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1. The Largest Cleantech VC: China
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2. Report: Silver Spring Seeks Mid-2010 IPO, Valuation of $3B?
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3. Daily Sprout
The Largest Cleantech VC: China
Jennifer Kho - Policy
When private investment in cleantech fell last year, government stimulus programs more than made up the difference, according to estimates that the Cleantech Group released at the Cleantech Forum in San Francisco this week. And no government is doing more to fill the gap than China’s. China has set aside a whopping $200.8 billion in stimulus funding for cleantech, 79 percent more than the $112.2 billion the U.S. stimulus funds have allocated to the industry, according to the latest Stern report released last year. (Estimates of U.S. green stimulus funding have varied broadly, with many ranging between $50 billion and $80 billion as of last year with $36.7 billion allocated to the Department of Energy.)
A chart that Sheeraz Haji, president of the Cleantech Group, presented Thursday shows that while worldwide private investment in cleantech fell below $150 billion in 2009, from just above $150 billion the previous year, global stimulus spending added an estimated $76 billion to the total pool of cleantech funding in 2009 and is expected to reach $182 billion this year (see chart, above). The chart is based on analysis from the Cleantech Group, as well as numbers from the World Economic Forum, the International Energy Agency’s World Energy Outlook, Bloomberg’s New Energy Finance and HSBC.
These numbers mean that governments, in essence, have become the biggest cleantech venture capitalists – with China as the largest player, by far. And just as the U.S. stimulus has changed the game for cleantech entrepreneurs and investors in the U.S., with both entrepreneurs and investors paying far more attention to Washington as private capital follows the public capital in a challenging economy, the new money from China is bound to bring plenty of changes to the industry as well, Haji said. As Maurice Gunderson, a senior partner at CMEA Capital, put it:
“It’s an opportunity, a threat and a wake-up call.”
Also, Beijing is likely to favor domestic companies in picking its winners. This doesn’t only happen in China, and is simply an effect of making funding a political process, Haji said. “Politicians are going to care if they’re giving their money to a domestic company.” For U.S. companies, the deeper pockets of Beijing’s stimulus program – as well as other government support for cleantech – may give Chinese competitors an advantage, especially in the potentially enormous Chinese market, he added.
Take Denmark, which largely grew the wind industry with government support. “Wind companies in the U.S. are disadvantaged because of that,” Gunderson said. (The world’s largest wind-turbine manufacturer, Vestas, is Danish.) China can bring orders of magnitude more resources to bear on cleantech than Denmark, he added. “Whatever they decide to do is going to be big.”
In addition to the greater government funding, the Chinese economy has been booming as of late and 69 percent of the total cleantech IPOs last year came from China. “Capital flows more freely in China,” Haji said, adding that debt markets also are doing better as loans are cheaper. The availability of provincial loans, for example, for its contract manufacturing partners helped lower SolFocus’ capital expenditure in the country. “Our capex was zero,” said Gary Conley, chairman of the concentrating photovoltaic company. “China makes it real simple for us.”
Companies aiming to target the Chinese market are aware that the government has a big influence on the business decisions and are making more trips across the Pacific, Haji said. And some U.S. companies also are considering manufacturing in China because of the lower costs, although the decision is balanced out by issues such as lower intellectual property protection, he added.
Silicon Valley investors also are taking more trips to China. “There’s pretty good awareness that if you want to be a credible cleantech VC, you have to go to China,” Haji said. Many big venture-capital companies have opened offices there. CMEA doesn’t have an office there, but does have one investment in China and has funds with which it can cooperate in the country, Gunderson said.
Still, Conley said that early-stage funding remains a Silicon Valley specialty, as Chinese stimulus money is more similar to later-stage funding – and he expects that market will slowly swing back in about two years after the stimulus program ends.
But even though the worldwide stimulus programs only are meant to last a few years to help counteract a global economic downturn, they way the money is spent now will influence the course of the energy and cleantech markets over the next 100 years, Haji said. “If we’re not careful, the U.S. will cede global competitiveness to China,” he said.
