Thursday, 28 June 2007

Clean Sweep 4

A round-up of recent news in clean technology and cleantech investment.

Deals
Tidal stream turbine developer Marine Current Turbines has secured £7.5m in new funding. New investors were led by ethically-focused Triodos Bank, via its Triodos Investment Management subsidiary, in its first investment in marine renewable energy. AM2 Funds (managed by City Capital Asset Management) also invested, alongside existing investors EDF Energy, BankInvest and Guernsey Electricity.
Bristol-based MCT recently announced that their first major installation, in Northern Ireland's Stangford Lough, will commence in late August. The SeaGen system will be the world's largest ever tidal current device, with 1.2MW capacity - four times MCT's SeaFlow turbine in Devon, which has been operating since 2003.
SeaGen will operate for up to five years, and is intended to act as a prototype for commercial applications. Danish offshore contractor A2SEA is leading the installation.

Waste-to-energy group Inetec has secured £2.5m follow-on investment from a syndicate led by Oxford Capital Partners. The round also included existing investor Finance Wales and other new investors. Inetec, based in South Wales, owns proprietary technology to convert waste from the food industry into stable biomass fuel. The funding goes towards the group's first waste-to-renewable-energy CHP plant on the Humber. The plant will take up to 180,000 tonnes of waste and generate 24MW electricity per year.

The Alternative Energy Company has raised £200,000 expansion capital from the Yorkshire and Humber Equity Fund, managed by YFM Group. The firm, based in Ripon, North Yorkshire, supplies of wind turbines, solar panels and power inverters for domestic use.

Swiss rechargeable battery developer ReVolt Technology has secured Euro10m follow-on funding from existing investors Northzone Ventures, SINTEF Group, Sofinnova Partners, TVM Capital, Verdane Capital and Viking Venture. The money goes towards tech development for ReVolt's zinc-air batteries and the installation of pilot production lines.


Company news
Nviro Cleantech plans to raise £12m by floating on AIM in July. The IPO will give the London-based tech developer a market value of around £20m.
Nviro identifies promising cleantech at university spin-out or start-up level, and brings them to commercialisation. Key technologies in their current portfolio include a clean coal process being developed with a Chinese partner; a wood fibre reclamation system; and air purification and laser ignition technologies.
Nviro raised £3.7m in private placing in December 2006. The IPO is brokered by Fairfax, with Grant Thornton as nominated advisor.

Fuel-cell materials company Bac2 is opening a test laboratory and new offices at the Millbrook Technology Campus in Southampton. The company raised £500,000 seedcorn from London Seed Capital and London Business Angel Network in May 2006. Bac2 say its electrically conductive polymer, ElectroPhen, is ideally suited to the bi-polar plates and end plates that link individual fuel cells into fuel cell stacks.

Wednesday, 27 June 2007

Bad harvest for biofuels?

Are biofuels an attractive investment proposition in the UK? The restructuring proposals from Teesside's Biofuels Corporation might suggest not. Shareholders in the company, which raised £15m in an AIM float in July 2004 and a further £32m in March 2005, now face a delisting and major dilution of equity in favour of slashing the company's debt with Barclays.

The company's statement (pdf here) splits the blame between technical problems at their Middlesbrough plant and a toughening commercial climate:
The combination of higher vegetable oil prices and lower biodiesel prices have together meant that the Company has been unable to make profits from the production of biodiesel. In particular the price of European biodiesel has been depressed by US biodiesel that benefits from both European market support mechanisms and US production subsidies[...] As a consequence, high-capacity production of biodiesel at acceptable margins has not been possible[...]

