Top 10 cleantech stories of 2009

In no particular order, here are my top 10 cleantech stories of 2009. Any other interesting stories that you think should be on this list?

1. Copenhagen Accord: From Hopenhagen to Nopenhagen
The widely anticipated UN climate talks at Copenhagen in Dec 2009 ended with a whimper. After spending much time haggling about the main issues, world leaders could only come up with a kind of letter of intent. In fact, it was US President Barack Obama who brokered the final deal with China, India, South Africa and Brazil. Europe, which was left out, was apparently angered with this move. For now, the goalpost has been shifted to Mexico in 2010.

2. Global Cleantech Stimulus
Though we’re facing the toughest financial crisis yet, several governments around the world managed to announce multi-billion dollar stimulus packages for the cleantech sector, underscoring the importance of the sector to deal with climate change and energy supply issues. US, China, South Korea, Japan, EU, Germany, Australia and UK are among the biggest contributors.

3. A123 Systems IPO Soars
Lithium ion battery company A123 Systems was clearly the star of cleantech IPOs this year, with its shares soaring more than 50% on the first day of trading in Sep 2009. A123 Systems has not made any money, yet its stock price is still trading above its offering price with currently $2 billion market cap, even though Chrysler cancelled its electric vehicle plans which included A123 batteries. Doesn’t this remind you of the tech boom in the late 1990s? More IPOs are expected to come with Solyndra already filed for IPO in Dec 2009 while we’ll just have to keep guessing when Tesla Motors, Silver Spring Networks and Codexis will make their debut.

4. Khosla Ventures Raises $1.1 billion Cleantech Funds
Even as VC/PE cleantech investments slumps in 2009, Khosla Ventures raises the bar with its $1.1 billion funds raised in Sep 2009. It was the largest amount raised by a VC firm since 2007 and the largest first-time fund raised since 1999. This was also the first time Khosla Ventures has raised funds from outside investors which included the CalPERS. It was a rare feat to raise a fund of this size and Vinod Khosla has definitely proved it.

5. Cleantech Investments Shift from Solar to Energy Efficiency
Indeed 2009 proved to be tough on solar companies where declining orders, excess inventory and project financing problems were accompanied with massive layoffs. While Spain’s removal of government subsidies and the financial crisis contributed to the solar slump, China continues to provide state funding to the Chinese cleantech firms via low-interest loans from big state banks to fund their growth. It is no surprise that investment is seen shifting from capital-intensive cleantech such as solar and wind to less capital-intensive cleantech such as energy efficiency, storage, transportation and smart grid sector. Have you heard of the Jevons Paradox – the more efficient we become in our use of energy, the more we will use? Ironically, energy efficiency may lead to more energy consumption as the cost of energy resource reduces.

6. Electric Vehicles: Electric Dreams Come True
It’s no doubt that Obama’s stimulus package has jolted the US electric car industry into life. Anything from electric vehicles, fuel cells, battery technologies, hybrid vehicles to charging stations have turned into golden opportunity for investment. Even the Big Three, GM, Ford and Chrysler were pressured by the US government to make electric cars. The stakes are high here, as we look forward to reduce oil dependence. Yet this has caused another “gold” rush, i.e. rare metals which are important components in making the fuel cells and batteries and China is the main producer of rare metals. Meanwhile, expect the Japanese Toyota and Honda to continue to lead in the hybrid car sector.

7. Biofuel Flights Sizzle
With biofuels craze fizzling out this year, a good news from the industry appeared. Biofuel flights were tested successfully by 3 different airlines this year. In Jan 2009, Continental Airlines tested flight with 50% jet fuel, 47% jatropha, 3% algae in 1 engine (the first to use algae). In the same month, Japan Airlines tested flight with 50% jet fuel, 50% biofuel (of which 84% is camelina, 16% jatropha, less than 1% algae; the first to use camelina). In Nov 2009, KLM demonstrated the first passenger flight with 50% jet fuel, 50% camelina. Previously, Virgin Atlantic was the first to test flight with biofuel mix with 50% jet fuel, 20% mix of coconut and babassu oil in Feb 2008 (some people were mocking Richard Branson at that time!) while Air New Zealand tested flight in Dec 2008 with 50% jet fuel, 50% jatropha (the first to use jatropha). No doubt, we will see more of these biofuel flights realizing in the future.

8. Algae is Oil’s Best Friend
It seems like algae is the new biofuel. Exxon Mobil invested $600 million in Synthetic Genomics, a biotechnology company founded by none other than the genomics pioneer J. Craig Venter, in July 2009 to produce fuel from algae. BP, already an early investor in Synthetic Genomics, invested $10 million in Martek Biosciences in Aug 2009. Though it is applauding to see oil companies to look at alternative energy sources, Exxon Mobil’s latest $31 billion acquisition of XTO Energy, the largest natural gas producer in US, in Dec 2009 is a bet that alternative energy is not viable enough to meet US energy needs for the next few decades while hoping that the cleaner fossil fuel will reduce possible carbon tax in the future.

