Investing in Solar
The one session I was most interested in attending at the Solar Energy confernce dealt with Investing in Solar. This session was primarily focused on venture capital.
The panel was moderated by Ron Pernick from Clean Edge
The panelists were:
Bill Gross - Energy Innovations and IdeaLab. His company is making small CSP units that can be used for roof top installations.
Dave Pearce - Miasole. This company is reasearching and producing a CIGS based thin-film PV.
Howard Berke - Konara. This company is producing an organic based polymer solution for thin-film PV
Ravi Viswanathan - New Eneterprise Associates. A venture capital firm.
Erik Straser - Mohr Davidow Ventures. A venture capital firm.
The main question presented to the panelists was what makes the investing climate different now compared to previous years?
Bill Gross: The investing climate has never been better. There are many companies now having early successes. The next big thing for this industry is for these solar companies to show real solar profits. Many of the companies are not there yet, but we should see it soon. There have also been many successful IPO's in the market recently. Profitable solar companies promote the success for everyone in the industry. Once they are able to move away from subsidies and are able to form more partnerships, this industry will grow. It is very similar to the successful model of silicon valley. When the industry is able to form an eco-system where everyone can grow, everyone will prosper. He doesn't feel that they all need to be in the same geographic area, the companies just need to be able to work and grow together. Another reason for the growth in VC capital is that the government is just not investing enough. Private industry understands this and needs to step in to take the industry to the next level.
Howard Berke: They have investors and partners world wide. They have funded their development primarily from VC capital and they have plans to take their polymer based thin-film system up to the production of gigawatts. They have focused on the technology and have found partners to build the plants and manufacturing. They are looking at their next round of financing next year for $20 million. The biggest change in the last 5 years has been more stimuli and incentives by other countries like Germany, Italy, Spain, and Greece. Another factor is that the demand and cost of fossil fuels is increasing the interest in alternatives. They are also finding that the Dotcom Bomb has left the VC's with no where to invest their money. They are looking for new alternatives and many of them are moving into financing this sector. The generalist VC firms have started to enter the cleantech industries in big way. They helped build the entire semiconductor industry and are now helping to build this one. His company is targeting a goal of printed organic polymers down to the cost of 50 cents per watt in 10 years. They are also developing photo active dyes in every color of the rainbow that can be utilized in many installations.
The VC's also see a way to get paid on their investments. The recent successful IPO's in this industry show away to collect the profits in the investment. There are also some major CEO's of Fortune 100 and 500 companies looking at this sector and the companies that can be acquired so they can enter this space.
David Pearce: Miasole was founded on building a solar cell built using the same technology that is used to build computer hard drives. They use a sputtering process to coat their material on stainless steel foil. He feels that CIGS thin-film solar is the next focus for their company. The innovations like this provide the potential to be on par with cost to existing electrical generation. In 2003 it was very challenging to find funding. Much of the funding was out of his own pocket. In 2005 it is now a different story. The VC's now see a path to liquidity. He also sees that the path to future growth in this industry is making the solar equipment part of the building infrastructure. He showed a sample of his material as part of roofing membrane material. The closer you integrate the material to the structure, you lower the cost.
Ravi Viswanathan: New Enterprise Associates is a broadbased investment house. They have a history of being a generatlist in the technolody, information technology, and life sciences sector. One thing that attracts many VC's to this space is that the technology is very similar to the semiconductor industry. There are also similarities with the life sciences. The contacts and knowledge they had built in the 90's during the dot com area are very applicable now in the same space.
Erik Strauser: They typically make about 25 investments a year. Clean tech is his focus for the firm. They find many of their companies at the major research universities or from repeat entrepreneurs. There is typically over 20% turnover in the Fortune 500 every decade. He believes that we will see a renewable energy company in the Fortune 500 in the next 10 years. Large companies don't invest in R&D anymore. They use this early stage companies to fuel their R&D development. It is often more cost effective to buy into a technology, rather than try to develop it themselves. He also stated multiple times that they have companies in the portfolio that are doing some very interesting technology that has not hit the markets yet.
Overall they all agreed that demand for their products are not an issue. Capacity is the biggest issue. Everyone is scrambling to meet demand. They feel that thin-film will become cost competitive with existing technology within the next 5 years. This is why the VC's are investing now for big gains in the future.