Biofuels Corp has had years of troubles, however, so it shouldn't be a death knell for the sector. The other big news of the day certainly suggests otherwise - BP and Associated British Foods, along with DuPont, have announced a major joint venture to produce bioethanol, just down the east coast by Hull. The £200m plant at BP's Saltend site will have a capacity of some 420m litres of bioethanol per year, based on locally grown wheat (assuming anything survives the current floods in the area, of course). The plant will potentially be convertible into producing biobutanol, which unlike bioethanol can be used in un-modified internal combustion engines and thus has a much larger potential market. A biobutanol demo plant will run alongside the main ethanol line.

ABF, via its British Sugar subsidiary, is also working with BP and DuPont on a 70m bioethanol plant in Norfolk which will use local sugar beet as a feedstock. Subject to final approval, the European Investment Bank will provide £120m project financing for the two developments, its first direct financing for biofuel projects.

Private equity investors seem to have shied away from UK biofuel investments, however - a distinct contrast to the US situation. There has been the odd tech deal - a recent example is last month's £15m syndicated round in Guildford-based TMO Renewables, developers of an improved patented process to convert biomass into ethanol, which sees its main market as the US - but no big production deals as have been seen across the Atlantic. Does that reflect different tastes for UK investors, or just the lack of huge farmbelt-friendly subsidies over here?

Tuesday, 26 June 2007

Seven cleantech blogs

A brief introduction to some of the most interesting cleantech blogs (or at least, the ones I look at most often, and which helped inspire this one). They're mostly US-centric, but all give a good insight into different aspects of technology, industry and policy.


Cleantech Investing
Rob Day, a principal at Boston-based VC @Ventures (part of the CMGI software group), provides a regular round-up of deals plus a VC's view on the commercial potential of various areas of technology. Running since March 2005, this was a big inspiration for Clean Ventures.

Cleantech Blog
Detailed commentary on a range of clean technologies, environmental and commercialisation issues. Neal Dikeman, partner at Californian investment bank Jane Capital Partners, leads a team of a dozen distinguished contributors including sustainability guru Joel Makower.

Clean Break
Toronto Star business columnist Tyler Hamilton monitors the Canadian cleantech industry and policy news. A good writer, and a great insight into what's happening north of the 49th parallel.

Green Wombat
Business 2.0 staffer Todd Woody comments on environment and technology news, and provides extra background to some of his magazine work (including a good recent feature on large-scale solar generation). Don't know about the name - I think Todd just likes wombats.

Search for Cleantech
A recently launched blog from William Brent, marketing entrepreneur and PR guy who's currently leading the cleantech practice at Weber Shandwick. Good insight into what's happening in China, where William spent 16 years.

Alternative Energy Stocks
Relatively venerable (launched July 2004) blog focusing on the alternative energy sector from a retail investor perspective, with good overviews of issues and opportunities in various sub-sectors. Recently introduced an aggregated feed of cleantech news from other sites and blogs, which makes for a useful one-stop shop.

Cleanergy
Collaborative blog on renewable energy and other cleantech, with deal news and analysis of (mostly US) policy. I occasionally contribute from the European perspective.


If there's any other good cleantech blogs out there I should be keeping an eye on, please let me know below.

Thursday, 21 June 2007

Clean Sweep 3

A round-up of recent news in clean technology and cleantech investment.
(Sorry for lack of other posts - been busy with other work this week, including some research on recent cleantech investment trends.)

Deals
Two US deals show an emphasis on reducing the silicon concentration in solar cells. Advent Solar has raised $70m+ in a fourth round led by ZBI Ventures (part of Ziff Brothers Investments). Sun Mountain Capital and Globespan Capital Partners also joined in alongside existing investors Battery Ventures, EnerTech Capital, @Ventures, New Mexico Co-Investment Partners and Firelake Capital. Advent's solar cells are based on unique ultra-thin solar wafers which minimise silicon consumption.
California's Silicon Valley Solar meanwhile raised a $10.2m first round led by Bessemer Venture Partners. The company, founded last year, manufactures solar modules which use less than half the number of cells of traditional assemblies. The deal includes the acquisition of NuEdison, an angel-funded photovoltaic manufacturer.