9. Smart Grid Gets Smarter
The smart grid has been hailed as the electricity Internet and it is such a big play that even the big IT players IBM (via its IBM Venture Capital Group) and Cisco are eyeing for a piece of it. In Obama’s stimulus plan, it calls for the creation of a smart grid and 40 million smart meters to be deployed in American homes. Smart grid may be the largest cloud (computing) and expensive but it will be lucrative for smart grid players. Silver Spring Networks, GridPoint, Trilliant, eMeter, Grid Net and SmartSynch are just some of the players that should benefit from the stimulus.

10. Water Splashes With Osmotic Power and Reverse Osmosis Desalination
In Nov 2009, Norway’s state-owned power company, Statkraft opened a prototype osmotic power plant which is the world’s first that generates energy by mixing fresh water with sea water. The idea of generating power from osmotic pressure gradients is actually an extension of reverse osmosis (RO) desalination. RO desal is used for water and wastewater purification, and such large plants are usually found in Middle East nearby power plants where they can easily get their electricity needs from oil. While the Middle Eastern plants consume oil to generate power for its desal process, Norway’s plant generates power from its desal process. I wish I could say much more for the water space but it is noteworthy that Kleiner Perkins has made its first water-related cleantech investment in APT. Hopefully we will see more VC investments in water-related cleantech next year.


Foundation Capital

About: Founded in 1995, Foundation Capital is a venture capital firm committed to supporting entrepreneurs and their companies, targeting innovative opportunities in cleantech, consumer Internet and infrastructure; telecommunications and networking; and enterprise software and on demand services. Foundation Capital funds total more than $2.4 billion. Based in Menlo Park.

Key Personnel:
General Partner: Bill Elmore, Adam Grosser, Paul Holland, Paul Koontz, Charles Moldow, Rich Redelfs, Mike Schuh, Ashmeet Sidana, Warren Weiss

– Azure Power, Calstart Products, eMeter, EnerNOC, Naverus, Purfresh, Serious Materials, Silver Spring Networks, SunRun

News: In April 2008, Foundation Capital, a venture capital firm committed to early stage company building, announced that it has closed a $750 million venture capital fund, Foundation Capital VI. The fund will allocate roughly $250 million to expanding the firm’s thriving cleantech practice which began in 2003. Foundation Capital has since built a comprehensive portfolio of investments in cleantech sectors including energy efficiency and intelligence, green building materials and industrial processes, food quality and clean water.

In Feb 2008, Foundation Capital was selected as an Inaugural Partner of the US Department of Energy’s Entrepreneur-In-Residence (EIR) Program, working closely with the Department’s Oak Ridge National Laboratory to help sponsored entrepreneurs bring the most promising of the Lab’s energy technologies to the private sector.

On 28 July 2009, SunRun, the leading provider of home solar power, announced it closed a Series B round of funding for $18 million led by Accel Partners and joined by existing investor, Foundation Capital. SunRun plans to use the funding to meet strong demand for its popular residential solar service, expand into new markets, and build on the Company’s recent successes.

On 22 July 2009, eMeter Corporation, the global leader in Smart Grid management software, announced the close of a $32 million private financing led by Sequoia Capital and joined by existing investor, Foundation Capital. The funds will be used to accelerate eMeter’s sales and marketing in new markets, enhance services to current customers and continue investing in new products.

See Forecast Earth video interview with Paul Holland here.


Google Ventures

About: There isn’t much information on Google Ventures’ website. It describes itself as “Google Ventures seeks to discover and grow great companies – we believe in the power of entrepreneurs to do amazing things. We’re studying a broad range of industries, including consumer Internet, software, hardware, clean-tech, bio-tech and health care. We invest anywhere from seed to mezzanine stage and embrace the challenge of helping young companies grow from the garage to global relevance. Our team includes entrepreneurs, investors and innovators, along with some 20,000+ exceptional Googlers whose breadth of knowledge, experience and creativity constitute perhaps our own most valuable resource. You don’t have to be a potential Google acquisition for us to want to work with you; we’re out to build great companies, period.”

