Tag Archives: Sequoia Capital

January Top 10 Players In Green Energy

1: The Obama State Of  The Union

There is nothing like an inspirational State of the Union address to remind us that the presidency is, among other things, a bully pulpit. So when Barack Obama used his State of the Union speech in January to call for massive federal investment in green energy research and development, he instantly thrust green power into the national spotlight. Of course, the president and his republican opponents disagree on whether the increased level of spending on green energy is an investment in the country’s future or yet another example of government excess the country can ill afford, but Obama gets points for laying out a vision. He may win some political points as well if he can paint himself as shepherding the U.S. towards a cleaner, greener, and more energy secure future while simultaneously painting republicans as dour green power cynics.


2: China: The Green Energy Superpower

China has its share of critics. Its human rights record remains abysmal, its undervalued currency makes American politicians howling mad, and its status as a global power worries both the U.S. and Europe. However, when it comes to green energy the country definitely has more admirers than detractors. So when Chinese President Hu Jintao arrived in the U.S. in late January for a four-day state visit, even Hu’s harshest critics had to grudgingly agree that his policies have put China well ahead of the U.S. in green energy infrastructure. China accounted for 21 percent of all global green investments last year, thanks largely to steps taken under Hu’s leadership. In remarks published on the Huffington Post, Energy Secretary Steven Chu bluntly stated that when it comes to green energy, the U.S. has one goal: Beat China. “The United Sates is competing for leadership in energy innovation,” Chu wrote. President Hu, your state visit made the US realize how far behind it is in the green energy race, so you and your Washington sojourn deserve pride of place on this list.


3: Jerry Brown Sees the Forest for the Trees

Stories about fiscal crises in state governments are decidedly dog bites man narratives these days. Perhaps no state has a direr fiscal situation than California, where newly elected Governor Jerry Brown is busy trying to close a $25 billion budget gap. However, while the budget is taking up much of the 72 year old governor’s time, he is also sticking with his commitment to green energy. In his first speech after being sworn into office Brown reiterated his goal of generating 20,0000 megawatts of renewable energy in California by 2020. With stints as a big city mayor, California attorney general, California governor, and a couple of presidential campaigns already behind him, Brown has said that his future political ambition is limited. However, his ambition to attract a larger amount green energy investment to California makes him a player despite his state’s lingering budget woes. At this stage in his career with his no nonsense stance on green energy he may be that one in a million politician; one who cares about the future rather than just his future.


4:  GE, NRG, ConocoPhillips: A Venture Capital Threesome

While some observers are bemoaning the relative dearth of venture capital in the green power sector, G.E.R. believes there is still plenty of money out there to support green energy. To prove our point look no further than Energy Technology Ventures, a fund set up by GE, NRG Energy, and ConocoPhillips. Certainly the fact that the $300 million fund is planning to finance approximately 30 early-stage renewable energy/cleantech companies over the next four years helped win it a spot on this list. However, more importantly, Energy Technology Ventures is ConocoPhillips’ first major foray into green investing and NRG’s first corporate investing program. Energy Technology Ventures makes this list because it demonstrates not only that green is still capable of attracting cash, but also because it shows new players are putting up capital and old players are willing to invest in new ways.


5:
Terra-Gen: Creative Financing

At a recent conference, a banker, who’s currently helping a couple of renewable energy projects get financing, noted that while money is available, accessing it remains long and difficult. Against this backdrop, the leaseback announced last month, supporting Terra-Gen’s 150-megawatt Alta Wind I project in California, is worth highlighting. Amidst an ongoing  difficult funding climate, New York-based Terra-Gen and its team of experienced project developers has scored some serious financing, including the leaseback transaction.  As we’ve noted, once-popular leasebacks are creeping back after a long hiatus – an indication that, while dollars remain hard to get, (unlike two years ago) they are on the sideline, available for the right projects.


6: Sequoia Capital $1.3B Fund

Despite concerns of a possible second Web bubble, which would happen at the expense of cleantech investments, our reporting shows that experienced green investors are continuing to raise funds, among them, Sequoia Capital. Last month the California firm secured $1.3 billion for a new fund, that will likely be partly invested in green energy companies. Sequoia’s current green portfolio includes startups like SunRun, a San Francisco-based leaser of solar panels. It has also put some money in Oorja, a Fremont, Calif. fuel cell maker. Not all venture capitalists are back scouring the Web for the next Facebook. Outfits like Sequoia and Khosla still see (long term) value in green energy.