In a less-explored branch of technology, Washington-based Stirling engine developer Infinia has raised $9.5m from some prominent investors. Khosla Ventures, Vulcan Capital, EQUUS Total Return and Idealab of Pasadena, CA joined existing investor Power Play Energy. The deal financed the acquisition of Stirling Cycles from Idealab.
Stirling engines date from the early 19th century, but are now winning increasing interest as an alternative to internal combustion engines and in CHP and solar applications. Infinia is commercialising a Stirling power system for domestic and commercial users, which promises to convert solar energy into electricity in a more efficient manner than photovoltaic cells.


Fund news
Early stage investor E-Synergy has recruited Sam Richardson as investment director for its Sustainable Technology Fund. The £30m fund, one of the government-backed Enterprise Capital Funds, invests in rounds of £500k-2m.

Swiss specialist Mountain Cleantech is raising its first fund with a reported target of Euro30m.


Further reading
The UN's annual review of Global Trends in Sustainable Development details soaring global investment in the renewable energy and energy efficiency industries. VC highlights taken from the media summary include:
Investment capital flowing into renewable energy climbed from $80 billion in 2005 to a record $100 billion in 2006. As well, the renewable energy sector's growth "although still volatile ... is showing no sign of abating."
Stock market investments in technology development, commercialization and manufacturing firms leapt 141% in 2006 compared with 2005, while venture capital and private equity investments jumped 167%.
Venture capital and private equity investors in 2006 poured $2.3 billion into biofuels, $1.4 billion into solar and $1.3 billion in wind, much of it to increase manufacturing capacity.
Most energy efficiency investment has been in early-stage funding. Venture capital and private equity investment rose 54% between 2005 and 2006 to $1.1 billion.

Full report here as PDF.

New Scientist presents an interesting study of US public attitudes to climate change:
The results of our poll challenge some common preconceptions. They show clearly that policies to combat global warming can command majority public support in the US, as long as they don't hit people's pockets too hard. Americans turn out to be suspicious of policies that use market forces to help bring down emissions, and are much more likely to support prescriptive regulations that tell companies exactly how they must achieve cuts. What's more, given the probable costs, action seems more likely to win public support if it targets electricity generation rather than private vehicles.
Some interesting implications for both policy design and cleantech commercialisation.

Thursday, 14 June 2007

Clean sweep 2

A round-up of recent news in clean technology and cleantech investment.

Deals
Biomass CHP firm O-Gen UK has received £10m in a funding round led by Foresight Venture Partners. The Staffordshire company will use the funding to build its first 3MWe plant.

Another biomass CHP group, Austrian Cycleenergy, has closed a Euro6.7m round led by 3i-backed 3TS Capital Partners. The firm is building biomass and biogas plants in Central and Eastern Europe, and aims to raise over Euro100m in equity, mezzanine and debt financing over the next two years.

German fuel cell start-up FutureE has closed an unspecified seed round with Business Angel Forum Region Stuttgart and L-Bank. FutureE will use the funding to develop its range of modular 0.5-4kW PEM cells.

Danish PV firm SunFlake has secured start-up funding from Seed Capital Denmark. A spin-out from Copenhagen University, SunFlake is developing highly efficient solar cells based on a patented semiconductor nanostructure.

CompactGTL has reportedly received funding from Novo Capital Management. The Oxfordshire-based converts the gas found in oil fields into synthetic crude oil, avoiding economically and environmentally wasteful flaring or re-injection. (This may be outside some definitions of cleantech, of course.)


Market news
"Cleantech has been the real revolutionary factor that has restored investor appetite for venture capital. Investors have regained hope of another quantum deal." So says EVCA general secretary Javier Echarri, unveiling the association's survey of private equity performance and activity for 2006. The figures confirmed a big rise in early-stage venture capital - VC funds raised a total Euro17bn new money, up 60% on 2005 and approaching the 2000 high of Euro22bn. Seed investments totalled Euro1.7bn (up from just Euro96m in 2005) in 462 companies, while start-up investment more than doubled to Euro5.6bn in nearly 2000 companies. Cleantech didn't feature in the sector break-down - something to consider for next year?