Prior to Google Ventures which was launched in March 2009, Google has been investing in cleantech through its philanthropic arm, aspires to use the power of IT to address the global challenges of our age. Its initiatives in Clean Energy include RE<C (which aims to develop electricity from renewable energy cheaper than coal), RechargeIT (which aims to reduce CO2 emissions, cut oil use and stabilize electrical grid by accelerating the adoption of plug-in vehicles) and Google PowerMeter (which aims to develop personal information that helps consumers make smarter energy choices). Google Ventures’ offices are in Mountain View, CA and Cambridge, MA.
See also

Key Personnel:
Bill Maris, Managing Partner
Rich Miner, Managing Partner

Based on Cleantech Group 2008 report, Google made investments in the following companies: ActaCell, AltaRock Energy, Aptera Motors, Makani Power, Potter Drilling, BrightSource Energy, eSolar
Google Ventures so far invested: Silver Spring Networks, Pixazza

News: In March 2009, Cleantech Group reports that “Google has finally admitted there is validity to the long-standing rumors of a dedicated venture capital arm at the Internet giant. Google has officially launched the VC fund, Google Ventures, with about $100 million to invest in technology startups in software, cleantech, biotech, health care and the Web.

In 2007, Google said it planned to invest hundreds of millions of dollars in renewable energy over the next few years, creating a research and development initiative called Renewable Energy Cheaper Than Coal, or RE<C, to produce a gigawatt of renewable energy that is cheaper than coal.

But even before creating its venture capital fund, Google has handed out millions to develop or support clean technologies. Some of its investments include:
* $15 million into stealth wind-power startup Makani Power.
* more than $10 million in investments in enhanced geothermal systems: $6.25 million into AltaRock Energy and $4 million into Potter Drilling.
* $2.75 million into Austin, Texas, battery developer ActaCell and Carlsbad, Calif.-based electric car maker Aptera Motors.
* $10 million into Pasadena, Calif.-based eSolar and $10 million into Oakland, Calif.’s BrightSource Energy, both developing solar thermal technologies.

Those investments came from Google’s philanthropic arm, But from now on, Google Ventures will oversee the company’s VC investments. So far, the fund has already put cash into Silver Spring Networks.

Response is likely to be overwhelming, especially considering the current limited capital availability. Last time Google put out a call for proposals, it received more than 10 times as many RFPs as it expected. Its $10 million plug-in hybrid request for proposals in 2007 drew more than 300 responses.”


In another article by Reuters in March 2009, it reports “Google Inc is forming a $100 million fund to invest in early-stage start-up firms. The fund, to be called Google Ventures, will be wholly owned by Google, but will operate as a separate entity and will seek investment opportunities to maximize returns rather than looking for investments that strictly fit with Google’s strategic vision.

Rich Miner, a co-founder of Android smart phone software that Google acquired in 2005, and Bill Maris are the fund’s two managing partners. Earlier this month, Reuters reported that Miner appeared at an investor conference for Internet start-up companies with a name tag that listed his name alongside Google Ventures.

Miner said on Monday that Google Ventures will look at a wide variety of companies to invest in, including consumer Internet products, information technology, health care and biotech, among other areas. “Just as we were founded by entrepreneurs, we think we can help some of those next entrepreneurs with the next great idea,” said Miner.

Google Ventures has already invested in Pixazza Inc, a photo-based online marketing service and Silver Spring Networks, a company that uses technology to improve the efficiency of power grids. Google has invested in other companies in the past through its philanthropic division, While may continue to make investments from time to time, Maris said that Google Ventures will now function as Google’s “primary vehicle” for making venture-style investments.

Several high-tech companies have in-house venture capital arms, including Intel (INTC.O) and Motorola, But Maris said that Google Ventures will have more in common with traditional venture capital firms. “We’re making financial return our first lens,” said Maris. But he noted that a part of the appeal of Google Ventures for start-up firms is the relationship to Google and its 20,000 employees.

The fund will focus primarily on companies seeking seed funding and early stage funding, and Google Ventures will have the ability to make investments ranging from tens of thousands to “several tens of millions” of dollars, Maris said.”


Google founders Larry Page and Sergey Brin also invested their own money into Nanosolar and Tesla Motors.

See a CNBC interview with Rich Miner here or on vodpod.


Cleantech Group-Deloitte Report 2008

This quite detailed 80-page report has an Investor League Table 2008 that is slightly different from New Energy Finance’s. The Top Investors, measured by rounds of participation are:

1. Khosla Ventures, 21
2. Kleiner Perkins Caufield & Byers, 19
3. Quercus Trust, 16
4. RockPort Capital, 14
5. Draper Fisher Jurvetson, 13
6. Emerald Technology Ventures, 11
7. VantagePoint Venture Partners, 10
8. Chrysalix Energy Venture Capital, 8
PCG Asset Management, 8
Oak Investment Partners, 8
Advanced Technology Ventures, 8
Google, 8
9. Venrock Associates, 7
Foundation Capital, 7
Polaris Venture Partners, 7

The list of investments are in the report. What I like about this report is that it contains tables that track deals in North America, Europe, China and India and table of M&A deal tracking (only for 4Q08). For example, it shows this company:

Company: Silver Spring Networks, Inc. – Provider of two-way IP-based networking communication infrastructures to utilities for advanced metering, distribution automation, and demand response. (comment: a brief description of the company is given)
Country: USA
Region: West Coast
Amount USD: $75,000,000
Stage: Follow-On (comment: it can show first round or seed for other companies)
Sector: Energy Infrastructure
Investors: Foundation Capital, JVB Properties, LLLP, Kleiner Perkins Caufield & Byers, Northgate Capital (comment: it lists the investors for the company)

A note to take is that Cleantech Group does not yet cover Asia beyond China and India (including Japan, Korea, Singapore, Malaysia, Taiwan, and others), South America (including Brazil, which has significant biofuels activity), or Africa. If there is time, we can look at these missed out countries in order not to miss out any good investment opportunities.

There’s a lot of graphs, tables and analysis in the report that we can look into it. There’s also analysis by geography, for example, India. There’s no table showing a list of top investors in India 2008 but I have to sieve through the section to come up with this ranking:
1. Acumen Fund (4)
2. IDFC Private Equity (3) (it’s the top investor: $201m)
Draper Fisher Jurvetson (3)
3. Nexus India Capital (2)

A brief summary about India: Indian companies raised $456 million in 18 disclosed deals venture capital and private equity rounds during 2008 (amount not disclosed in 1 deal). Investment in the region represented 4% of the global total. Although down by 20% from the previous year, 2008 saw new investors including Kleiner Perkins and Garage Technology Ventures, as well as corporate investors such as Applied Materials, entered the India clean technology market.

Kleiner Perkins Caufield & Byers

About: Since its founding in 1972, Kleiner Perkins Caufield & Byers has backed entrepreneurs in over 600 ventures, including AOL,, Citrix, Compaq Computer, Electronic Arts, Genentech, Genomic Health, Google, Intuit, Juniper Networks, Netscape, Lotus, Sun Microsystems, Symantec, Verisign and Xilinx. KPCB portfolio companies employ more than 250,000 people. More than 150 of the firm’s portfolio companies have gone public. Many other ventures have achieved success through mergers and acquisitions. The firm has offices in Menlo Park, California; Beijing, China; and Shanghai, China.

The firm was named after its four founding partners: Eugene Kleiner (emeritus), Tom Perkins (emeritus), Frank J. Caufield (emeritus), and Brook Byers. When the firm was formed in 1972, the founders of most venture capital firms came from financial backgrounds, however Kleiner Perkins’s founders distinguished themselves through their industry experience – Kleiner as a founder of Fairchild Semiconductor and Perkins as one of the leaders of Hewlett-Packard’s early computer hardware division. See Kleiner’s Laws here and his obituary here and here.

Key Personnel:
The Partners are:
Brook Byers, Chi-Hua Chien, John Denniston, Amol Deshpande, John Doerr, Juliet Flint, John Gage, Bing Gordon, Al Gore, Wen Hsieh, Bill Joy, Randy Komisar, Ben Kortlang, Joseph Lacob, Ray Lane, Aileen Lee, James Li, M.D., Michael Linse, Dana Mead, Thomas Monath, M.D., David Mount, Matt Murphy, Ajit Nazre, Jordan Ormont, Daniel Oros, Jessica Owens, Ellen Pao, Ted Schlein, Beth Seidenberg, M.D., Risa Stack, Trae Vassallo.

Note: Democrat Al Gore joined as Partner in Nov 2007 while Republican Colin Powell joined as Strategic Limited Partner in July 2005.

We look at specific companies related to cleantech only:
Greentech – Altarock Energy, Altra Biofuels, Amyris Biotechnologies, Ausra, Bloom Energy, Fisker Automotive, GreatPoint Energy, Hara Software, Lehigh Technologies, Lilliputian Systems, Mascoma Corporation, Miasole, RecycleBank, RPX Corporation, Silver Spring Networks, Verdiem.

News: In March 2008, KPCB announced the iFund, a $100 million venture capital investment initiative that will fund innovators developing applications, services, and components for Apple’s iPhone and iPod touch platform.

In May 2008, KPCB was raising funds for a $500 million growth-stage clean-technology fund called the Green Growth Fund. Another $700 million fund called KPCB XIII Fund will invest in greentech, IT and life sciences ventures. By October 2008, KPCB’s Green Growth Fund led a $75 million investment round into Silver Spring Networks, a leading provider of Smart Grid technology solutions. The new funding, a portion of which has been reserved for strategic partners, included returning investors Foundation Capital, JVB Properties and Northgate Capital.

Here is an interview with Ajit Nazre, a partner who also leads the firm’s India investment initiative.

See a video posted on Vodpod or here for John Doerr’s speech on greentech.