7:  Khosla Ventures, Bold Investor

Khosla founder, Vinod Khosla

Risk and outside-of-the-box thinking seem to drive Khosla Ventures’s investment strategy, the pioneering clean energy-focused venture fund launched by Vinod Khosla, a co-founder of Sun Microsystems. Khosla Ventures’s portfolio companies include some of the green power sector’s most cutting edge players, including LS9, a maker of enzyme-based diesel. It has also invested in HCL CleanTech, a developer of technology that turns cellulosic biomass into fermentable sugars. Khosla’s latest bet is Ciris Energy, a Colorado company that’s developed technology that biochemically converts coal to methane. While some VC investors have had second thoughts when it comes to cleantech, Khosla continues, convinced that in the long run its educated but risky investments will payoff.

8: Goldwind USA, A Chinese Developer In America

The last time a Chinese company announced plans to construct a U.S.-based wind farm, Washington went haywire, with Senator Chuck Schumer (D-N.Y.) calling on the Obama White House to not fund the project. No such thing has happened to Goldwind USA, the Chicago-based subsidiary of China’s Urumqi, China-based Xinjiang Goldwind Science & Technology Co. Over the past year, the company has discreetly hired former First Wind CFO Tim Rosenzweig and then built its American portfolio by acquiring a couple of Midwestern projects, including one in Illinois from Irish developer Mainstream Renewable Power. The wind company is now in talk with banks to arrange financing for these projects and through it all it has managed to stay out of the political spotlight. A stealth approach that could payoff as the Chinese company comes online with its PPA-backed projects.

9: Global Energy Investors,  A Long-Term Green Investor

Massachusetts-based Global Energy Investors views the solar and wind sector as a long-term play. That’s a healthy indication for an industry – partly backed by venture capital funds – with midterm aspirations. Last time we talked to GEI founder David Richardson, he told us they were set to close on their $200 million inaugural fund. The firm plans to invest that money in operating wind or solar power plants, backed by long-term purchase agreements. “We’re going to be looking for small power plants that generate cash flow,” Richardson told us.  He is actually looking for the same sort of stable returns he got as a bond investor at Dwight Asset Management Company, the bond fund he helped launch and which currently has $80 billion under management.

10: Solar Junction, From The Lab To The Market

Solar Junction, a developer of concentrated solar PV panels, is working hard to get investors to participate in a fourth round of funding it will use to make its Concentrated solar PV panels a commercial success. On paper, CPV technology generates more power than conventional panels. But unlike conventional PVs, CPVs have yet to become a commercial success. Solar Junction seeks to change that. Backed by its venture investors, including Draper Fisher Jurvetson, it hopes its fourth round of funding will help push its solar technology one step closer to a commercial home run.

The Week in Green Energy: VCs Still Like Green

Kleiner Perkins's John Doer has led some major green investments for the firm.

Kleiner Perkins Caufield & Byers foreshadowed a return to its digital core a few weeks ago when it announced that its new $1 billion Digital Growth Fund (DGF) would invest $38 million in Facebook.

The news troubled some in the green power sector because it signaled that the firm’s interest in renewable and cleantech startups might be waning. In a relatively short amount of time Kleiner Perkins has become an important backer of fledgling green energy companies. However, with money once again chasing tech companies, there is real concern that green energy is falling out of favor with investors. Pessimists point to Goldman Sachs’s $450 million investment in Facebook and Google’s failed $6 billion buyout of Chicago-based Groupon as further proof that the web is thriving while greentech sags.

A cursory look at the numbers seems to support this assertion. In 2008 venture funds pumped more than $4 billion into the green sector, but over the last two years investment has slipped and cash-flow challenges  have early-stage investors rethinking their overall strategy. Green energy is certainly hampered by the fact it often requires significantly larger initial investments than IT. It also rarely fits the conventional three-to-five year and exit model favored by venture capitalists.

However despite the siren song of the IT sector, venture capitalists have not completely turned their back on green energy. Many in the venture community have changed their approach, choosing to back cleantech and energy efficiency companies that hold greater promise for short-term profitability. Others continue to quietly gather funds for further investment in a variety of green energy projects. In fact, according to data compiled by G.E.R., U.S.-based venture and private equity funds are raising $2.4 billion for new green energy and cleantech funds. Sequoia Capital has raised $1.3 billion, the Westly Group is putting together $175 million for its third cleantech-focused fund, and Global Energy Investors has nearly $200 million for a green infrastructure fund. These numbers are all the more impressive considering the tepid economy, and they indicate that the venture capital investment pipeline for green energy remains strong.

This week’s headlines support G.E.R.’s numbers. Google led a $20 million funding of energy efficiency company Transphorm and George Soros’ Soros Fund Management said it would be a cornerstone investor in Silver Lake Partners’ new green venture fund — Silver Lake Kraftwerk. Soros Fund did not say how much it would invest in the new venture but it was certainly enough to attract Cathy Zoi, an Obama administration alum who most recently worked with Energy Secretary Steven Chu overseeing energy efficiency and renewable energy initiatives. At Silver Lake Zoi will work with Adam Grosser, a West Coast venture investor who will manage the fund.