London-based New Energy Finance has released its Clean Energy League Tables for 2006, showing the sector's top investors and professional firms. In the venture capital and private equity category, 3i took top investor by total investment, while Draper Fisher Jurvetson was most active by number of disclosed investment rounds. Law group Orrick was top legal advisor for target companies.

US asset manager PowerShares has launched a new clean energy portfolio product. The PowerShares Global Clean Energy Portfolio tracks the Wilderhill New Energy Global Innovation Index (jointly published by New Energy Finance) which includes 80-90 companies including renewable energy, biofuels and emerging low-carbon tech from Europe, Asia-Pacific and the Americas. PowerShares also manages US 'clean' and 'progressive energy' funds, and launched a general US cleantech fund in October 2006.


Further reading
The Economist's Technology Quarterly highlighted some interesting tech: aerial wind farms (I'm particularly intrigued by the twin kites idea); and hydrothermal cooling for city air conditioning. There's also a hard look at the economics of recycling, highlighting the need for further innovation in both product design and reclamation technology.

AltEnergyStocks, a Canadian specialist investment site, has introduced a cleantech news page of items culled from other news sites and blogs.

Newsweek interviews US VC legend Vinod Khosla about cleantech investment and ethanol fuel.

Tuesday, 12 June 2007

Seven clean VCs

A brief introduction to some prominent venture capital investors in UK clean technology companies. Should you be looking to raise funding for your cleantech business, these would be good people to talk to:

Carbon Trust
The quango charged with encouraging emissions cuts also invests in low-carbon technologies. The Trust invests only a small amount itself (£250k-£1.5m, in UK companies only), but always invests alongside commercial VCs who get the added value of its specialist knowledge and experience. It's the main reason why almost half of UK cleantech deals have some public sector investment. The Carbon Trust also backs specialised cleantech incubators, and considers investments in third party funds with a clean focus.

DFJ Element
Backed by the financial heft and reach of American VC giant Draper Fisher Jurvetson, Element is a leading global cleantech specialist. With total funds of $292m, Element typically invests from $3-5m in early-stage ventures through to $10-15m for later-stage opportunities. Although focused on the US, the team can access deals worldwide through DFJ's office network.

Environmental Technologies Fund
A specialist cleantech investor based in London, ETF claims to be Europe's first dedicated cleantech fund backed entirely by financial institutions. It closed its first fund in late 2006 at over Euro50m. No announced investments as yet, but it's looking to lead deals at the post-revenue stage, investing Euro5-12m over several rounds.

E-Synergy
Tech specialist E-Synergy recently launched the £30m Sustainable Technology Fund, one of the first of the government-backed Enterprise Capital Funds. The STF is an early-stage technology fund, at least half of which must be targeted at companies developing 'sustainable technologies' in rounds of £500k-2m.

Foresight Venture Partners
An award-winning technology venture capital trust (VCT) manager, the former VCF Partners has shifted its focus to sustainable investment. Foresight boasts experience in cleantech sectors such as recycling, waste-to-energy, biofuels and CHP. The Kent-based group invests from early stage up to buyouts, investing up to £3m alone or in syndicated deals.

3i
The grandaddy of UK venture capital has plunged into the cleantech pool with a nominated team from their technology sector business (disclosure - I've worked with the team on their promotional material). The 3i investment remit stretches from venture level through to infrastructure plays, although it's currently seeing most cleantech opportunity at the later growth stages. The group prides itself on its international network, and is targeting emerging markets such as China and India as both a market for portfolio companies and as a source of new investments.

