends are rapidly changing the shape of the industry.
  

Renewable Ventures and MicroGreen Polymers

• Renewable Ventures, which is going to be providing financing to offset the upfront costs of installing solar systems, has announced that they (and their institutional investors) have $100M of funds to put into such financings. See this Red Herring story for more information on the company's efforts; the company appears to be an emerging competitor to SunEdison, which earlier raised $60M for third-party solar financing, as well as GE Commercial Finance, which is also providing financing options. Renewable Ventures claims to have financed 1MW of solar developments through 2005.
  

• MicroGreen Polymers, which has developed thermoformed plastics with added durability and heat insulation, has raised $2.4M in their first significant raise of capital. Two unnamed private financing groups led the raise, which also included WRF Capital and local angel investors. As this article describes, one of the most promising early applications for the plastic would be eliminating the need to "double-cup" when you get your morning caffeine fix...