In addition to the Google and Soros action, Fisker automotive managed to raise $150 million and the Illinois State Treasurer is backing a bill that could double the amount of money it invests in venture capital funds.

Cleantech investments rose sharply in Canada in 2010, and 2011 may be another banner year. In Ontario, the country’s most populous province, the government-funded green revolution continues to gather steam. As the week closed, the Ontario Power Authority (OPA) awarded power purchase contracts that will support 872 megawatts of renewable energy projects. The projects require about C$3 billion ($3.05 billion) in private investments to fully develop. This latest deployment is a direct result of the Green Energy Act, which was signed into law two years ago. The Ontario Power Authority has approved more than 2,625 megawatts of solar power purchase contracts under the act’s investor-friendly regime.

This latest batch of green power contracts comes a few months ahead of provincial elections, which could lead to significant changes in the act. Indeed, the province’s Progressive Conservative party, led by Tim Hudak, has come out against the feed-in tariff, arguing that it is too expensive. Hudak and his government in waiting have said they would not void existing contracts, but solar and wind developers should expect renegotiations if the Progressive Conservatives beat the Liberal Party of Premier Dalton McGuinty this fall.

VC and PE Watch

Illinois Treasury Seeks To Double Venture Capital Investments

Fisker Automotive Raises $150M

George Soros Partners With Silver Lake To Launch New Cleantech Fund

Google Leads $20M Investment In Energy Efficiency Company Transphorm

Canadian VC: Cleantech Investments Rise Sharply In 201

Ramblings and Musings

On the other side of the world, Libyan dictator Muammar el-Qaddafi unleashed his mercenaries this week in a desperate attempt to hold onto power. The turmoil in Libya has oil prices in London and New York surging. On Friday Brent crude in London was trading at $111.43 and nearing $100 in New York. An economic rule of thumb posits that every $10 increase in crude prices shaves half a point from U.S. GDP. Back in 2005 economic and environmental concerns jump-started an unprecedented investment flow into the green sector. However, now the industry is more mature and investors more cautious, which might make it difficult for the green energy sector to get a similar boost from the latest spike in oil prices. However, the events in Libya and their effect on crude prices do confirm that a homegrown, sustainable, carbon-free energy infrastructure, despite its initial expense, could be a smart long-term investment for developed and developing countries alike.

Photo: Kerrismatic, Flickr

Sequoia Raises $1.3B For New Venture Fund

Sequoia Capital, one of Silicon Valley’s most respected venture fund, has secured more than $1.3 billion for its Sequoia Capital 2010 fund.

Sequoia began fund raising in  March, writes Fortune’s Dan Primack, who first reported the news, citing a Securities Exchange Commission Form D.

Listed on the SEC Form D are partners in Sequoia’s green energy practice, including Michael Goguen, Warren Hogarth, an indication the fund could back renewable energy and cleantech companies.

Continue reading Sequoia Raises $1.3B For New Venture Fund

Smartgrid Developer SynapSense Raises $5M From GE and Current Investors

Folsom, Calif.,-based SynapSense, a developer of wireless energy efficiency solutions that cuts power costs of data centers, has raised $5 million in a new financing round. GE’s energy financing unit, GE Energy Financial Services, stepped in as a first-time investor. Continue reading Smartgrid Developer SynapSense Raises $5M From GE and Current Investors

The Week In Green Energy: During Summer Doldrums Renewable Energy Funding Heats Up

NEW YORK - JULY 6: A girl runs through a water fountain to cool off on July 6, 2010 in the Brooklyn borough of New York City. The National Weather Service has issued a heat advisory for parts of the Northeast, mid-Atlantic and parts of Michigan and Kentucky with temperatures in some areas predicted to reach 100 degrees. (Photo by Ramin Talaie/Getty Images)

The sweltering heat that has hammered the East Coast for the better part of the week did not dry up the renewable energy deal flow, as some developers managed to clinch crucial funding. And as is often the case these days — especially in the cleantech and renewable energy sectors — Washington was the de facto deal maker. Hence, as we headed into the Fourth of July weekend, President Obama announced some $2 billion in Department of Energy loan guarantees supporting solar developers.

Of the $2 billion announced by the President, Spanish company Abengoa Solar got $1.45 billion for the construction of the 250 megawatt Solana Concentrating Solar Power (CSP) plant in Arizona. Colorado-based start-up Abound Solar also scored a $400 million guarantee to scale production of its thin-film, photovoltaic modules from a current 67 megawatts to nearly 1 gigawatt over the next three years. Continue reading The Week In Green Energy: During Summer Doldrums Renewable Energy Funding Heats Up