Zouk
A dotcom survivor turned cleantech specialist, Zouk was launched in 1999 (which might explain the wacky name) and soon entered the emerging carbon market. In 2006, it launched its dedicated Cleantech Europe fund, focusing on growing companies with Euro2-10m revenue and proven technology. Direct investments are typically in the Euro5-10m range, but Zouk also joins and leads syndicates for larger rounds.


If you've any thoughts on these or any other cleantech VCs, please leave your comments below or email me at cleanventures@2ubh.com.

Friday, 8 June 2007

US entrepreneurs call for more support

Another new report on cleantech investment, from US business network Environmental Entrepreneurs and the Cleantech Group. This one concentrates on how public policy has accelerated growth of the sector, with a useful overview of public support in three main strands: building demand, directly or indirectly; providing financial support, directly or indirectly, to cleantech companies; and providing business development and other indirect assistance.

It also makes various recommendations for what the federal government could be doing to improve the environment and the fortunes of cleantech companies (cynics might question the ordering of those two priorities, of course...). The first is for a mandatory national carbon cap - a call that George Bush evidently hasn't been listening to, judging by this week's G8 shenanigans. There's also calls for a national renewable energy standard, and more public investment for cleantech R&D.

The importance of state support and direct investment for the growing cleantech sector is something I touch on in a new post over on the Cleanergy blog, looking at the recent Carbon Trust report on European investment:
The UK has seen the largest growth in Europe, although still less than the US. That may be thanks to the role of venture funds backed by public money, notably the Carbon Trust itself - over 45% of UK cleantech deals have been backed by public sector investors, according to an earlier study by venture specialists Library House. The European average is just 14.7%, leading to calls for more government support for young cleantech companies.

Does UK cleantech need more public money, or is there a risk of crowding out the commercial VCs? If you've any thoughts, add them below.

Thursday, 7 June 2007

Clean sweep

A round-up of recent news in clean technology and cleantech investment.

Policy
The DTI released its Energy White Paper 2007, outlining how the UK government plans to achieve its goals of cutting CO2 emissions by c60% by 2050; and maintaining the reliability of energy supplies.
The paper focuses in part on ways to drive investment to accelerate the development and deployment of low carbon technologies, including creating further incentives for private sector investment, and directly supporting R&D where justified. Governments have a responsibility to create the right incentives and frameworks to enable a rapid transition to a low carbon economy, the paper notes.

The DTI is also preparing to launch its Energy Technologies Institute, a public/private joint venture dedicated to low carbon R&D, with projected funding of £600m over 10 years. One possible home for the Institute is the Environmental Energy Technology Centre planned for the Advanced Manufacturing Park in South Yorkshire. Regional development agency
Yorkshire Forward
this week formally announced the £8.7m centre for cleantech industries.

Deals
Italian fuel cell group Electro Power Systems has reportedly secured Euro5m from 360° Capital Partners. It's probably the largest VC deal for Italy in the past year. The funding will back R&D and business development for ElectroPS's Electro7 cell.

In sunny California, Tioga Energy launched with a $10m+ funding round from NGEN Partners, Draper Fisher Jurvetson, Rockport Capital, DFJ Frontier and Kirlan Ventures and others. Tioga provides facilities management services for solar energy installations, installing and managing solar kit for small commercial operators. Interestingly, Tioga used to be waste treatment firm CerOx before reinventing itself as an energy operator.
In other US news, Envision Solar (warning - their site will hijack and resize your browser!) has reportedly raised $600k of a targeted $2m first round; while waste gasification group Ze-Gen is in the process of raising $4.5m from Flagship Ventures.

Further reading
The Carbon Trust has released a new report on Investment trends in European clean energy 2003–2006. Key findings include:
* A total Euro1.96bn was invested into 300 companies in 444 rounds by investors between 2003 and 2006;
* On average, clean energy investment accounted for 10% of the total European venture capital investments made per quarter, on a par with biotech, IT and semiconductors;
* UK companies lead the pack with nearly 42% of all the European clean energy deals, followed by Germany, France and the Nordic regions.