Finally, all the stimulus programs will likely cause a dip when they end, and it’s unclear how quickly the industry will be able to bounce back afterward, Haji said. “It might hurt.” Companies propped up by the funding will go away, while those that have been incubated by it – and are able to compete on their own once the government spending ends – will survive, Gunderson said.
Report: Silver Spring Seeks Mid-2010 IPO, Valuation of $3B?
Jeff St. John - smart grid
Sounds par for the course, when it comes to alleged details on the most poorly kept secret in cleantech. Bloomberg first hinted at a Silver Spring IPO in August, while reporting that CEO Scott Lang was predicting profitability in the third quarter of 2009 and $200 million in revenues some time this year. But that $3 billion valuation figure is about double the rumored $1.5 billion valuation figure that started floating around after Silver Spring bought home energy web display software developer Greenbox Technologies in September for a rumored $20 million.
Of course, since then, Silver Spring raised an additional $100 million in December, bringing its total VC haul to some $275 million (Google Ventures, Foundation Capital, Kleiner Perkins Caufield & Byers and Northgate Capital are among its investors). That puts it in the class of startups that are getting too big to be acquired. (Company representatives often balk at the term "startup" being applied to their company, given that scale of investment, not to mention the fact that it's been around in one form or another since 1996.)
Silver Spring has also landed a host of utility contracts in an industry that demands its players grow to utility scale. Silver Spring's radios are inside the majority of the smart meters that are being deployed by PG&E, and Florida Power & Light, Pepco Holdings, and American Electric Power. FPL and Pepco are among utilities that got Department of Energy grants to boost their deployments, boosting the schedule for rolling out Silver Springs' gear. Other DOE grant-winning customers include Commonwealth Edison and the Sacramento Municipal Utility District — and that's not to mention the deals the company has in Australia, or the work its doing to use its networking tech for smart grid applications beyond smart meters, such as for the Bluebonnet Electric Cooperative in Texas.
Dow Jones put the company's backlog at about $800 million. To be sure, a good deal of the company's most recently landed business is supported by Department of Energy grant funding — and that could expose it to delays and bureaucratic wrangling over that cash, as we reported last week. Still, compared to its emerging peers, Silver Spring is the smart grid startup to beat when it comes to racing to the IPO finish line.
Who will be next to IPO? Investor Steve Westly in May named Silver Spring on a short list of cleantech IPOs he was expecting, along with Solyndra, which filed IPO papers late last year, and Tesla Motors, which filed its IPO papers in late January. Other cleantech startups on investors radar screens include smart grid networking company Trilliant, solar thermal developer BrightSource Energy and LED maker Bridgelux.
Daily Sprout
Katie Fehrenbacher - Misc
Key Senators Snubbing Climate Bill: According to a Reuters survey of 12 key Democrat and Republican Senators who could hold the swing votes, “the U.S. Senate is unlikely to pass a comprehensive climate change bill to reduce greenhouse gas emissions this year.” — CNET.
Apple Spends a Third of Its Shareholder Meeting on Green: According to GreenBiz Apple spent “about a third of its annual meeting discussing sustainability, melting glaciers and the finer points of reporting about greenhouse gas emissions?” — GreenBiz.
Making sense of Wal-Mart's big green announcement: Why Wal-Mart’s carbon neutral pledge is important. — Grist.org.
Cleantech Entrepreneurs Not Stoked on Stimulus: The entrepreneurs at the “Meet the DOE” event at the Cleantech Forum on Tuesday “didn’t seem to agree that things were going so well,” in terms of the stimulus funds “and used the Q&A session to vent their frustration about the lack of funding for energy startups,” — MIT Tech Review.
Will Energy Efficiency Work?: Efficiency and Resilience: After Jevons Paradox, the Piggy Principle — Oil Drum.
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