Last week's Economist had a typically solid survey on business and climate change - first part here. The bottom line: Cleaner energy means new technologies, and new money to be made. Businesspeople concerned to position themselves well for a carbon-constrained future must do more than get themselves photographed with Al Gore: they need to invest in technologies that will produce cleaner energy.

The McKinsey Quarterly has a couple of articles of interest: one on biofuels and entry strategies for new players; and an interview with the ubiquitous Al Gore and his investment partner David Blood on 'sustainability investment' ('the explicit recognition that social, economic, environmental, and ethical factors directly affect business strategy').

Business 2.0 has a good feature on the (mostly US) companies developing big solar power projects. Author Todd Woody is putting up extra information that couldn't fit into the main feature on his Green Wombat blog.

Ron Pernich and Clint Wilder of the Clean Edge blog released their new book, The Clean Tech Revolution. I've got my copy on order - review to follow.

Wednesday, 6 June 2007

Welcome

Welcome to Clean Ventures, a new blog looking at clean technology and venture capital investment from a UK perspective.
Some introductory notes:

The subject
Clean technology, or cleantech, is a sprawling category. One general definition is those technologies which improve performance, productivity or efficiency while consuming fewer resources or less energy and cutting waste and pollution. In its broadest sense, it's all about doing more with less, in a cleaner way.

Cleantech can cover a bundle of different areas. The largest category focuses on energy - cleaner ways of generating usable energy, and more efficient production and consumption. There's waste management - reducing wastage, and recycling or reusing what remains. Cleantech can also include new ways to purify and filter water and air. Then there's a host of supporting technologies, including new materials and process innovations.

All good treehugging stuff, of course, and it's previously been easy to dismiss as such. But there's now a very strong business case for cleantech. The problems these technologies address are those of climate change, energy dependency, pollution, resource depletion and unsustainable urbanisation - again, nothing new, but these problems are increasingly being recognised by governments and corporations as ones which demand attention and investment, creating a strong demand for new solutions.

That's why cleantech, in 2006, became the third largest investment category for venture capital investors, after software and biotech. With both the major VC and private equity groups and smaller specialists chasing the best clean ventures, it's a sector that's set to grow further. This is big technology and big business in the making.


The blog
Clean Ventures will attempt to track what's happening from a UK perspective. Inspiration comes from a number of US-based blogs (which I'll introduce in another post) which have been doing an excellent job of tracking what's happening over there. Obviously there's a much more limited number of companies and investment deals being done within these island shores, but the globalised nature of the industry and the problems it addresses means there should be plenty going on of interest to entrepreneurs, innovators and investors based here. I'll be writing from a UK perspective, but not, I hope, an exclusive or parochial one.

I'll be documenting VC deals in cleantech companies, new research and analysis on the sector, and policy news of interest. I'll be looking out for news on emerging technologies, companies and services. I'll also be looking at the possible investment bubble in listed cleantech businesses, and what that might mean for companies and investors.

It's likely to start out quite modestly, but I'm aiming to introduce new services and content as things develop. If there's anything you'd like to see, or you'd like to contribute to or support the blog, please add comments below or email me direct at cleanventures@2ubh.com.


The author
I'm a freelance journalist of over 10 years' experience, specialising in technology, venture capital and entrepreneurial businesses. I've written mostly for specialist titles from Chemistry & Industry to Corporate Financier, and have won the BVCA/Isis Venture Capital Journalist of the Year Award for writings on technology investment for Real Deals. For more information, see my website at 2ubh.com (where I also blog on various subjects including venture capital and environmental issues).

I recently worked with 3i on promotional literature for their growing cleantech sector, which helped rekindle my interest in the general subject. I'm also currently carrying out some original research at the University of Sheffield on bubble characteristics of the listed cleantech sector - watch this space.